Rethinking Apple's price targets

A couple of years ago, I bought AAPL for $86 dollars a share and then sold it all for $170 a share. Early this year, I bought 800 shares at $80 a share and am still holding it. And loving every minute of it…

ROTHIE!! Who the hell calls him Rothie? It's Big Ben you moron.

By the way, Paul Taylor, (not the modern dance choreographer) coincidentally wrote an article on FT.com about the Zune v. Ipod. For those who like to compare that kind of info, worth looking at, I guess. Also, this conversation is not really about stocks and shorting; if you feel that good about AAPL you should bet your house, your wife, your future on it. It's really about the thrill of seeing things other people don't. I love CEO Mulally at Ford. (Talk about making a killing, all you braggers out there about what you bought when!) Mulally did amazingly prescient things at Ford that has kept it solvent today during a time when no one, no one was even thinking in that direction. That's seeing with your mind, not your brain. Dan in Pittsburgh. Is Rothie guilty or what? Weigh in. What's your gut?

Just in case anybody is curious about the actual numbers, Apple's current EPS is set at about $6. A change in accounting principles (which is what prompted Cramer) will allow Apple to report it's earnings differently and add about 30% to it's EPS for FY10 (the new accounting rule won't take effect until November/December after Apple's 4 Quarter results in October) bringing it to around $11 (probably a bit more) With a current P/E of 32 (which is historically the center of the road, not too high and not too low) that works out to a valuation of >$352/share for AAPL at the end of 2010 which is what all the fuss is about.

It's hilarious really, Apple isn't going to make any more money than they've already been making (which is a crapload), but because they will be able to report it differently, then every investor from Joe Nobody to some big hedge funds start to buy it up big time – what a bunch of morons. Don't get me wrong, they're not morons because they're buying AAPL, they're stock is going to go through the roof (maybe not $300, but definitely mid-200s), but they're morons because instead of actually doing extremely simple math, they just look at the EPS that was said on a conference call and say 'Buy' or 'Sell' with no more thought than that….absolute idiots.

ony ,

You're one of the Apple FUD distort and short guys refered to earlier. You haven't a clue about Apple or technology and you're masquerading here to set up a sentiment of fear(=sell).

I dare you to short you will loose your shirt because the whole world is realizing what a previous reader said : Apple is value , user friedly and a great computer at a very reasonable price. It's fresh, innovative fun and easy to use and as a user who doesn't want frustration – All Apple products are productive and fun to use and you know what?… they never crash.

If you need help, Apple genius bars in every Apple store will give you 1 on 1 expert help for free anytime and also help every switcher transfer their files from virused pcs.

I dare you to short you will loose your pants because Apple is here to grow and stay and it's stock will probably go to the $300 range before you get to cover your bets. You're just a gambler not really a computer /technology user.

I will short – near term and then later for a longer hold for the gradual, inevitable decline to non-phenom performance. (Of course, this accounting rule thing adds a very big wrinkle/unknown into the mix. Don't know if it will actually occur, when, how it will read exactly.) New comments from Jack and RandyV: first, what the heck is a FUD? Second, I agree with a good deal of the comments about why Apple HAS BEEN so successful but as I said earlier that is old news and, to put it simply, people forget. That stuff begins to fade out from the experience and when that happens at the same time as our current social-econommic-(mass)culture period interacts simultaneously with other products that will appear and improve and compare favorably (they don't have to be better)that which Apple HAS BEEN will cease to be. Not in a gigantic way; I've already said it will always be first tier. It just won't be the phenom that it has been. Will it be this quarter – of course not. Next quarter – getting closer. It will happen. Coffee and cars? It doesn't matter. Lastly, I get the flash and the substance behind Apple's success. I just don't look behind me to see what's ahead. Hitting golf balls with your eyes closed. Yes, Jason, it's real and it's a metaphor, meaning, you'll be surprised at how much you can see when you take your eyes off the things you have become so focused on. Don't want to get to Uber-Guru here; it's how a lot of great science and invention gets done.

I got tired of reading thestreet.com predictions when I noticed that the articles they wrote about my favorite stocks usually went the other direction. I have no interest in people who yell all the time.

Regarding Apple's high stock price – that's high enough to discourage manipulative day traders who pile onto the below-ten-dollar and below-twenty-dollar stocks, and disinterest the short-sellers too, because Apple continues to be successful at selling product and – this is very important – they have no debt, they have a cash horde.

Every analyst that disregards that cash horde has to understand that some people detest debt, and Apple represents to them a properly run company.

Mr PED, how about an article comparing the debt/cash positions of Apple's competitors – that would be Microsoft, Dell, HP, IBM, etc. as well as of other companies of comparable stock-market valuations.

That would make for some interesting comparisons.

ex ped: I've done that comparison before, but maybe it's time to revisit.

Jack,
———
Apple is value , user friedly and a great computer at a very reasonable pricee
they never crash

HAHAHAHA…

Tony ,

You're one of the Apple FUD distort and short guys refered to earlier. You haven't a clue about or Apple or technology and you're masquerading here to set up a sentiment of fear( =sell). I dare you to short you ewill loos e your shirt because the whole world is realizing what the previous writer said : Apple is value , user friedly and a great computer at a very reasonable pricee. It's fresh, innovative fun and easy to use and as a user who doesn't want frustration – All Aple products are productive and fun to use and you know what, they never crash. If you need help Apple genius bars in every Apple store will give you 1 on 1 expert help for free anytime and also help every switcher transfer their files from virused pcs. I dare you to short youwill loose your pants because Apple is here to grow and stay and it's stocjk will probably go to the $300 range before you get to cover your bets.

Tony,
I am not a fan of Macs and do agree that they will have to lower their prices dimenishing their margins. However, They're first movers. Apple will be the first mover on the next big seller. As such, they will no longer require the high margins in their cash cow iPhone to grow. I will agree that they are expensive right now, but if we get another correction Apple is a BIG TIME buy. It is obvious that the herd says "buy", so I think I will sell and take my gains.

BTW: Was the golf ball comment a rip on Tom? Or do you actually hit with your eyes closed. Call me dumb, but I did not get the analogy.

I'm not short AAPL yet – soon. Kick save, and beauty! Finally, a little recognition over Phil.

Dont you think Apple will fall now?
It should be time for that due to the long rise…

http://myiphone.se

Tony Esposito,
BTW, you're not the ex-Blackhawks goalie, are you? Because that would be pretty cool.

It seems that you're staking your position on nothing more than gut feeling and a perfectly rational dislike of the more militant Macheads who just think they're cooler than the rest of us. This, unfortunately is the trap that a lot of the Windows apologists fall into. They pretend that Apple users are only there because they want to be cool. What you seem not to be getting is that "user experience" doesn't mean the warm, fuzzy feeling you get when some chick coos over your iPhone, it means that your browser works like a browser should, or your e-mail app works like an e-mail app. And if we're talking about Macs, it means that you haven't had to restart your computer in the 3 years you've owned it because it locked up, as opposed to the daily horrors of trying to keep a Windows machine running. Or that if there was a hardware problem (hey, it happens, things break) Apple was there to help. And I have absolutely no idea where you're even getting your argument that Macs cost more to own. That has been disproved by every single study ever done; due to their reliability and compatibility, Macs cost a fraction to maintain, compared to any Windows machine.

So, since you started it, let's stick to anecdotal or subjective arguments: Using your Starbucks example, someone already brought up the point that you could always get a better cup of coffee for less than Starbucks, and once the economy tanked, people smacked themselves in the head and remembered that. You somehow equated this to computer purchasing decisions, which is an absolutely horrible analogy. Coffee is an impulse buy on a daily basis. There's a good chance that even when Starbucks owned the world, most of their customers still occasionally drank a cup somewhere else. A computer is a 3-5 year commitment, like a car (although my car commitments tend to be in the 6-10 year range). People will always buy the best one they can afford for their needs. That's why BMW, Lexus and other luxe brands weathered the recession fairly well; anyone who could afford one before the recession could still afford one during it. Now that we seem to have bottomed out and are crawling slowly out this hole, MORE people, not fewer, will probably switch to Macs. This is not trend-based like you think, it's a pretty steady characteristic of the buying public. People don't love Apple products because they're cool (well, okay, some people do), they love them because they work. And they allow their owners to work more efficiently, more intuitively and more reliably. When they can afford that – and as has already been pointed out here somewhere Macs aren't that much more expensive than COMPARABLY EQUIPPED PCs – people are always going to get the best one they can afford. Granted, there is always going to be a huge number of people who can make do with less or for whom cost is the most important factor, and you're right, Apple is never going to crack that market, which they've admitted.

I don't think anyone here is really concerned about the vagueness of your arguments, just that they're clearly not based on a realistic interpretation of the Apple market, but rather, like so many other analysts, on a cognitive dissonance akin to the "He only drives a BMW to show how rich and cool he is" argument. He probably doesn't drive it because it has a great service plan, high resale value, outstanding performance, free scheduled maintenance, etc. BTW, I do not drive a BMW… they're too expensive.

@Tony Esposito
You sound like TechTrader 10 with a new name.

not going to beat this to death.. i will always pay the extra money for mac provided the end product is worth the expenditure. i wouldn't take 2 pc's for a mac. 2 zunes for an ipod.. a palm pre for an iphone.. apple's products simply are superior in every way. you cannot give me these other products. if need be, i would 'work' my apple products a little longer before buying again. until very recently apple was a domestic biz. it is world-wide, and while a slow down is in place here, china is busting at the seams. time will tell my friend..

Here's the bottom line, Tony: I've been hearing and reading the exact same predictions – people will wise up, Apple will lose it's luster, they'll have lose margins to compete, the bad economy will crush their sales – over and over again for several years now. I've bought and sold Apple again and again, it's constantly been the most profitable part of my portfolio, and every one of the predictions has been – predictably – wrong. Because they've all been based on a misunderstanding of why Apple products sell. I'm the least-trendy guy in the universe – I buy cheap non-label clothes on overseas trips, I still use a Palm and my cellphone just makes calls – but even I have an iPod and plan to buy another. The eighteen cents I could save by buying a crappy hard-to-use MP3 isn't even worth looking into, and as one company after another has found out, most of the (US) public feels about the same. Someday Apple will start to lose its moxie, will stop innovating and start to take its customers for granted (like the airlines and Starbucks did), and then things will change fast. However, as with other companies, I expect to notice change well before it shows up in sales. I sold Circuit City at a loss the day after they fired their experienced staff as a cost-cutting move. The stock went up, but I knew they were doomed. As long as Apple keeps doing what they've been doing, they'll keep their customers happy and make lots of money. Good luck with those shorts you're buying – and with holding on to your shirt.

Alan, yes, I agree except the cost of owning Apple over that 2 or 3 year period is more expensive too. (Hey, I own a Mac; I should know!) And same with cars by the way. In any case, even if a favorable "math component" exists between owning a Mac and owning something else, just as there exists for Apple a favorable "user experience component", over time, and exacerbated by external social, economic and cultural "events" (although I hate using that word) those things mean less and less. The simplest way of putting it is, people forget.

tony.. i understand the analogy to coffee you made with apple and their pricey products.. personally i'm dd man and never bought into paying 6 dolars for a cup of joe. but here's the thing..if a mac costs a few hundred dollars more than a pc and the ipod a few dollars more than a zune, what is the cost when you are using this superior product spread out over a 2-3 year period? it is pennies. and yes when i said kids, i meant h.s and college and post college.. of course younger children will need their parents to buy these more expensive products for them..

Welcome, Tom. I knew I would flush out a techie from Silicon-Land. Gotta love the predictability of the weather out there. Lived in CA for 12 years and although I would never go back I sure am glad I was there. And Go Niners! They really look like they've got something this year. (Hey, do you want the Raiders down there? Might be cool.) Okay, as to your worry that I am being "general" and not "specific" enough (you used those words upwards of 20X in your post.) I'm afraid that is not what I do, it is not how I anticipate trend-horizons and trend-slopes and culture frames. You're a techie and I understand that. You need the comfort of labels and numbers. Those are not my work tools. I'm good at them and use them for other things but not for what we are discussing here. I know that disappoints or angers you or perhaps makes you feel superior to me – and all of that is good. Especially making you feel superior. That's just another name for "the other side of the market." But knowing this product's capabilities over that product's and customer experience and proactive adaptation – that only matters up to a point. The buying trends become increasingly influenced by things very different than that – things that you can't put on a Power Point presentation. And Starbucks? Bad analogy. Nobody builds their own airplane either, Tom, and look what everyone settles for. I say, lobby to get the Raiders. Much better market down there than the Bay Area. Ever hit golf balls with your eyes closed, Tom? Practice it like a meditation; you'll be amazed by how much you can see. Go, San Jose Raiders!

JWCatDuke, I remember the good old days when I could buy or sell 100 shares of a stock and have an immediate impact on the stock market: the stock would always go down after I bought it, and go up after I sold (in disgust). I figure the arbitragers, institutions, and hedge funds waited to see what I did, then did the opposite. After all they are the ones that really drive the market's direction.

But seriously, I used to consider Jim Cramer loud and obnoxious, so I avoided watching "Mad Money". A few months ago, my wife talked me into watching it, seriously. Our investments have improved dramatically ever since. Although the article's author, Philip Elmer-DeWitt, dismisses Jim Cramer as a showman, we really should keep in mind that loud and brash though he is, he does know what he is doing. After all he was a successful hedge fund manager before retiring with all his riches. As far as I'm concerned, he's done better for me than all these so called analysts, and that's what really counts.

Good stuff, guys. To he who calls himself "ampersand": The scenario I lay out is of course my opinion, much like your opinion is that I am wrong. (And that's all you have said.) However, I never said that the "concrete" evidence you have rightly asked for has occurred. In fact, the nature of what I do requires that I ignore the so-called concrete evidence (that has already occurred and is therefore, by my standard, old news) and pull in empirical, anecdotal and intuitive evidence that indicate to me that things will change. And they will. And Apple is not immune. And this period is when it will happen. Again, it will not make Apple a second-rate player; it will thrive. It just won't be the phenom that it has been, and that's what we're talking about here. I say, at this time, buyer beware – the trend will change. It will change during this recession/recovery. Dan: Excellent points. But that customer experience is ad-speak; it is a very fickle thing what people expect from one culture-frame to another. Look at airlines and the flying experience. It went from "first-class" for everyone to a flying prison. This analogy doesn't explain everything I'm seeing but it is an example of what can happen to the "customer experience."

Esposito: the mass consumers will not pay up for the Apple status the way it used to and will now opt for the other cheaper versions of the same product;

Can you specifically identify which Apple product as compared to which "cheaper" version?
It is easy to generalize and then take pot-shots at generality.

Esposito: "…this will reduce the overall projected number of Apple units as well as shrink margins when Apple lowers their prices to compete (as they already have started to do)."

Which product line is being cut down without any higher end models?
Precisely which product line is cutting prices so much that it will begin to shrink the margins in ways that Apple cannot predict? Can you be specific?
Over the past five quarterly calls, Apple has consistently revised its margins down appropriate to reflect deteriorating economic condition and each time, the GAPP numbers beat, say nothing of the non-GAPP numbers. So care to be specific?

Provide your specific thoughts supporting your position, we can have a meaningful discussion. Sticking to generality is not interesting. Anyone can argue using some generalized vague information.

Espotio: "… Hard to say when the buying stops (before or after this info becomes news) but Apple will settle back to 165-175 at that time so shorting at 188 to 198 has less risk than one might think right now in this Mad Money environment."

WHat is meant by "buying stops"? Consumer buying? So care to explain how consumer buying will suddenly stop or drop so low?

You cited Starbuck's but that is argument in generality again. Any old consumer from an 14-yr old high school kid to my 86-yr old mother can buy beans or pre-grind packs from anywhere and grind and brew at home. It is cheaper than Starbuck's. Starbuck is serving a discretionary spending segment.

Do you see the entire computer generation heading to electronic stores to start buying parts to build their own PC's, cell phones and MP3 players? Most importantly, do you see all these people suddenly register for Software Engineering classes and ALL become software engineer developing their own web browser, HTTP servers, Cloud Computing suite, databases, purchasing and educational software for their own use on their own home-built hardware? So much so that they will severely dent software and hardware purchase into the future?

Change is a problem when a company fails to adapt like GM, Chrysler, Ford, Motorola, etc. Change is not a problem when a company is willing to adapt and innovate. A fleet-footed technologically savvy company cannot be proactive when it lacks a war-chest. A rich company with money to burn does not a smart company make when the leaders are more interested in being "cool" and "in" than shipping good products. Any company that has the ability to proactively adapt and innovate and has a large war-chest (25-billion?) to survive a downturn is well positioned. Which one is Apple?

So when you can state more precise thoughts or supporting arguments, we can discuss in more details. This is notabout being fixated on Apple, this is about understand what we are thinking so that we can make informed decisions.

As for share prices and options valuation, I am not trading expert, so I will read and learn.

@Tony
Your comment "Trends always change and the current social-economic-cultural climate is ripe for such a change regarding Apple products" notwithstanding, AAPL may hit 200 next week.

"But it will lose its phenom steam for the reasons I have explained." Dan here, and I agree about the Steelers! On Apple, though, I'm still not seeing any explanations (or "news") beyond your opinion that trends will shift, which is based on the belief that everyone who buys iPods, iPhones and Macs spends more and just does it to be trendy. I'm writing this on a Windows PC – I have three, and one Mac laptop I only use for movies and fun stuff – so I'm not a member of any cult. But when the economy tanked I saw Apple at $80 and bought some on margin – and heard all the same predictions from friends at the time. Like you, they miss the reason for Apple's current success. The prices on Macs are only a bit higher than COMPARABLE models of competitor's products, and iPods don't really have any competitors that match the entire customer experience. The amount you can save is small and you always give up something – which is why every iPod killer ended up DOA, time and again.
On all their major products design, usability, customer service and reputation keeps the base happy and keeps adding to it. That's what sells Apple, not just trend-chasing (look at the Mini to see what how a weak Apple product doesn't get any takers). During hard times people buy quality or cheap, it's the middle players that get creamed. (By the way, I bought Starbucks at the same time and made a bit of money there too.)

Tony,
Please point me to something that explains that "social trends and their interaction with the economy and taste and style phenomenon" are leading people away from Apple products. Something concrete, not just your opinion.

Sacto Joe: If you bought AAPL at 90, you just made almost 100 points. And you can't buy more?! Come on, go for it!

Analyst sees Apple Stock hitting $335 by 2012

Thu, Aug 6, 2009

Finance, News

Jon Markman of MSN Money lays out the case for Apple’s stock price hitting $335 by 2012.

To project a $335-a-share price in three years, I am just looking for 15% earnings growth and a return to the premium price-earnings multiple that is accorded to industry leaders. General Mills is growing at 8% and gets a 16 P/E. In this tough environment, Apple is being given a 22 P/E, but in a more buoyant climate it should have an opportunity to shift higher toward a P/E that’s double its growth rate, or 29. That may seem high now, but technology leaders are frequently given 30 to 50 P/Es as traders determine that they are willing to pay up for growth.

My estimate for Apple earnings next year, based on current and projected growth trends, is $7.90 a share. Grow that 15% for three years and multiply by a 28 P/E and you get roughly the $335 target. It won’t be easy, but it is within reach.

That might seem like a stretch but let’s take a quick look back. 3 years ago today, and before the arrival of the iPhone, Apple was trading at or around $68 a share. Since then, Apple’s stock price has nearly tripled as it briefly flirted with the low $200 range in December ‘07. Currently, Apple is trading at $163.91, which represents more than a 100% increase in stock value since August 2006.

Looking forward to August 2012, a $335 price target certainly seems feasible – that is, of course, if Apple can out with a new product that can generate another significant revenue stream, a’la the iPhone in 2007. Of course, if Apple releases a tablet and that becomes a big hit, there’s your new revenue stream right there. But flying under the radar a little bit are the ramifications of Apple’s current and exclusive iPhone deal with AT&T. Given all of the complaints surrounding AT&T’s subpar service, Apple will undoubtedly look to branch out to other carriers as soon as it becomes practical to do so. And with all signs pointing towards the iPhone hitting Verizon sometime in 2010, on their upcoming 4G network of course, Apple may soon see its iPhone market share, and subsequently its iPhone revenue, increase dramatically.

Analysts may look at the iPhone and think, “Okay, what’s next?”, but the truth is that we haven’t even begun to see how profitable the iPhone will be for Apple. Once its contract with AT&T expires, things will undoubtedly kick into high gear.

Ben, Ben, Ben, I'm writing this on a Mac right now. No lie. I'm not talking love here. I'm talking social, economic, cultural shifts and making money on it. Apple will not become the Zune or the Hoola-Hoop. But it will lose its phenom steam for the reasons I have explained. By the way, please kill NY Jets Sunday – badly.

Sorry, Dan, you didn't write "ass-backwards." Love those Steelers. By the way, in the interim, short AAPL @ 188 for a quick 5 – 6 points down.

Missing from this report.
Analyst sees Apple Stock hitting $335 by 2012
Thu, Aug 6, 2009
Finance, News
Jon Markman of MSN Money lays out the case for Apple’s stock price hitting $335 by 2012.
http://www.edibleapple.com/analyst-sees-apple-stock-hitting-335-by-2012/

Dan: You're speaking preferences, not me. Think deeper. And "ass"-backward isn't necessary.

Ex ped made the statement in a different thread that Cramer "… is clearly bragging about having done it himself". I called him on the accuracy of that statement. In response, he said the following:
“The Dec. 22, 2006 video comes and goes, but the text lives on. The nut graph is this one, where Cramer explains how easy it is to "foment" uncertainty and doubt about a stock: "You can't create yourself an impression that a stock is down, but you do it anyway because the SEC doesn't understand it … Apple's very important to spread the rumor that both Verizon and AT&T have decided they don't like the phone … You also want to spread the rumor that it's not going to be ready for Macworld. And this is very easy because the people who write about Apple want that story, and you can claim that it's credible because you spoke to someone at Apple, 'cause Apple doesn't … they're not going to comment … So it's really an ideal short. And again if I were short Apple, I'd pick up the phone and I'd do that today." "When I watch that," Jon Stewart told Cramer last March, "I can't tell you how angry that makes me."”
The key phrase here is “if I were short Apple”. You can read it to say that, but for the fact he’s not short Apple, he’d do that. Or you can read it to say that, were he the type of person who played short, he’d do that.
I find this far from conclusive proof that Cramer was “clearly bragging about having done it himself".
Let me also say that I like both Cramer and Stewart, and that I watched that interview with extreme interest. I think it’s also fair to say that the subject of Apple shorting was not the center of that controversy.
Finally, Apple’s story has been there for all to see for a long time now. On the strength of that story, I bought a fair amount of shares (for me) at $90/share at the bottom of the last downturn. And if I had any more long term cash available to invest, that’s exactly where I’d still put it. Cramer’s doing a service to his viewers in trying to paint for them a picture of why this company is on a spectacular roll as a company. And he truly needs to be commended for that. Just as he should be commended when, halfway through the selloff, he told people on fixed incomes to move to safer havens.
Amazing how nobody remembers that…

You need to expound and articuate more. I don't understand the analogy with Dell products. PC's unit share still holds a 95% v. 5% domination; OS Apple has about 10%. (PDA effect.) But this is not about your love for Mac and Steve Jobs's sleek look on stage. It's about social trends and their interaction with the economy and taste and style phenomenon. Fascinating stuff really. Weigh in appropriately.

@Posted By Tony Esposito NY, NY: September 17, 2009 11:07 AM
You have it bass-ackwards.
Apple is growing and taking market share from the stale entrenched, not the other way around as you are professing. You are just another Apple bashing trader trying to gather support for your rediculous assertions. You belong in Hollywood where dreams seem real to some.

I'm not sure I understand this: "There is a serious negative news item that will hit AAPL soon: the mass consumers will not pay up for the Apple status the way it used to… Hard to say when the buying stops (before or after this info becomes news)". The only "info" or "news" seems to be your opinion that people will start to think like you do and abandon their clear and established preferences. Or is there something else you're expecting? FYI, I have both an old iPod and a video Meizu player, and am probably going to replace it with a Nano for video – anyone who thinks the iPod alternatives are the same thing has never used both.

Alan, here's another illustration: Starbucks. At the height of Starbucks popularity, analysts thought it too would be recession proof because although it was an expensive cup of coffee, people would still want their "Starbucks" coffee, their one indulgence. That's basically what your saying about Apple. But look what happen to Starbucks – Dunkin Donuts and McDonald's, no less, is stealing market share. Trends always change and the current social-economic-cultural climate is ripe for such a change regarding Apple products. (Your 58 year-old cousin anecdote notwithstanding.) Please respond because I think this discussion is a lot more interesting than which analyst was right or wrong or Cramer this and Cramer that. Apple will not go over 200 and will settle back to 175 plus or minus until what I have explained above plays out. Then, I'll let you know what's next at that time.

@Tony Esposito: You do realize that your thesis (that people will somhow "hit a wall" on paying Apple's price points) is about as tired a story as Dell's product line?

Also, Alan: If you really mean "kid" in your post. Who buys it for the kid?

"When Apple stops the "subscription" accounting for the iPhone – assuming they change it for existing accounts – a good portion of that $ 32B will go away."

Where is it going and Why?

You're looking backward and you're not taking into account that trends often take unexpected twists and turns. eg. Grunge became high fashion. Tailored, designer jeans went to torn, pre-faded baggies and for a lot less money in real terms. Apples margins will contract. They've already started reducing prices. Zune or otherwise (there are many and growing), all things change and the current climate is ripe for it.

@jmmx, pdx:

Not that big a portion, if at all and still debt free and tons of cash… With sales booming due to quality , innovation and amazing superior fully integrated products, that are all favorites that are booking record sales, through the hardest recession it's impossible to stop Apple and everyone is switching ( about 50% of all purchases are first time Apple buyers). All this when the rest of this industry has been shrinking for the past few years….

So many people (including some on here) are so clueless on Apple.

This company only has more room to grow in the home computing market, cell phone market and personal gaming system market. Now, with their new Nano, they have gotten another segment (the FLIP) in their hands. Why is this such a hard concept to follow? Unlike Google who cannot grow more and is slowly losing the fight, Apple can ONLY go up with % of shares of these markets.

To tony.. you must be over 40.
show me one kid who's going to buy a 'zune'over an ipod and i'll eat this e-mail. apple owns generation after generation of young people. a cousin of mine who was a pc user for decades just made the switch to mac and cannot fathom why he waited so long. my cousin is 58

p.s. This entry is particularly amusing:

Calyon Securities Shelby Seyrafi 24 Feb 2009 Underperform $90

Ol' Shelby's bosses should probably take a hard look at this analyst's work….

For those of us who don't track analyst scorecards, it would be interesting to know if there are similar variations on other companies such as Dell, Microsoft or Intel.

The other question I've had is whether the change in Apple income/profits due to the pending accounting rule change can be independently calculated, i.e. could each of these analysts figure out/estimate the new EPS for AAPL under the new rules, and apply that relatively linearly to their previous stock estimates.

AAPLinvestor is running behind on at least one of the analysts. Societe Generale has boosted its target to $255 (9/4/2009).
http://blogs.barrons.com/techtraderdaily/2009/09/04/apple-the-iphone-cash-machine/

ex ped: Thanks for the update.

has Shelby Seyrafi been on a leave of absence? $90…. and she still has a job. Man I need to be an analyst; pull a random # out of my arse and take a 6 month vacation.

@ny

You are correct. BUT! remember one thing..

They are talking about changing the GAAP accounting rules. If they do so…

When Apple stops the "subscription" accounting for the iPhone – assuming they change it for existing accounts – a good portion of that $ 32B will go away.

(On the other hand, they may just decide to allow the current "subscriptions" to run through to their end.)

Is there an explanation on how someone like Cramer who admitted to manipulating Apple's stock in the past and was called out on national TV (Jon Stewart) for doing so, still has so much influence? For stock to rise this much in day, it couldn't have been little guys like me and my insignificant 100 shares. This was 10's of thousands of shares – so that means big investors. As a previous poster noted – Apple's fundamentals haven't changed since the introduction of the iPhone – only the analyst's opinions. And Abramansky originally called for a low ($75 target, I think) less than a year ago until Apple trounced through a couple of quarters. Now he's he highest? I think all the small investors investors are getting screwed over.

Cramer caused the rally?? No dir. He merely repeated things that others said a week ago.

ex ped: Well, Fortune.com and Silicon Alley Insider reported the news a few days earlier and the stock barely moved. Cramer reported the same news Tuesday night — telling viewers they "heard it here first" — and Apple jumped more than $6.70 the next day. So yes, I believe Cramer triggered the rally.

There is a serious negative news item that will hit AAPL soon: the mass consumers will not pay up for the Apple status the way it used to and will now opt for the other cheaper versions of the same product; this will reduce the overall projected number of Apple units as well as shrink margins when Apple lowers their prices to compete (as they already have started to do). Hard to say when the buying stops (before or after this info becomes news) but Apple will settle back to 165-175 at that time so shorting at 188 to 198 has less risk than one might think right now in this Mad Money environment.

Apple broke 200 briefly in January 2008. Their profitability has only increased since. The iPhone is a huge hit, with NO competition in sight. Over 90% of the planet still uses Windows, which means Apple can (and probably WILL) increase it's market share 10 fold in computers. I think even the high estimates are very conservative. They are based on the fact we are in a deep recession (which may some day end) and are assuming linear earnings growth. I think accelerating earnings growth is far more likely, because we are probably low on AAPL's "growth curve".

Apple has been a victim of rampant Hedge Fund and private distort and short tactics since it broke $200, about 2 years ago. It then fell with the market when it melted down. Anyone following Apple knows that there's absolutely nothing in it's fundamentals that justifies it's last 2 years of performance. It is now exactly where it was when the financial crisis hit us and has proven that it is recession proof and king of technology innovation. It should easily (with it's 32billion in cash and no debt ) be in the $275 range especially with a product lineup like it now has ready for the holiday season. This Xmas, retail will be ALL Apple products – count on it.

Thanks for the data.

I hate to defend analysts but 6 months ago no one could really predict the current recovery and rally.

That said… It is clear that that most of those jokers do not really understand Apple, as a company or as business.