Apple: $300 Or Less, Not $1,000 Or More

Tuesday, April 3, 2012
By Paul Martin

by Karl Denninger

And maybe $100 or less.

C’mon guys, where’s your critical thinking skills.

The lapping up of the Apple lovefest, fanboi hyperbolic chart mavens is disgusting.

And wrong.

And, if you stick with it too long, ruinous to your portfolio.

Let’s just be simple about it: Nearly every hyperbolic chart like this ends in a disaster.In fact, I challenge you find those that have not.

Then there are the amusing predicates (EPS growth estimates) both for the next quarter, this year, and next year. This year, 59%. Next year, 13.7%. That doesn’t quite fit with a near-doubling of the stock price does it?

The $1,000 call is a call for a trillion dollar company — by next year. Something like 2% of GLOBAL GDP and close to 7% of US GDP? Really? You believe that? If so, you’re smoking something.

This is a firm with an operating margin of 34% with a huge percentage of it from hardware. What’s their P/E if that gets cut in half?

You think it won’t? Oh yes it will. This sort of operating margin always attracts competition. It is the reason that our operating margin at MCSNet — a nearly-pure services business — was one of the most-coveted and secret numbers we had. Nobody heard that number in general circulation because it would have immediately drawn people to try to figure out how we were doing it, to be immediately followed by someone forcing us to lower prices in order to keep customers, thereby destroying it.

The Rest…HERE

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