Hi Everyone,
I'm back again, so just thought I'd add my 2 cents to the mix.
Apple is now doing what I always knew they could: manage their business well. Apple is a company with $6 billion in sales and 140 million shares - it should be easy for it to earn $2 a share on that alone. This is gratifying because in the short term, all the street sees in the $$$ on the bottom line.
However, now that Apple has done that, they face the more daunting task, and the one that will really define AAPL stock for the next 5 years: growth. Apple has gotten pretty much all the gains it will get from margin improvement. Apple needs top-line growth to help them sustain the type of earnings growth that wall street demands.
If you assume, long term, that Apple's margins will stay where they are (unlikely, since they are fairly high now), Apple needs to start generating revenue growth of at least 15% to make them credible.
Some people argue that the most important thing is strong unit growth, in the end, it will be the tech market that decides. I think that the stock and tech markets are wound around each other: people evaluate technologies nowadays based on the stock performance of the company pitching them.
If Apple delivers top-line growth, wall street will declare the turnaround official. If that happens, expect to see good progression from the stock (ideally, if margins remain the same, at least 15% a year).
In the short term, beware, Apple's P/E is a little high now given their earnings growth rate, etc. I'm not saying anything bad will happen - however, there is a lot of the good news priced into the stock at this point.
Well, hope that was long enough for you. :) Feel free to ask any technical or corporate culture questions. Boy, the mood on the campus is AMAZING these days. Everyone is feeling good and in-the-money.
BTW 8.5 looks great. Good things coming on the HW side too. |
