[robotrout]

      if you wanted to buy the entire company it would 
      cost you about $240 billion.

      To put that in context, for the same amount of money 
      you could own Newmont Mining Corp. (NYSE: NEM - News), 
      the world's largest gold-mining company,

      And E.I. Du Pont de Nemours & Co. And Kellogg Co., 
      And Shrek studio DreamWorks Animation SKG Inc,
      And H&R Block Inc. (NYSE: HRB - News), 
      And The New York Times Co. And Molson Coors Brewing,
      And the Estee Lauder Cos Inc. And Tiffany & Co.,
      the Hershey Co., Harley-Davidson Inc., Expedia Inc., 
      Abercrombie & Fitch Co., American Eagle Outfitters, 
      Burger King Holdings Inc., CBS Corp., Chipotle 
      Mexican Grill Inc., Whole Foods Market Inc., 
      Starbucks Corp., Netflix Inc., JetBlue Airways Corp.,
      NStar, and Dr Pepper Snapple Group Inc.

Not even the most ardent Apple fan, I would assume, could believe this is a fair valuation.

[Edited to add list of names that didn't make my original cut and paste.]

[sandee]

I think is that Apple is doing something which no-one else may have done in recent past.

1. Apple is in software business where it has championed the model of fixed engineering cost and variable revenue streams.

2. They execute well and their products are neat. (That is a understatement)

3. They are market makers. There products are not just stealing customers but also creating new customer base for these products

4. Their marketing model is un-parrelled. And no-one in industry has any chance to replicate that in near future

Compare that to other companies. Most of them are not innovative but profitable because they are big, have low cost products. Some are in utility/F&B domain where its tough to increase the price. And others don't have much competative advantage.

Software is still the most profitable business (by a big margin), if done right. Apple is just demonstrating that.

[mistermann]

More importantly I think is, these old economy businesses being compared are valuable to a large degree just because they are essential. Now, the iPhone isn't essential, but if you have some extra cash, it is one of the first things a lot of people buy, the sales figures prove this.

If Apple can avoid any anti-trust suits, I think they have clear sailing for the next 2 to 3 years. I dislike Apple, but I LOVE my iPhone (but only compared to everything else).

[laut]

Apple is very profitable. It made 3 billion last quarter, about twice Jet Blue's market cap. Apple has no debt and a lot of cash. Apple could essentially buy Starbucks with cash. Apple's current assets is more than 30B and Starbucks market cap is less than 20B.

[alanthonyc]

I'm not saying that Apple isn't overvalued, but let's get some perspective here:

With $40 billion in the bank, Apple could buy, in cash, today, all of the following:

  - New York Times (1.4 billion)
  - Jet Blue (1.6)
  - Burger King (2.8)
  - Dreamworks (3.4)
  - Abercrombie and Fitch (3.9)
  - NStar (3.9)
  - Chipotle (4.2)
  - Netflix (5.1)
  - H&R Block (6)
  - Whole Foods (6.8)

Now, assuming the 3 billion dollars someone else here said they made last quarter is accurate. And assuming it holds true for a few years:

  - they can buy Dupont by November.
  - they can buy CBS by June 2011
  - they can buy Hershey by April 2012
  - they can buy Estee Lauder by April 2013
  - they can buy Starbucks by November 2014
  - etc. Kellogs and Newmont would take about twenty months each.

Keep in mind that this is all straight cash. A lot of companies operate in debt, Apple doesn't have any and wouldn't have to take any on to do these hypothetical purchases.

And naturally, this is all based on what they are doing today. If you put your money into the stock, you're assuming they are going to do at least as well. But even if they don't, that's still a lot of money the company is generating.

[randrews]

He actually goes on to list another dozen or so companies; Apple's valuation is all of those combined.

[potatolicious]

Some of those companies are failing (e.g, NYT), some are commodity suppliers highly subject to market fluctuations (e.g., Du Pont), and others are locked in eternal marketing struggle in a highly-competitive and arguably saturated marketplace (e.g., Burger King, Abercrombie & Fitch).

Not saying that Apple's valuation is correct, but there is a certain attraction to the company: it sells premium, high-margin products that have proven their ability to withstand general economic malaise, are non-commoditized, not easily substitutable goods, and have few realistic competitors (the MacBook Pro sits almost unchallenged in the premium laptop market, the iPhone is - for now - at the top of the smartphone game, etc).

[karzeem]

Apple's P/E is just under 22, which is not terribly expensive for a company that just launched a new, multibillion dollar product line (the iPad) and who has the dominant product in a rapidly expanding market (smartphones).

The writer puts it as "Would you rather own Apple or [long list of companies]?" That's a little misleading, because any of those companies could be overvalued or undervalued by the market, and because betting all your money on one company is almost always less attractive than spreading your risk over a dozen different ones.

[celoyd]

betting all your money on one company is almost always less attractive than spreading your risk over a dozen different ones.

As a minority shareholder, perhaps, but not necessarily as an owner.

[sh1mmer]

Does anyone know the combine revenue, debt and liquid assets of those companies?

It would be interesting to see how Apple matched up.