Zeev's Turnips Patch-No Politics (ZEEV)

[langostino]

F.R. - one thing on AAPL

"I'm sure they stuffed the channel"

Honest to goodness, you really do just talk out your %#@ don't you? If you had access to the sales channel or knew doodly-squat about the details, you would know there's no way they could stuff the channel because they're still having trouble ramping production, particularly on the mini. The parabolic growth curve has been so exponential that they still haven't got enough manufacturing capacity.

There are plenty of real reasons to think AAPL is severely overvalued here, but artificially bumped sales figures due to channel stuffing is not one of them. As for Jobs, he's not leaving, but if he did, a company that profitable sitting on the intellectual portfolio it has would not be worth cash. I'm not sure if that's a joke comment or just plain idiocy. If you want a starting point for valuing the IP, you can begin with the operating system. Refer back to 1997 when Apple purchased the bare bones skeleton of it for $500 million from NeXT. It would be pretty hard to argue after 8 more years of development and critical acclaim as the superior consumer OS that it would be worth anything less. The Filemaker division could be sold tomorrow for a pretty hefty pricetag. Go through the rest of the properties and you'll find an awful lot of breakup value.

But breakup value is irrelevant at this point, because Apple has gradually transformed itself from a company whose revenue streams were dominated almost entirely by the sale of PC hardware, to one with a much more diversified set of income streams and growing more diversified as every quarter passes. From a business almost entirely dependent on physical PC sales where declining ASPs and lengthening useful lives were creating a downward spiral, they now suck money from a growing installed base with services, software, music and a growing array of peripherals. There is a ton of "hidden" value that has been built up at Apple in the course of the past 6-8 years that has nothing to do with the Dell widget model.

p.s. If you were figuring "back to cash", that would be an interesting moving target. Not long ago, net cash was about $11.75 or so. Today, they've paid off the last $300 million in debt and are sitting on net cash of over $14. When they report in January, the number will go north of $15, and so on and so forth.