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  • once_on once_on Mar 1, 2013 3:42 PM Flag

    Funny thought: At this rate, AAPL can take itself private and pay off the loan in 5 years with FCF

    EV is $268B, and analysts have them generating about $230B over the next 5 years in FCF ....

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    • So aapl is going to forever sell all its gadgets at record pace? Fact is all big companies hit a wall like msft. Having said that of course aapl is a better buy then amzn at thesr levels.

      Oh yeah, analysts are idiots.

      • 1 Reply to kenji100
      • Kenji:

        AAPL is trading at an EV/EBITDA of just over 6. It doesn't need to sell at a record pace... If it could simply hold profits close to these levels, that is a pretty extraordinary cash flow yield in this environment. While AAPL has earnings risk (as everyone does), it has the cash to weather any storm and, actually, can deploy that cash for strategic acquisitions once the bubble bursts. It would survive for years with no revenue (most of the mfg cost lie elsewhere with partners...). Plus, its global earnings make it a real currency hedge as well... Amazon OTOH....

        Apple can and should sit on its cash and let WS beat it down. When things are at their darkest, then it should deploy the cash to buybacks and acquisitions...

    • Once, any institutional long not selling AMZN and buying AAPL here is just negligent unless they've already maxed out AAPL weighting. The ratio of APPL/AMZN EV is about a factor of 2, where in a year it will be more like a factor of 10 again... I've never seen such a clear way to reduce risk and increase upside simultaneously... AAPL has $150B in cash and can weather whatever comes. AMZN is almost out of net cash (sorry folks, payables are obligations to suppliers) and just raised debt...

      • 1 Reply to techstrategy
      • AAPL needs to do something .. If I were on the BOD, I would double the dividend, and then buy back $80B worth of stock (~ 20% of the company, or 185M shares). Removing 20% of the shares, with a 2x increase of dividend, results in only a 60% increase in payout, even though you increase the yield by 100%. The stock will get back to $550 in a hearbeat with increased demand and lack of supply. The amazing thing is that they would still have $57B in cash, and only about 40% of FCF tied up in the increased dividend.

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