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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: HerbVic who wrote (24077)	4/16/1999 9:25:00 AM
From: Moominoid	Respond to of 213177

Can anyone explain this part to this dumb ol'e hillbilly? I think but don't know that they calculate 50c or so of interest on 11.36 per share cash and they then take that away from the analysts 99 consensus to get two bucks? David

To: HerbVic who wrote (24077)	4/16/1999 10:56:00 AM
From: J R KARY	Read Replies (1) \| Respond to of 213177

I'll try , may be due to the stock being divorced from the company 1st you ain't no dumb hillbilly , particularly if'n you got a cousin who looks like Elvis , makes money doing so and lives in Hawaii ! My guess is that current AAPL management wanted to steer a independent road in its recovery specifically avoiding employee destroying take over attempts , merger offers etc . The iCEO (personality cult) position , along with insider sales and management's timed news silence , let certain (5) funds get too (>60%) much stock . Public perception result ; if you think AAPL is back - buy its products and avoid its stock . My guess again is the EARLY note call is a management step to cure this imbalance . A popular stock issue REALLY helps sell products (set tops , P1 etc) . Jim the K

To: HerbVic who wrote (24077)	4/16/1999 12:01:00 PM
From: Eric Yang	Read Replies (6) \| Respond to of 213177

>> The company ended the quarter with $1.97 billion in cash net of debt, or about $11.36 per share. With a new consumer Powerbook and other goodies in the pipeline, Apple could still do perhaps $2 a share, fully-taxed at 35%,for the year. Net of cash, it's trading at less than 12 times that FY99 estimate. << "Can anyone explain this part to this dumb ol'e hillbilly? I have a sneaking suspicion that it's pivotal." The method Motley Fool uses to determine valuation for a stock is slightly more sophisticated (and probably more accurate way of looking at things) than the typical PE ratio. Their method is still based on Price/Earnings but it makes adjustments to both Price and Earnings before dividing one by the other. For Earnings, MF tries to determine what the real earnings would have been if a company did not benefit from the lower tax rate. The current consensus estimate of $2.70 EPS for fiscal 1999 is based on tax assumption of around 10-15%. If Apple were to be taxed at the 35% rate earnings per share would be closer to $2. For Price, they are factoring in the high (net of debt) cash per share. So while the stock is at around $35.50 per share right now, because each share you purchase has a $11.36 cash value associated with it, the premium you pay is only about $24 per share. Combining these two adjustments, we have a PE of $24/$2 or 12X of FY 99 earnings. By the way Apple's current net of debt cash is $2,922 mil (cash) minus $955 mil (long term debt) which is $1.967 bil. When the convertible notes are redeemed on June 1st, $661 million gets wiped off of Apple's long term debt. As a result, Apple's cash net of debt after this quarter will jump by at least $661 million plus $100+ mil in expected earnings. Apple's cash (net of debt) per share will then jump by over $4 to around $15.8. Eric