Is Apple Really Worth More than the Sum of Microsoft, Dell, Google, Facebook and HP?

Because that’s what the market cap suggests:

But not the book value:

Nor revenue:

And nor earnings before interest, taxes, depreciation and amortisation:

The data suggests that relative to other tech companies AAPL is significantly overvalued. And going forward there is no guarantee that AAPL can justify today’s value by keeping up its dominance of the sector. Tech is an extremely fickle and fast-changing sector where one year’s turkey can be next year’s prize pig. And AAPL’s product lineup is still dominated by products developed under the charge of Steve Jobs — it will take a while longer to fully assess whether or not AAPL can succeed at the same magnitude over the entire product cycle from conception to sales without his leadership.

But I doubt that anything like a sober look at the data will stop the Apple bulls. Because this time is different, right?

 

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31 thoughts on “Is Apple Really Worth More than the Sum of Microsoft, Dell, Google, Facebook and HP?

  1. Apple has already lost dominance of the smartphone market, Samsung outsells it.

    Its the ultimate brand.
    Thats all it is, a brand.
    Thats all it was when it dived last time, and stayed dived for two decades

  2. Now you’ve done it…

    It’s safer to draw a picture of Muhammad, then post a youtube video of you taking a dump on it than it is to question the value of Apple (and I think you’re supposed to bow your head when you say it).

    I’ll miss you being alive, John

    • Hey if AAPL wanna send me a complimentary iPhone5, Retina Macbook Pro and a Thunderbolt display than I might reconsider my valuation.

      (I’m kidding). They make great products. They deserve to be worth more today than any of the companies I compared them to.

      But not more than them all put together!

      • Just very curious to add:

        Furthermore, AAPL’s success largely also depends on Foxconn’s ability to produce their great products in affordably prices. Based on the informations out from various Chinese media sources, it seems that Foxconn has more and more difficulties in keeping what make Apple continue to success in affordable pricing. Such as they are having incresing trouble to find enough Skilled cheap Chinese labors (labor shortage /or hard to find the needed labor force is common now) in China, 2) All labor costs are increasing a lot, 3) component materials prices are up, 4) Production management costs are up, 5) Land/Factory costs are increasing.

        So how Apple can continue to make good profits while Foxconn makes very little and very likely make non profit at all or even lose money making the iXXXXs in the future?

        May be Apple will eventually go into robotic manufacturing technololgy. But wait! Apple has no manufacture to speak of. Unless if you see Foxconn is Apple’s manufacture production line, sort of at least for the time being? So will Apple to contract some different manufacturer(s) in and let the iXXXX to be made in the U.S when they go into the i-robotic production technology in the future?

        But it’ll be for a quite a while when that happens. Wonder what Apple is doing with their tons of cash? Do you think they already started to invest into the company’s future iRobots manufacture adventure yet?

        Or may be Apple is and will continue to invest in Fox-conn which just bought Japan’s Sharp recently? Then Apple will be still making their iXXXX in China’s robots?

        Or may be Fox-conn is just a part of Apple that Apple is the Lord presides in Sillicon Valley in the U.S while Foxconn is the Servants reside in the servants’ quarter in China?

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  5. Another home run from Aziz. By the way, the main message I am getting from the above charts is that Microsoft is more overvalued than Apple and is in a bigger risk of drop.

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  7. In order to understand the Apple market-cap and valuation you need to consider 2 additional things:

    1. The holders list – Just take a look at the largest holders of AAPL and you’ll see what I mean.

    2. Helicopter Ben and his printing machines (related to point #1) – I suspect that a large part of the Apple “over-valuation” is actually negative valuation of not only the rest of the sector, but of the rest of the entire economy. When our two best known exports are dollar bills with no intrinsic value and almost zero marginal cost of production and the IP value of iPhones, iPads, a few Macs, and the collective information of millions of relatively deep-pocketed users, additional INFLATION of the money supply is going to swell the value of the only real asset.

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  9. “They make great products. ”

    Do they?
    Serious question, everyone repeats it, but go back to first principles and prove it.

    The Nano is 5x as much as a Sandisk Clip, for? What?
    The Iphone looks like a childs toy compared with the S 3.
    Google is bringing out an Ipad Killer
    The Macbook is generic x86 parts in a slim box.

    “Apple, buy our products and you will be a better person”

    Which just is not the case, and its only a matter of time until the world runs out of morons with disposable income searching for validation.

    My employer has just signed a deal for Lumias to be our new phone.

    • I can’t run Logic Pro or Final Cut on Windows without some serious hacking. And the Macbook Air is leagues ahead of the other x86 ultrabook competition; on heat generated, shape, weight, comfort, quietness.

      • Apple products work amazingly well. A colleague re-sold his iPad on Craigslist for $400 a couple years after he bought it. You just cannot do the same reselling with Microsoft (or even Samsung) products, and the reason is because they are amazingly well built devices.

        Their software works great, and looks gorgeous. Microsoft is getting huge flak for its Windows 8, while Apple is just perfecting their OS in a rather boring but very effective way. Like a batting champion routinely going 2 for 4, they are consistently providing a great OS.

        Apple has real, devoted fans and they deserve it. They won’t vaporize like the 2000 Nasdaq or South Sea Company, instead I believe they will drop a bit and plateau for years like Cisco–another fantastic company but not worthy of their immense market cap a decade ago.

      • Which is great, for a TINY minority of people.
        But your arguing Spyker should be the worlds biggest car firm.
        Its not, and never will be.

        As I said, I remember the last apple war, they lost, they were crushed, they were so badly beaten, they didnt pay out a dividend for seventeen years.

        Everything you say now, was true then, but it just didnt matter, right now, Apple iPhones have already fallen.

        Right now, today, apple has already lost dominance in the mobile phone arena.
        5 years, thats what “innovation” gets you.

        The clock is ticking, and its ticking fast, how long until the iPad is no longer the best selling tablet?
        2015?

        The Macbook never even was the best selling laptop, because 90% of people buy the $300-350 HP/Compaq

        • Well in my view the iPad has a better interface than anything else in the mass market, but your points are taken. I am not a typical consumer; I was using Macs in 2004 for music and design software, and I probably will be using them after everyone else moves onto something else. Shame Apple are doing everything possible to throw their old customers under the bus (e.g. no update for Mac Pro workstations in 3 years).

  10. Aziz, this post is silly. Market cap is not value, it represents equity; this is not the same as the value of a company. Book value is largely irrelevant as it represents historical value only, and has little to do with current market reality. Total revenue is also irrelevant – it does not say anything about profitability. Looking at EBITDA is useful, but looking at the number without considering growth is bad. I am not an Apple fan, and take no stance on whether it is overvalued or not ,but this post misses the mark completely.

    • As I said, revenue is an irrelevant stat to be looking at. Please examine profit margin, EBITDA margin, EBITDA growth, leverage, market position, brand image, etc… there are a ton of factors you are not considering. Yes, it may very well be overvalued, all I am saying is that the graphs you’ve posted are not the right ones to be looking at for valuing a company.

  11. I was with you ’til brand image and market position, which in the tech sector can change rapidly and so are semi-relevant at best. Leverage (or lack of) is probably AAPL’s greatest strength right now. Still, lack of leverage hasn’t stopped certain tech companies trading sidewards for years simply because they got to a dominant position and couldn’t find new ways to grow.

    To build a bullish case for AAPL, you’d wanna start with this chart:

    AAPL Net Income Chart

    AAPL Net Income data by YCharts

    But seems like a transitional position, not a new normal. We’ll see.

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  14. May I add you need to look at EBIT/Capital (Cashflow to shareholder funds) to see if the returns on Capital employed is increasing or decreasing. Usually a terminal business with flabby staff and management will show a decreasing return, as more capital is “thrown under the bus” to keep the business going. I see iProducts everywhere. Most of the cool kids have iProducts. Geeks have better products but cool kids are not necessarily bright kids. Pester power is very important.

    • EBIT is used because Depreciation/Amortisation is still cashflow in a technical sense. If you waste money buying a capital item you need to see the return from that capital item.

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