Apple and Wal Mart

[Dburn]

Apple is about 1.5% away from taking over Wal-Marts spot on the S&P 500

[thunar]

Grrr. If I only had more money. I'm just keeping my SPY puts and FAZ calls on a rotating basis for now.

[Dburn]

Grrr. If I only had more money. I'm just keeping my SPY puts and FAZ calls on a rotating basis for now.

To me it's just one of those great Business stories. The worst part is I had an extra 10G to buy stock in 1997 when Jobs took over after being gone for 12 years when John "Sugar Water " Scully fired him. I thought" I should buy this stock which was at $7.00 ( split adjusted to $1.50) . 10G would be worth 500G now. The market Cap was 4 Billion. It has gone up 50x through two major market crashes since. That in and of itself is amazing. It got cut in half at the worst part of the crash but not because of the crash but because people thought Jobs just had months to live.

If he had been healthy I think it may have suffered a 10% loss . Once it passes Wal-Mart, the next one is Microsft which it's 20% behind and Exxon Mobile. They have some work to do to get to kick that company out. Either that or oil prices nose dive. I think his brush with death probably did some good for his over-sized ego. If anyone deserves a big head, he does. But generally when people get like that they feel invulnerable and that's exactly when shit starts to go wrong.

The Company has 40 Billion in Cash. They have more than the anyone right now. I think the USA ended it's fiscal year with 45 Billion in cash. HAHAHA ( We are so fucked)

[Dburn]

AAPL is ahead of WMT as it takes out new all time highs this morning. Not by much. It will seesaw. But, I'd say this is a done deal.

[thunar]

Somebody explain to me how the minority computer maker and minority smart phone maker is bigger than Walmart and gaining on MS, which provides the OS for 90% of all business and home computers...

[Dburn]

Somebody explain to me how the minority computer maker and minority smart phone maker is bigger than Walmart and gaining on MS, which provides the OS for 90% of all business and home computers...

I figured that would get a reaction. They are 20% away from Microsoft and check this, 33% away from Exxon Mobile. If you look at forward and trailing PE it's way under than say Amazon or B of A HAHA.

There is nothing out of line with the valuation ratios. It must make the Walton's fucking crazy. 2 Million employees. All that Land and stores, international. Yet earnings wise here's how it stacks up

APPLE:
Forward PE: 19.7
Trailing PE about 22
Net earnings last fiscal year 9.36 Billion. (Note, Y over Y is around 50% growth in earnings)
Last quarter: 3.36 Billion net. This is a 65% increase in 4th Quarter last year. That works out to 14 Billion a year.
34,200 employees.
Profit per annum per employee 2009: $291,176
This year, it should be $380,000

WMT
Forward PE: 12.3
Trailing PE about 14.59
Net earnings last fiscal year 14.4 Billion. (year over year is flat)
Net income 3rd Quarter 3.31 Billion.
Full time employees 2 Million
Profit per employee per annum: $6,650

Two things to key in on is growth rate and earnings per employee. Compare this to Amazon who has a 35x forward PE and a 67 trailing PE and annual net income of 909 Million with $37,000 in earnings per employee.
Growth rate is high, but it's ratios makes Apple look cheap.

$10,000 invested in Wal Mart Jan 2000 to Jan of 2010 $9850.00
$10,000 Invested in Apple in Jan of 2000 to Jan of 2010 $87,100
$10,000 Invested in AMZN in Jan of 2000 to Jan of 2010 $20,000

If you look at Wal Marts chart all the way back, they hit a high of $70 in 1999 and then dropped to $54.00. It's been a dead stock ever since. They don't have a big enough margin to pay a dividend. That have 1/4 the cash that Apple has on Hand and their fixed overhead costs are huge while Apples is much lower. Basically when Sam died and the stock was split among the siblings and wife , they have been content to sit on their 100 billion ( 50% of the company). People won't invest as readily company that is 50% owned by the family and is so Chintzy on dividends.

They tried to go International and grow that way but they really have hit a roof. Not a Plateau. Apple on the other hand is not controlled by any one person stock wise. It has a huge growth story behind it the biggest recession since the great depression. Wal-Mart who should be doing much better right now because of the perception of low prices isn't doing much. I remember in the 90s they used to give employees stock options. The employees were much more involved. Then when Sam died, the stock stagnated , eventually the options were converted and sold and that's when they started beating their wages down to try to squeeze profits out to please Wall Street. None of the Walton's are really active in the operation. Basically Sam's kids are a bunch of assholes as well as his wife. People were willing to put up with that ownership when Sam was alive because it was a growth story. Not anymore. .

They have gone all over the world looking for stores to open up. You would not believe their fixed overhead costs. They have to work real hard to squeeze that profit out . My guess is cash is at 6 Billion because they stretch out payable payments. Apple pays on time. They are a very demanding customer but they don't squeeze on price like Wal-Mart and then stretch payments. They are more focused on quality and delivery with 64x a year in inventory turns. Most of their assembly is done in China now, yet they still manage to employ 34,200

Most Of Walmarts stuff is made in China and they employ 2 Million. They can't earn much money with out beating it out of employees and suppliers.

Meanwhile , one thing you don't see on Amazon's balance sheet is their IP and distribution know how. How much is that website worth? They also have a huge technology platform where they sell computer services and the most modern distribution warehouses ever. They do a lot of fulfillment for their competitors it's that good. Bezos has a lot of skin in the company still. He is young at 47 or so. I thought he was full of shit 12 years ago, but he has proved all his critics wrong. I think he and Steve jobs are probably pretty close in Net worth and 7 years apart in age. They still have a passion for the business.

The Waltons are kind like "meh" . "I suppose I should see one store a year but I refuse to buy any of that junk. God, we really need to spend a few billion and get rid of that minimum wage and get a exemption for employing illegals. Once we get the wages down to $2.00 per hour for everyone , we can then say no American wants to do that kind of work."

That's pretty much they way they think. Apple's people are well paid. You don't hear of employees qualifying for medicaid. Wal-Mart passes out medicaid applications with their reusable employee welcome kits.

Kinda says it all there.

[thunar]

So many gems here

Basically when Sam died and the stock was split among the siblings and wife , they have been content to sit on their 100 billion ( 50% of the company). People won't invest as readily company that is 50% owned by the family and is so Chintzy on dividends.

Basically Sam's kids are a bunch of assholes as well as his wife. People were willing to put up with that ownership when Sam was alive because it was a growth story. Not anymore. ....

Yeah, they are nuts, with their dozen stories underground bunker with hydroponics and medical staff. And their funding of basic math only schools. No Literature, just simple sentences with phonics. Keeping the population dumb.

Remember that shit I about the Texas School Board?

Around this time, social conservatives decided to target seats on the school board itself. In 1994 the Texas Republican Party, which had just been taken over by the religious right, enlisted Robert Offutt, a conservative board member who was instrumental in overhauling the health textbooks, to recruit like-minded candidates to run against the board’s moderate incumbents. At the same time, conservative donors began pouring tens of thousands of dollars into local school board races. Among them were Wal-Mart heir John Walton and James Leininger, a hospital-bed tycoon whose largess has been instrumental in allowing religious conservatives to take charge of the machinery of Texas politics. Conservative groups, like the Christian Coalition and the Eagle Forum, also jumped into the fray and began mobilizing voters.

http://www.washingtonmonthly.com/featur ... blake.html

They don't have a big enough margin to pay a dividend. That have 1/4 the cash that Apple has on Hand and their fixed overhead costs are huge while Apples is much lower.

True Enough, but I don't think one can compare Apple to Wally. Apple really has little to go on, it's closed business model is obsolete. As soon as a real player like Vivendi Universal or Sony gets interested in Media distribution, competition will emerge and they'll knock iTunes off the map:
"50 cents for 50 cent. Get Barbara Streisands' back catalog, 50 songs for $5.00!"

Also, people want porn, so the bikini-free and flash-free (no facebook casual games, very popular, everybody in this office plays Mafia Wars and Farmville, from 18 to 50 years old) iPhone will be ditched once word gets out about it. In the long term, RIM and Nokia and Samsung are going to rule the roost, they still dominate the cell phone market. Apple's rush to market and making their fanboys be their alpha test their phoe was a one-off. They have a legacy of failed products like AppleTV and the soon to be iPad. Why anybody would pay $499 for an iPhone with a big screen and cell phone OS without the ability to be a cell phone, is beyond me.