Apple: a Berkshire Hathaway Company

Apple would be a great fit for Mr. Buffet.  And since he is on a buying spree...

Apple's stock closed Thursday at $100.10 a share a new 52 week low.  Their market cap is now less than 90 billion dollars soooo anyone wanna team up with Warren and  buy a computer company?  

You and your new business partner Warren Buffet can buy Apple Co. today for less than 100 Billion dollars.  Here is what you get... for the low low price of $90 billion dollars.  You get 4.5 billion in earnings (TT) growing at 25-35%. [maybe more!] and 27 Billion in current assets!

27 Billion!  

You and your buddy Warren will get Apple for 61 billion dollars (88-27)  which is effectively 13.5x trailing earnings.  Why?  you say are you and your partner Warren interested in this clearly suffering company (stock price down 50% YTD)?  

• Sustainable world wide growth (at a significant discount)
  
• Unsurpassed brand loyalty, 
  
• FAT margins (albeit narrower than historically)  
  
• Best in class products (Mobile computing, Computers, Music Players)
  

Apple has finance all of its amazing growth over the last 8 years from available cash flow, so has no debt and the best employees in silicon valley

Realistically a takeover of Apple would cost significantly more than the current stock price and it's not like the world is flush in takeover capital right now.  The point is that this is a crazy successful and strong company with huge prospects for the future.  What multiple would you pay for Dell's 3% margin, GM's millions in losses, the entire finance industry's mystery balance sheets?

Writer is long Apple and loves his mother.  You should love your mother but Apple is up to you.  Do not suppose that writer is suggesting other than loving your mother.  Your finance decisions are yours alone.

Kvetching Apple

Michael Arrington gets it right.  He has an office and (a family) he is tech support for.  He uses Macs buys and supports them for other People and when they do not work it reflects poorly on him (read me) wastes his time, and makes him consider market alternatives (currently no good ones but nature abhors a vacuum). 

I don’t think this is going to get better.  Apple is focused on Mobile Me (can I call it something else? I really hate the name.)  and will solve those problems since it needs to work but I think the hardware problem is here to stay.  

Apple successfully differentiates its products with design (e.g. you want to use the product, find it useful and attractive, all the things that make it NOT a Dell) and software.  Build quality is an aspect of design but often times not the one that gets us to a purchase decision.  That said, Apple Desktops (according to a popular consumer magazine…) are better than the industry average for repair rate.  Apple Laptops however are behind other laptop brands in quality although given the purchasing profile of Apple laptop purchasers (eg younger, less business use, more educational use) I wonder if it is because the Apple laptops are beaten more…

The “Apple at the crossroads” article is popular right now but it is accurate.  Growth may have outstripped their model/resources, how will they respond?

The thing is that despite our kvetching neither Arrington nor I are really considering PC alternatives.