Store recon: Plano, TX
On September 8, 2008, maverick_rich posted the following:
If there is a recession, it can’t be happening in Plano TX. It especially cannot be happening in the Apple stores.
I went to Neimans to buy my wife and anniversary present (tomorrow big day). After buying her gift I went by the Apple store. It was not packed (seen it worse). But, for a Monday after lunch, it was very busy. I managed to speak to my local contact about sales. He is telling me things have never been better.
iPhones are still flying off the shelves. Just that they now have supply to meet demand. Demand has not fallen. Mac sales and back to school has been crazy. They are now busy with all the transfer from Windows to Mac at the Genius bars. They are sold out of iPods and some of the students, with the back to school program have complained (they “took care” of them however - whatever that means). Macbooks and iMac sales are very brisk. They still have inventory.
Guy (as always) has not clue when the new models come out.
Anyway… for those of you would think we are seeing any slowdown at Apple, please show me the evidence. To me, today and the past week was just another scare tactic to knock the stock down IMHO. Wall Street is not syncing up with reality.
techstock2000 @ September 8, 2008
I paid a visit to my neighborhood store (NYC 5th Ave) on Sunday afternoon around 4PM and there must have been 300 people in there. It was a beautiful day in the 80s with bright sunshine. Sections of the store were roped off to allow for a more orderly shopping experience, the check out had stanchions to allow the line to wrap around a bit and the sales associates were running around like crazy helping people and checking out with their handhelds. What a sight. I was told it was an average day for them!
Re: “Anyway… for those of you would think we are seeing any slowdown at Apple, please show me the evidence. To me, today and the past week was just another scare tactic to knock the stock down IMHO. Wall Street is not syncing up with reality.”
With all due respect, this is not the issue.
Apple is currently and will continue to sell plenty of product.
But when you have a slowing economy with margins under pressure, the street is not willing to pay-up or pay the richer premiums like they will during a bull market.
The day will come, but it certainly doesn’t look like it’s just around a corner.
The valuation of a company is the present value of the continuous value of the Free Cash Flows the company will generate into perpetuity. That is what you are buying when you buy a stock. Backward P/E is meaningless as it provide nothing concrete. Earnings are so manipulated. EBITA would be a better metric. But, general public would get confused.
Anyway… next Q is also meaningless when valuing Apple, or even the next year. If you believe Apple will grow faster than competitors and that it’s growth and cash flows are sustainable, then 1 Q or 2 Q slowdowns should not impact the value of a company. The question you should be asking is “Will Apple dominate the PC. MP3 and Smartphone industries in a few years”. If so, then the company is extremely undervalued.
Rich,
Re: “The question you should be asking is “Will Apple dominate the PC. MP3 and Smartphone industries in a few years”. If so, then the company is extremely undervalued.”
I would agree.
However, the market isn’t looking out that far (a few years) at the present time, and as a result Apple stock will not be rewarded shorter term (6 to 9 months).
Long term investors will probably do just fine.
But for those who continue to get frustrated because the street refuses to recognize that value NOW and pay up, it becomes an exercise in frustration.
Traders will continue to loove it, though.
Another definition for stock price: Price is a momentary consensus of value of all market participants.
In these markets I wonder how many buy and sell decisions are being made based on a Free Cash Flow analysis. Fundamentally the market participants already agree that Apple is a great company for the long term, but what are the majority of participants willing to buy or sell at; at this particular point in time? That’s where the disconnect is between FCF and today’s price.
Of course, that disconnect is always there. The size of the disconnect is what frustrates investors. I think the disconnect would be less without naked shorting. As long as the SEC and Congress continue to allow major traders the ability to sell without locking up a borrowed share it is going to be very dfficult to get close to FCF values.
I don’t see naked shorting as a problem with AAPL. There are plenty of Apple shares floating around. It would not be hard to borrow and sell. Volume selling…
Rich
So FCF is not working and there are plenty of shares being borrowed legally, what does that leave?
Concerns over the global economy? There sure is a large disconnect between FCF and recent price action.