chasing AAPL
Here's what you're chasing after ...
Apple's infrastructure can handle up to $8 Billion in Revenues with only modest increases in SG&A and other operating costs (or so they claim). Plug in 28% margins (their standard), operating costs of $1.8 Billion and you've got operating income of $440 million. Be generous and give them $60 million in investment and interest income (if interest rates rise a bunch in the coming 2 years). After taxes that gives you $350 in net income on 365 million shares, or about $0.95/shr.
FY '03 Revs = $5.8 Billion. So they would have to show 20% growth to get from here to $8 Billion. For comparison, they moved from $6.0 Billion to $7.7 Billion in the boom years of 1998-2000 (the official numbers show it at $8.0 Billion but the last quarter was jacked up between $300 and $400 million by a monster channel stuff, so I use $7.7 for reality's sake).
And if all that goodness happens, you've got a stock trading at 18 times 2005 EPS. In an industry that won't grow half that rate.
No, valuation doesn't seem to matter a whit in this market for time being, and the relative number of buyers to sellers is what will decide whether you should buy for a trade. But if and when valuation comes to matter, draw your own conclusions, but it's getting might close to "priced to perfection" in my book.
Zeev??
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