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Technology Stocks : Apple Inc.

AAPL 278.85

+0.5%

Nov 28 9:30 AM EST

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To: rhet0ric who wrote (22472)	1/14/1999 2:38:00 PM
From: Alomex	Read Replies (2) of 213173

From the Fool: fnews.yahoo.com A larger concern is that Apple has picked the low-hanging fruit of Mac faithful looking for upgrades and that its long-term growth prospects are still sketchy. PaineWebber estimates that of 27 million total industry computer units shipped in the December quarter, Apple's share remains below 4%, or far from its 7%-8% share of the total installed base. Then there's valuation. Apple is currently benefiting from U.S. net operating loss carryforwards that should keep the tax rate at about 10% this year before returning to the mid 30% range next year. So the stock already sells at 22 to 24 times fully taxed earnings estimates for FY99. When valuing Apple, investors should work in a 36% tax rate. But they must also back out the $9.44 cash per share net of debt. If you assume about $2.00 per share in FY99 earnings, Apple's cash-adjusted price is now 17 times the forward estimate, in line with its revenue growth. No doubt, Apple faces continued challenges. Still, a long-term investor might see a company with a consumer-oriented brand and proprietary technology, a company that's regaining market share and delivering operational efficiencies that are tops in its industry. Such a company ought to trade at a premium both to the market and to its own growth rate. (A recording of Apple's conference call is available at 402-220-4030 through 6 p.m. Pacific Time today.)

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