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Muhammad Bazil
Muhammad Bazil
Articles (192) 

Apple: Sometimes Numbers Do Talk

June 09, 2012 | About:

As an analyst, it is important to key in the prevalent tendencies in a model market before arriving at conclusions. The populist standpoint tends to lean towards analysis mounted on the operations of a company. In person, I believe that this draws the most accurate foresight. Nonetheless, I have remote divergences. What if the numbers are too big to ignore?

Just look at Apple (NASDAQ:AAPL), the stock that always makes the top stories. Show me an investor who doesn’t know something about Apple, and I will show you a European who is not aware of the debt crisis.

Apple is a news maker — there is no debate about that. Some people may think that it’s the IT specialists who do most of the work at Apple. Wrong. IT specialists do less than half of the work. Most of the work is done by spokespersons and administration personnel who receive innumerable calls each day and address countless press conferences.

Recent news has raised a big question: Will Samsung and Apple ever bury the hatchet? Apple was the last one to open fire when it recently filed a patent infringement lawsuit that would potentially shut down Samsung’s U.S market for the latest galaxy model. Samsung galaxies will extend a two-in-one package, so to speak, of threat to Apple.

First, Samsung’s handsets will dig through iPhone’s incredible sales figures in the U.S. The second threat — and arguably the most baneful one — is Android’s growth. Galaxies operate on Google’s (NASDAQ:GOOG) Android. As it is, Android’s global growth figures seem to have taken the reins from Apple’s IOS. Future projections also show that Android’s market share will continue ballooning. Perhaps this explains why Apple is adamant to let go of its Samsung litigation drama that has since translated into the biggest tech soap opera.

In other news, the patent lawsuit against Motorola Mobility (now in Google’s portfolio) has been thrown out of the window. This erodes confidence in Apple’s advocates. The timing couldn’t be any worse. At such a time when tension between Samsung and Apple has reached vitriolic boiling points, Apple should display aggressiveness and solidarity in its legal front.

I have to draw the thin line that separates being bullish and being realistic. Opting for the former would be out of order at the moment — it actually borders close to the fanatic incline. Nonetheless, I cannot conclusively say that the tables have completely turned on Apple. There is one thing that most investors and analysts are overlooking — money! Money talks. You can say that this is a loosely used contemporary expression, but it is the simple truth.

Look at the figures below.

Apple Google Microsoft
Revenue 142.36B 38.98B 73.03B
Net Income 38.62B 10.83B 23.34B
Employees 60,400 33,077 90,000
Market Caps 542B 189B 249B

Although I am not lured in by figures, these concise figures spell a lot of possibilities and questions. At first it may appear as if Microsoft (NASDAQ:MSFT) and Google are making good profit from their revenues. From a prose outlook, this is quite true.

However, if you probe deeper you will find that it does not in any way negatively affect Apple. Although Apple is using a bigger portion of its revenue to make profit, it is treading on safer ground. This is because it has a bigger cushioning in case risks mature into catastrophes and misfortunes. Its financial backing speaks volumes and merits its ability to finance the expensive ongoing litigation between itself and Samsung. In addition to that, Apple enjoys better economies of scale.

To better capture your understanding, let me use a more practical approach. If, for instance, you have $10 and you need to invest $4 to make another $2, you will be left with $6 to do anything you want with, right? On the other hand, if you have $5 and you need to invest $4 to make $2, you are only left with a dollar at your disposal. The former example is a safer bet. The same cases apply to Apple and its competitors. Although its competitors are proving to be more aggressive by the day, they are still stuck in the "$5 scenario," while Apple enjoys the "$10 scenario."

What am I trying to say? In case anything happens (which it can after considering the dynamic nature of the tech front), Apple will have the financial muscle to easily adapt. Money talks and in this case, the numbers actually do say something about Apple’s future.

About the author:

Muhammad Bazil
Muhammad Bazil is a financial journalist and editor for a variety of websites, public policy organizations, and book publishers. He has written hundreds of published articles and blog posts on topics including budgeting, credit management, real estate and investing. His articles have been featured on the homepage of Yahoo!, MSN and numerous local news websites.

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