Apple Inc to join Dow industrials index this month, replacing AT&T Inc

Business Financial Post ^ | 03/06/2015

[SeekAndFind]

Apple Inc. will join the Dow Jones Industrial Average on March 18, replacing AT&T Inc., in the first reshuffling since September 2013.

Apple holds a market capitalization of about US$736 billion, making it the largest publicly traded company in the world. AT&T, by contrast, has a market value of US$176.5 billion.

Shares of Apple were higher in early trading, gaining 1.3% to US$128.02, while AT&T’s shares fell 1.3% to US$33.55.

The changes will push the number of technology-related companies in the 30-member gauge to six and boost their influence even more as the tech giant joins Microsoft Corp., Intel Corp., International Business Machines Corp., Cisco Systems Inc. and Visa Inc.

AT&T is being kicked out after falling 4.5% in 2014. The changes will take effect with the start of trading on March 19.

[Swordmaker]

If it can't, won't this be considered a "bubble" in retrospect?

No, because it was producing value in relation to its stock price. Read what i wrote. The estimated PE for Apple for 2014 is going to be only ~15. . . i.e. the stock will sell for only 15 times earnings. That is WAY under valued. That represents an anticipated 6.66% return on investment on a stock that has $188 BILLION dollars in liquid assets! That is totally insane! You can get pretty close to that return investing in some mutual funds that have no where near that kind of liquidity. . . much less a stock that is paying quarterly dividends and is simultaneously buying back stock! More insanity to price a GROWTH stock at such a ridiculously low price! Some analysts are holding that Apple is FOUR TIMES underpriced. . .

Apple generated $75 BILLION in revenue for a market cap of $750 BILLION. . . but that is just one quarter. Multiply that out by FOUR QUARTERS and Apple is generating $300 BILLION in revenue! By profit, assuming equal quarters, which won't be true, it would be $18 x 4 or $72 Billion. . . or pretty damn close to a PE of 10.5!

Even at the estimated 15, we are looking at an average $50 BILLION a quarter. $200 Billion a year in revenues. Show me another money machine producing any where near as well.

Any company that produces like that can never be called a bubble. It is valued correctly or way too below its actual value. You just want it to be a bobble because it is Apple.

These are just facts of Finance and Economics. As I said before, a bubble is a market or a stock that is vastly over priced for what it can legitimately produce in real value i.e. wealth. Apple IS producing way above its competition and similar businesses in its industry so it cannot be a bubble.

[Star Traveler]

Well, as for me, I think there are more variables to account for than just the dollars ... to have an equal comparison to what is going on today. And those variables could alter the equation quite a bit.

I don’t think it’s possible to make an exact equal comparison over the years, and match it up to today. I think today’s comparison, across the board with all the other companies out there today ... is the definitive and valid comparison.

[Swordmaker]

It’s not that Apple did not have to grow to this point now, and did not have to perfect their business to the point it is now ... they did ... and NOW they’ve become the most successful business of all time. That’s where they’re at today.

And that is true. Apple has grown a business that is truly worthy of the value, not the over-inflated business that Microsoft, GE, Amazon, eBay, Google, and the others who have stocks that sell at many multiples of their earning ability. If you can take your money out of those businesses and put it in a bank paying a ridiculously low interest rate and get a better return, WHY INVEST IN THEM??? If they are growth companies, there may be some argument that you are holding for future value, but not if there is no future end game for them.

Apple's stock went through 4,200% appreciation in value since 2000 because it was a growth stock. In the past three years, it first switched to a dividend stock. . . and then suddenly returned to being a growth stock that also paid dividends, the best of both worlds! Not only that, but Apple was agressively buying back its own stock, increasing the value of its outstanding shares.

Yet Wall Street loves the high PE stocks of Amazon, eBay, and Google, and eschews Apple. . . why? Good Question. Apple is not your traditional stock and the normal investing rules seem to not apply to Apple. . . and the analysts haven't a clue how to evaluate Apple. They continue trying to treat the iPhone as a commodity phone, when it clearly is not and does not compete in that market.

[tacticalogic]

Show me another money machine producing any where near as well.

Providing the evidence to support a claim is supposed to be the responsibility of the person making the claim.

[tacticalogic]

It’s not that Apple did not have to grow to this point now, and did not have to perfect their business to the point it is now

More gobbedlygook.

[Star Traveler]

Well, the APPLE-HATER CULT is not known for its comprehension ... LOL ...

[tacticalogic]

Well, the APPLE-HATER CULT is not known for its comprehension ... LOL ...

Predictable name calling and personal attacks.

[Star Traveler]

You fit the profile ... :-) ...

[Swordmaker]

Providing the evidence to support a claim is supposed to be the responsibility of the person making the claim.

No, you have to find evidence to prove my contention wrong, to falsify my claim. I don't have to prove my claim wrong, you do. Find another publicly traded company that has produced more than $18 Billion dollars in profit in a single quarter. Frankly you cannot. Ergo, my case is made.

[Swordmaker]

Predictable name calling and personal attacks.

I see you accepted the sobriquet. . . and the description. He could have just been making a general observation. You did not have to assume he was speaking about you, but you accepted delivery because you knew you were doing exactly what he stated. Hilarious.

[tacticalogic]

I see you accepted the sobriquet. . . and the description. He could have just been making a general observation. You did not have to assume he was speaking about you, but you accepted delivery because you knew you were doing exactly what he stated. Hilarious.

And more of the same from you.

[tacticalogic]

No, you have to find evidence to prove my contention wrong, to falsify my claim.

No I don't. If you can't back up your own arguments with sufficient evidence to support them, then you don't have any reasonable grounds to expect anyone to believe you.

[Swordmaker]

I can see you have never done any formal debating since you have no clue about the proper argument format. You claim I have to prove the negative of my argument. Apple has produced MORE profit in a single quarter than any other business in history and you say that I have to prove more than that? Why? That is indisputable. It was all over the business news.

However, since you are so dense and think I need to provide more evidence, I shall. . . and are implying that I am a liar. . . even though you have provided absolutely ZERO countering evidence, as is typical of you Apple-hating trolls, I will do as I usually do, prove you wrong.

Apple is way down the list of companies ranked by revenues.

Revenues are all well and good. . . but it's like Market Share. Unless those revenues stick to your fingers and in your pocket, they mean NOTHING. Unless you want to count certain Government national banks like the Industrial & Commercial Bank of China's profits of $ 42,718,000,000 with assets of 3,124,886,000,000 (that three TRILLION dollars). . . and the US Government's Fannie Mae withe profits of $ 83,963,000,000 on assets of 3,270,108,000,000 (another $3 trillion in real estate loans), There is NO OTHER COMPANY IN THE WORLD with profits like Apple's!

Profits of the worlds' largest revenue corporations in order of PROFITS:

WORLD CORPORATIONS IN ORDER OF PROFITS — 2014
Corporation	US Rev. Rank	World Rev. Rank	Revenue	Profit Rank	Profits
Apple Inc.	5	15	$170,910,000,000	1	$37,037,000,000
Exxon Mobile	2	5	$407,666,000,000	2	$32,580,000,000
Samsung Electronics	n/a	13	$208,938,000,000	3	$27,245,000,000
British Petroleum	n/a	6	$396,217,000,000	4	$23,451,000,000
Chevron	3	12	$220,356,000,000	5	$21,423,000,000
Berkshire Hathaway	4	14	$182,150,000,000	6	$19,476,000,000
China National Petroleum	n/a	4	$432,007,000,000	7	$18,504,000,000
Toyota Motor	n/a	9	$256,454,000,000	8	$18,198,000,000
Royal Dutch Shell	n/a	2	$459,599,000,000	9	$16,371,000,000
WalMart	1	1	$476,294,000,000	10	$16,022,000,000
Volkswagon	n/a	8	$261,539,000,000	11	$12,071,000,000
Total Oil	n/a	11	$227,882,000,000	12	$11,204,000,000
Sinopec Group	n/a	3	$457,201,000,000	13	$8,932,000,000
China State Grid	n/a	7	$333,386,000,000	14	$7,982,000,000
Glance	n/a	10	$232,694,000,000	15	$ 7,402,000,000

[adorno]

You keep talking about the ‘Apple Hater Cult”, but, not being fanatical about a product or a company has nothing to do with ‘cultism’. On the other hand, loving a product or a company, to the extent that people might go into convulsion and anger tantrums, like you are doing, is very indicative of a cult. The Apple cult is so dangerous, that, a Jim Jones type might start offering some ‘Apple Ade’ to the cultists, just so they can live a normal life again.

All that aside, the Apple bubble is not about the earnings; it’s about the illogical rise of the stock to a very high market cap. No company with one product driving their earnings, should have a stock flying so high. Like I’ve said, when the iPhone starts to be regarded as nothing special and nothing that should command the premium prices that Apple is gouging their loyal customers with, then, the stock will have a steep drop to a level that will be more representative of it’s true value, perhaps around #200 billion or below.

Remember that you heard it here first. Bubbles don’t last forever, and bubbles are not just about earnings. Heck, many companees in the dot-com boom era, didn’t have stellar performances, and what hey had was irrational exuberance bringing up teir stock prices to undeserved levels. Those companies either went bust or got downsized tremendously.

Apple is a stock bubble; it’s riding high on earnings driven by, mostly, a single product. Apple needs to do something quick, or they will, for certain, ‘burst’ like all other bubbles.

[tacticalogic]

The proposition at hand is that Apple is more successful than any company, ever. You still have a lot of years to account for.

Or you can just admit that you don't really know if it is the most successful "ever".

[Swordmaker]

Or you can just admit that you don't really know if it is the most successful "ever".

Actually, I do know.

This list has all global quarterly earnings of all time, limited to earnings of more than $10 Billion in real value (June 2011).

Largest corporate quarterly earnings of all time

#	Company	Industry	Country	Year	Fiscal Quarter	Report Date	Earnings (Billion)	USD Inflation to June 2011	USD Real Earnings (Billion)
1	Fannie Mae	Government-sponsored enterprise Public company	United States	2013	1Q	9 May 2013	$58.7	0%	$58.7
2	Apple	Consumer electronics	United States	2015	1Q	27 January 2015	$18.04	0%	$18.04
3	Gazprom	Oil and gas	Russia	2011	1Q	30 August 2011	$16.24		$16.24
4	Royal Dutch Shel	Oil and gas	Netherlands   UK	2008	2Q	30 June 2008	$15.68	3.16%	$16.18
5	ExxonMobil	Oil and gas	United States	2008	3Q	30 September 2008	$14.8	3.17%	$15.27
6	Apple	Consumer electronics	United States	2014	1Q	27 January 2014	$13.10	0%	$13.10
7	Apple	Consumer electronics	United States	2013	1Q	23 January 2013	$13.08	0%	$13.08
8	Apple	Consumer electronics	United States	2012	1Q	24 January 2012	$13.06	0%	$13.06
9	ExxonMobil	Oil and gas	United States	2007	4Q	31 December 2007	$11.66	7.47%	$12.53
10	Apple	Consumer electronics	United States	2012	2Q	24 April 2012	$11.6	0%	$11.6
11	ExxonMobil	Oil and gas	United States	2005	4Q	31 December 2005	$10.71	14.7%	$12.28
12	ExxonMobil	Oil and gas	United States	2008	2Q	30 June 2008	$11.68	3.16%	$12.05
13	ExxonMobil	Oil and gas	United States	2006	3Q	30 September 2006	$10.49	11.25%	$11.67
14	ExxonMobil	Oil and gas	United States	2006	2Q	30 June 2006	$10.36	11.25%	$11.53
15	ExxonMobil	Oil and gas	United States	2008	1Q	31 March 2008	$10.89	5.71%	$11.51
16	ExxonMobil	Oil and gas	United States	2006	4Q	31 December 2006	$10.25	11.85%	$11.46
17	ExxonMobil	Oil and gas	United States	2005	3Q	30 September 2005	$9.92	13.54%	$11.26
18	Royal Dutch Shel	Oil and gas	Netherlands   UK	2008	3Q	30 September 2008	$10.90	3.17%	$11.25
19	ExxonMobil	Oil and gas	United States	2007	2Q	30 June 2007	$10.26	8.34%	$11.12
20	ExxonMobil	Oil and gas	United States	2011	1Q	31 March 2011	$10.69	1.01%	$10.8
21	ExxonMobil	Oil and gas	United States	2011	2Q	30 June 2011	$10.68	0%	$10.68
22	ExxonMobil	Oil and gas	United States	2011	3Q	30 September 2011	$10.33	0%	$10.33
23	BP	Oil and gas	United Kingdom	2008	3Q	30 September 2008	$10.0	3.17%	$10.32
24	Apple	Consumer electronics	United States	2014	2Q	23 April 2014	$10.2	0%	$10.2
25	ExxonMobil	Oil and gas	United States	2007	3Q	30 September 2007	$9.41	8.27%	$10.19

Out of a list of 25 best quarters in history, Apple occupies six of the slots, positions 2, 6, 7, 8, 10, and 24. All of those quarters have been in the last three years, four of them in the last two, three of them in the last year.

The Number one position is occupied by the quasi-government entity FNMA, which is only there because of an artificial political move by the Obama regime. . . the governmental bailouts to save it from bankruptcy.

Fannie Mae had a whopping big quarters and year in 2013 because the US Government bailed FNMA out because of HUGE LOSSES of $59.8 Billion in 2008, $74.4 Billion in 2009, and even more losses in 2010. . . and they booked those huge multi-Billion dollar bailouts from tax payer funds as income recovery in 2012 and 2013. Without those non-real-revenue funds, FNMA would have still been in the red on 2013 as they paid out funds on foreclosed property loans.

There are two other larger organizations that are not listed, but both are government owned banks in China which mandate that all businesses in the country do business with them and mandate their levels of profit. . . they do not qualify for inclusion. . . and really Fannie Mae being a quasi-government body with over 3 Trillion in assets should not either.

[Swordmaker]

All that aside, the Apple bubble is not about the earnings; it’s about the illogical rise of the stock to a very high market cap. No company with one product driving their earnings, should have a stock flying so high. Like I’ve said, when the iPhone starts to be regarded as nothing special and nothing that should command the premium prices that Apple is gouging their loyal customers with, then, the stock will have a steep drop to a level that will be more representative of it’s true value, perhaps around #200 billion or below.

Adorno, bubbles are always about earnings. Always. There is nothing illogical about Apple stock selling for 16 times earnings. Not one blasted things in the world is illogical about that. What is illogical is for a company to sell for 50-70 times earning such as Google, ebay, and Microsoft did back in 1999 when it really was a bubble to went POP! due to irrational exuberance and impossible to fulfill expectations for value to meet that level of stock value with its ability to create wealth. Amazon.com selling at 450 times earnings, or eBay at 1140 times earnings are completely illogical. Not Apple which is selling at a very conservative 15-16 times earnings can be no where near described by any sane person as a bubble.

You want it to be a bubble because of your hatred for Apple. . . but you can give no logical evidence for your reasoning. Instead you insist on your "one product" theory against all evidence presented to the contrary. . . and the facts which completely shoot down your claims. You show complete ignorance of Economics. . . Bubbles are ALWAYS about earnings, or rather the lack of earnings to justify the astronomic stock prices. That was true of the original Tulip Bulb bubble in the Netherlands, the Dot Com bubble of the late 1990s, the housing price bubble of the mid-2000s, but it is not true of Apple. There are ZERO signs pointing to Apple's stock value being a bubble. None.

[tacticalogic]

So Apple is actually not at the top of the list.