Analysis - Apple immune to stock sell-off

[HEXUS]

Indices have declined by ten percent in the past month but Apple is up.

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[TheAnimus]

Hmm I wouldn't like to call anything immune, I also wouldn't like to say with hindsight something wasn't hard to see!

I also did loose a bit betting against em during the credit crunch, after I'd made quite a bit doing so, so they are volatile.

The thing is, they don't pay divs, they sit on a massssssive pile of cash. What are they doing with that cash?

Right now if its in say gold or something which is trust worthy people will be happy, a lot of people in the press have been saying the the continued gold bubble is a sign of distrust with the governmental powers that be, as such people like some other stocks.

I would also say that this title is SEO bate again, because its frankly not true, Apple suffered during the real unrest, if you look at some points it was trading with grater relative drops than IBM. To claim its immune is silly.

Also given that they are sitting on so much cash, they need to make like porsche and develop a hedge fund style group inside themselves. This can then be used to efficently carry out their purchasing, whilst mainting the money in a responsible way.

Failure to do that, to continue sitting on a cash pile could be quite costly if its not invested properly, and if the market suddenly upswings.

As a result I'd compare Apple to a synthetic of someone like MAN and a tech stock which isn't in growth mode.

[Scott B]

I knew you wouldn't let me down Animus. Apple is up when most other companies are down - that's clearly the point I was making, but whatever.

[TheAnimus]

If ever your at one of the meets I'll tell you about my day job in a past life, which involves presenting, whilst I'm not qualified to begin to judge the numbers, it does mean I have access some rather gnarly software for looking at this stuff!

It is very true that Apple is up when most are down, but it did drop too. When you look at the implied volatility (backed out from what the options are traded at) the surface did skew away from the more classic smile for the short term.

The thing that suprises me about apple, which I've been banging on about for years now is how they sit on this massive war chest. What are they doing with that? When you look at it in respect to their earnings it strikes me as a significant part of the valuation and future earnings potential.

As such I'd argue Apple is fairly unique, unlike any other tech stock I can think of.

If you plot its volatility (implied or realised) with MAN group, it looks somewhat similar, but both really did drop price, rise in vol, during the events of the last fortnight. If you then plot it against porsche say, you can see a similar pattern.

So I would say Apple was vulnerable to the sell off, but no investor can really hold that against them, at the time gold and certain commodities were been massively bought into, mining outfits, even commodity investment funds were being hammered on the open market.

To me, what was impressive is that Apple had steady growth before this. After the sell off most companies rebounded mostly, Apple were stable growth before and after.

As for Sony's failures, I'd hazard a guess its easy, after the Japanese tsunami, they took a beating with the hacking issues of the PSN, and quite simply haven't recovered, sales of TVs and the like are down, their supply chain buggered up a bit. A mate of mine went in quite heavily (about 20% of his retirement money) on them after the tsunami de-valued them, ooops. Then again I bought Hitachi ADRs and well should have sold them at 60 but got greedy....

[Scott B]

Fair enough - and I'll confess to a minor liberty taken in the name of headline writing - but I contest the 'SEO bate' (sic) charge. While Apple dipped along with everyone else, over the course of the past four weeks it's up while the indices are down. That's all I'm saying.

God knows what they're going to do with all that cash, and I don't understand the logic of neither acquiring nor paying dividends. But Apple's share price is doing just fine regardless, so it's hard to criticize.

[dangel]

TBH you have to admire them - love or hate them (I'm ambivalent) they're doing very well.

[TheAnimus]

As such I'd argue Apple is fairly unique, unlike any other tech stock I can think of.
.....
To me, what was impressive is that Apple had steady growth before this. After the sell off most companies rebounded mostly, Apple were stable growth before and after.

Fair enough - and I'll confess to a minor liberty taken in the name of headline writing - but I contest the 'SEO bate' (sic) charge. While Apple dipped along with everyone else, over the course of the past four weeks it's up while the indices are down. That's all I'm saying.

True, I guess I'm not disputing that they've had a truely steller, heck 6 weeks, that defy things one would expect them to be correlated too. And as for it being an SEO bate headline, in my world of black n white, 0 or 1 it seems that way...

God knows what they're going to do with all that cash, and I don't understand the logic of neither acquiring nor paying dividends. But Apple's share price is doing just fine regardless, so it's hard to criticize.

Buy IBM

But lets not forgot that plenty of firms which people couldn't understand, were the likes of Nortel or Enron. I'm not saying Apple is going to go bust, just that personally I feel it is overvalued unless they really have something up their sleeve with the warchest. They are not making big inroads into a lot of the developing markets, they are, too simply, too expensive. We are seeing Andriod making leaps and bounds there, and also roumers of Tango the diet coke of Mango from the WP7 platform.

I also think a lot of the fondleslab market is simply going to contract in on itself as the devices are just not quite there yet. What I'm getting at is I could easily see this as a bubble, but alas I couldn't say how it will deflate.

[badass]

God knows what they're going to do with all that cash, and I don't understand the logic of neither acquiring nor paying dividends. But Apple's share price is doing just fine regardless, so it's hard to criticize.

In America, companies have to pay a 30% repatriation tax on any cash they bring in. Seems like a stupid tax to me and most of the tech giants agree. They are lobbying the American government to have a repatriation tax concession so they can bring the cash to the US without paying as much.
I think the concession is a great idea. Loads of companies bringing in hundreds of billions of dollars into the US and either spending it on job creation or simply giving shareholders a dividend might really help kick start their economy.

[DoomMarine]

Thing is in my eyes Apple is a triumph of style over substance. Apple are now happy to eek things out as slowly as possible and jonny public laps it right up. Dont get me wrong marketing wise they are king but as far as the products go ......meh.

As long as Apple have the masses at their whim they will continue to be a success.

[andrewtorr]

just a juggernaught, although I hear people moaning about style of substance for 99% of the people out there apple products just cant be beaten not just only on style but also on ease of use and general reliability.