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Groups > comp.os.linux.advocacy > #289477
| From | owl <owl@rooftop.invalid> |
|---|---|
| Newsgroups | comp.os.linux.advocacy |
| Subject | Re: It was bound to happen sooner or later |
| Date | 2015-04-13 20:35 +0000 |
| Organization | ok by me, so long as it doesn't get out of hand |
| Message-ID | <bgnvhd0.jgu@rooftop.invalid> (permalink) |
| References | (4 earlier) <mgb69g$h0h$1@dont-email.me> <jgnvmb83.gkjd@rooftop.invalid> <mgh079$4d6$1@dont-email.me> <vnhguf93.kjhg@rooftop.invalid> <mgh7dl$4p8$1@dont-email.me> |
Ezekiel <zeke@nosuchemail.com> wrote: > "owl" <owl@rooftop.invalid> wrote in message > news:vnhguf93.kjhg@rooftop.invalid... >> Ezekiel <zeke@nosuchemail.com> wrote: >>> "owl" <owl@rooftop.invalid> wrote in message >>> news:jgnvmb83.gkjd@rooftop.invalid... >>>> Ezekiel <zeke@nosuchemail.com> wrote: >>>> >>>>> "owl" <owl@rooftop.invalid> wrote in message >>>>> news:bghvur80.ra0@rooftop.invalid... >>>>>> Ezekiel <zeke@nosuchemail.com> wrote: >>>>>> >>>>>>> "owl" <owl@rooftop.invalid> wrote in message >>>>>>> news:gbvjdu03.pa3f@rooftop.invalid... >>>>>>>> Ezekiel <zeke@nosuchemail.com> wrote: >>>>>>>>> Apple is worth twice as much as Google. >>>>>>>> >>>>>>>>> Or Google is worth 1/2 as much as Apple if you prefer. >>>>>>>> >>>>>>>>> AAPL = $740.33B >>>>>>>>> GOOG = $367.59B >>>>>>>> >>>>>>>>> I know many of you are confused because of "share price." But >>>>>>>>> don't >>>>>>>>> be. >>>>>>>>> It's market-capitalization that determines what a company is worth. >>>>>>>>> Not >>>>>>>>> the >>>>>>>>> share price. >>>>>>>> >>>>>>>>> Don't be like this dimwit below. >>>>>>>> >>>>>>>>> -- >>>>>>>>> "Share price is a measure of market confidence based on current >>>>>>>>> performance. >>>>>>>>> The market is apparently twice as confident of ($600) Google as it >>>>>>>>> is >>>>>>>>> of >>>>>>>>> ($320) Apple, and 20 times more confident than it is of ($28) >>>>>>>>> Microsoft. >>>>>>>>> So >>>>>>>>> what Google is doing today is apparently better than what others >>>>>>>>> are >>>>>>>>> doing." >>>>>>>> >>>>>>>>> Homer the "advocate" lecturing others on another simple concept he >>>>>>>>> completely fails to understand >>>>>>>> >>>>>>>> Yeah, but market cap is basically a popularity contest. >>>>>> >>>>>>> To a very small extent. There's always the "now company people want >>>>>>> to >>>>>>> see >>>>>>> in the portfolio" thing but it's primarily based on fundamentals and >>>>>>> expected future earnings. >>>>>> >>>>>> >>>>>>>> Apple doesn't have >>>>>>>> all that money, and they don't get money every time a share of Apple >>>>>>>> stock >>>>>>>> is sold at a higher price. Apple got paid one time - the day the >>>>>>>> stock >>>>>>>> was >>>>>>>> issued. >>>>>> >>>>>>> Yes and no. When a company has their IPO they don't release all the >>>>>>> shares. >>>>>>> It's called the "float" and nearly every company owns and holds >>>>>>> shares >>>>>>> in >>>>>>> their own company. When you hear a company is spending billions on a >>>>>>> "stock >>>>>>> buyback" then they're buying more of their own shares. Companies use >>>>>>> the >>>>>>> shares they own for bonuses, etc but they'll also sell some shares to >>>>>>> raise >>>>>>> capital. >>>>>> >>>>>> >>>>>>>> 2014 Liabilities & Shareholders' Equity: >>>>>>>> Apple: 231.84B >>>>>>>> Google: 131.13B >>>>>>>> Microsoft: 172.38B >>>>>>>> >>>>>>>> http://www.marketwatch.com/investing/stock/aapl/financials/balance-sheet >>>>>>>> http://www.marketwatch.com/investing/stock/goog/financials/balance-sheet >>>>>>>> http://www.marketwatch.com/investing/stock/msft/financials/balance-sheet >>>>>>>> >>>>>> >>>>>>> This is an interesting accounting trick. You see companies with >>>>>>> insane >>>>>>> amounts of money in the bank yet these companies issue debt (ie - >>>>>>> borrow >>>>>>> money) to raise capital. >>>>>> >>>>>>> The reason behind this is that Apple/Microsoft/Google have the >>>>>>> highest >>>>>>> possible bond ratings. So they can borrow money at a low interest >>>>>>> rate >>>>>>> and >>>>>>> then deduct the interest from their taxes. >>>>>> >>>>>>> Most/much/shitloads of the cash they have is overseas. So if they >>>>>>> were >>>>>>> to >>>>>>> bring that cash back into the US they would need to pay US taxes on >>>>>>> the >>>>>>> money. So it's cheaper to borrow money (at low rates) than it is to >>>>>>> bring >>>>>>> in >>>>>>> money from foreign subsidiaries. >>>>>> >>>>>> Actually I grabbed the wrong line. >>>>>> >>>>>> Total Equity 2014: >>>>>> Apple: 111.55B >>>>>> Google: 104.5B >>>>>> Microsoft: 89.78B >>>>>> >>>>>> So they are really *much* closer than market cap would indicate. >>>>>> I mean, really, if Apple's share price fell to $1 tomorrow, based on >>>>>> some wild news that made everybody suddenly hate the company and dump >>>>>> their stock, the company would still actually be in the black to the >>>>>> tune of 111.55 billion >>>> >>>>> Having $111 billion in the bank isn't a bad thing. According to their >>>>> latest >>>>> SEC filing it's now up to $178 Billion. >>>> >>>>> "Apple has mind-boggling $178 billion in cash to spend" >>>>> (CNN-Money) >>>> >>>> >>>> >>>>>> and the shareholders could force the board >>>>>> to give them some moolah. >>>> >>>>> Here's where it gets tricky. For example, Google founders did a >>>>> power-play >>>>> and made it so that ordinary share-holders have no voting rights. On >>>>> top >>>>> of >>>>> that, their special "class-B shares" (that don't trade on the market) >>>>> get >>>>> 10 >>>>> votes/share whereas ordinary class-A shares get only 1 vote per share. >>>> >>>>> The bottom line is that even if every single Google shareholder in the >>>>> world >>>>> agreed on something - they can't force the company/board to do squat. >>>> >>>>> <quote> >>>>> I believe this stock split is largely being done so that Sergey Brin >>>>> and >>>>> Larry Page can maintain voting control over everyone else. >>>> >>>>> However if they don't execute well they can't be "forced" to change by >>>>> everyone else. >>>> >>>>> Currently everyone except Brin, Page, Eric Schmidt, Google's ex-CEO and >>>>> Executive Chairman, and a few other people own Class A shares. Class A >>>>> shares get one vote for each share. >>>> >>>>> Class B shares are largely owned by Brin, Page and Schmidt and they get >>>>> 10 >>>>> votes per share. In total there were 56,167,343 Class B shares >>>>> outstanding >>>>> on January 30, 2014. >>>> >>>>> Class C shares will be given to the Class A and B shareholders but >>>>> receive >>>>> no votes on stockholder resolutions. Their trading symbol will be the >>>>> historical GOOG after the split. These are the shares that the company >>>>> will >>>>> probably issue going forward for acquisitions or stock awards. >>>> >>>> >>>>> This means that Brin and Sergey have 468 million votes compared to the >>>>> 280 >>>>> million Class A shareholders, essentially complete control of the >>>>> company >>>>> as >>>>> they have just over 55% of the total votes. Maybe the Board could exert >>>>> enough pressure on either Brin or Page to step down if they thought it >>>>> was >>>>> being taken in such a wrong direction that it warranted action but >>>>> otherwise >>>>> the founders have complete control. >>>>> </quote> >>>>> http://www.forbes.com/sites/chuckjones/2014/04/02/google-stock-split-in-larry-and-sergey-we-trust/ >>>> >>>> >>>> >>>>>> Regardless of whatever is happening trade-wise on the market, a stock >>>>>> represents an ownership share of the company, and if the company is >>>>>> strong financially, that share has value separate from its market >>>>>> value. >>>>>> Likewise, whatever inflated price a stock might be selling for has no >>>>>> real relation to the "value" of a company. >>>> >>>>> A companies assets (like $178 billion in the bank) gets factored into >>>>> the >>>>> companies valuation. So in Apple's case, they're a $562 billion dollar >>>>> company with $178 billion in the bank. >>>> >>>> All that really means though is, "this is how we're going to do the >>>> math." >>>> A company is truly only worth its net worth: assets - liabilities. The >>>> stock market is just respectable a means of gambling and has no >>>> relevance >>>> the value of a company. If I decide to buy Apple one day, there's no >>>> way I'm paying $740 billion for a company.... >> >>> True, there's no way you'd ever pay $740 billion for Apple. If >>> (hypothetically) this were to happen then you'd be paying about $925 >>> Billion. >> >>> Acquisitions happen all of the time. The company being bought out is >>> usually >>> paid about a 25% premium. Example from just last week: >> >>> <quote> >>> Mylan, one of the big makers of generic drugs, made public on Wednesday >>> an >>> unsolicited offer to acquire Perrigo for about $29 billion in a deal that >>> would extensively expand its range of product offerings. >> >>> Under the offer, announced on Wednesday, Mylan would pay $205 a share in >>> cash and stock for Perrigo, a 25 percent premium over Perrigo's stock >>> price >>> last Friday. Mylan did not specify what the split of cash and stock would >>> be. >>> </quote> >> >> >> >>>> that has a net worth of $178 billion. >> >>> The "net worth" or what you've called book-value is going to be very low >>> for >>> any company. What's the book value for Google ($367B) ... they own a >>> bunch >>> of used servers? What's the book value for Visa ($161B) - they don't own >>> much of anything. Or a bank like Wells Fargo ($281B) where they mainly >>> hold >>> money that doesn't even belong to them. >> >>> The way to look at these companies is to view them as a money-making >>> machine. If your neighbor offerred to sell you a "machine" that legally >>> produces $100k/year in cash then what would you be willing to pay for the >>> machine? Would you tell him to take a hike because there's only $3000 >>> worth >>> of parts in this machine? >> >>> Not that this is sustainable, but I'll use Apple's last quarterly >>> earnings >>> as an example: >> >>> <quote> >>> Apple just posted the best quarter in corporate history >> >>> Apple (AAPL) sold 74.5 million iPhones in the last three months. >>> That helped Apple's profit soar more than 37% to $18 billion. >>> </quote> >>> http://money.cnn.com/2015/01/27/technology/apple-iphone-earnings/ >> >>> It's a money-making-machine that's currently generating a profit of $8.25 >>> million dollars an hour, 24x7 around the clock. *That* is what gives them >>> their market cap. >> >> That doesn't change the fact that "market cap" has no real meaning. >> It does not represent any tangible asset that the company or its >> investors possess. >> >> In other words, Apple's $740 billion market cap might as well be thought >> of as "the missing $740 billion." >> >> So where is this missing $740 billion? >> >> Does Apple have this $740 billion? No. >> >> Do Apple's investors have this $740 billion? No. They *spent* money >> for their shares. They now have pieces of paper representing fractional >> ownership of Apple's equity (which is nowhere near $740 billion) instead >> of the actual money they used to have. >> >> Who does have this missing $740 billion then? >> >> Some of it is in the hands of the people (AKA the Smiling Ones) who sold >> the current Apple stockholders their pieces of paper. >> >> The rest of it doesn't even exist at all, because market cap is just >> a price tag. And a price tag is not the same thing as money. >> > Ahhh... Now I see what you're saying. > Sure, market cap doesn't represent any tangible value. It's simply > share-price multiplied by the number of shares outstanding. It's the > calculated equity value of a company. There's no actual $740 billion dollars > anywhere. I certainly agree with that. > It's like when a stock price goes up or down by 10% one day. In Apple's > case, did an additional $75 billion magically appear or disappear from the > day before? Yeah - there's no real/actual money anywhere. The market cap is > just the current value that the investment community puts on a company. > It's basically a way of expressing the total combined value of all the > company shares. In a perfect world this value would be pretty accurate and > consistent but in the real world it's not. There are things like the dot-com > bubble where stock values were artificially inflated because of "irrational > exuberance." Then there's always bogus valuations because of a "short > squeeze" where a current valuation isn't realistic and is merely the result > of market conditions. >> Do Apple's investors have this $740 billion? No. They *spent* money >> for their shares. They now have pieces of paper representing fractional >> ownership of Apple's equity (which is nowhere near $740 billion) instead >> of the actual money they used to have. > No matter what stock or bond you have, until you sell it's just a piece of > paper. (Assuming you even have the stock certificate on hand.) > And when you finally do sell the shares then you gets something truly > valuable... you get a some other pieces of paper that are called "money." > This paper is better than the that other paper. (okay, so it's technically > cloth not paper.) > In reality you don't even get these pieces of paper we call "money." What > you actually get is a few computer bits in your bank account have now been > updated with new bit values. You don't even get the pieces of paper... some > bank has some new bits in their computer and that's what people work for > their entire lives. > At the end of the work week give me a pig, some eggs and a loaf of bread. > Something more "real" than updating a few bits at my Bank of America > account. Cool. I'll put my house on the market at $80 trillion and upgrade my market cap.
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It was bound to happen sooner or later "Ezekiel" <zeke@nosuchemail.com> - 2015-04-10 16:12 -0400
Re: It was bound to happen sooner or later Tomas <tgif9fri@numo.net> - 2015-04-10 16:15 -0400
Re: It was bound to happen sooner or later "Ezekiel" <zeke@nosuchemail.com> - 2015-04-10 16:29 -0400
Re: It was bound to happen sooner or later Tomas <tgif9fri@numo.net> - 2015-04-10 17:20 -0400
Re: It was bound to happen sooner or later Steve Carroll <fretwizzer@gmail.com> - 2015-04-10 13:33 -0700
Re: It was bound to happen sooner or later owl <owl@rooftop.invalid> - 2015-04-10 22:07 +0000
Re: It was bound to happen sooner or later "Ezekiel" <zeke@nosuchemail.com> - 2015-04-10 19:20 -0400
Re: It was bound to happen sooner or later owl <owl@rooftop.invalid> - 2015-04-11 00:19 +0000
Re: It was bound to happen sooner or later "Ezekiel" <zeke@nosuchemail.com> - 2015-04-11 09:08 -0400
Re: It was bound to happen sooner or later owl <owl@rooftop.invalid> - 2015-04-11 14:45 +0000
Re: It was bound to happen sooner or later DFS <nospam@dfs.com> - 2015-04-11 12:21 -0400
Re: It was bound to happen sooner or later owl <owl@rooftop.invalid> - 2015-04-11 16:58 +0000
Re: It was bound to happen sooner or later DFS <nospam@dfs.com> - 2015-04-11 22:00 -0400
Re: It was bound to happen sooner or later Steve Carroll <fretwizzer@gmail.com> - 2015-04-11 09:43 -0700
Re: It was bound to happen sooner or later owl <owl@rooftop.invalid> - 2015-04-11 17:17 +0000
Re: It was bound to happen sooner or later owl <owl@rooftop.invalid> - 2015-04-11 17:20 +0000
Re: It was bound to happen sooner or later Steve Carroll <fretwizzer@gmail.com> - 2015-04-11 11:58 -0700
Re: It was bound to happen sooner or later owl <owl@rooftop.invalid> - 2015-04-11 20:02 +0000
Re: It was bound to happen sooner or later Steve Carroll <fretwizzer@gmail.com> - 2015-04-11 13:56 -0700
Re: It was bound to happen sooner or later owl <owl@rooftop.invalid> - 2015-04-11 21:48 +0000
Re: It was bound to happen sooner or later "Ezekiel" <zeke@nosuchemail.com> - 2015-04-13 14:01 -0400
Re: It was bound to happen sooner or later Snit <usenet@gallopinginsanity.com> - 2015-04-13 11:21 -0700
Re: It was bound to happen sooner or later owl <owl@rooftop.invalid> - 2015-04-13 19:24 +0000
Re: It was bound to happen sooner or later "Ezekiel" <zeke@nosuchemail.com> - 2015-04-13 16:04 -0400
Re: It was bound to happen sooner or later owl <owl@rooftop.invalid> - 2015-04-13 20:35 +0000
Re: It was bound to happen sooner or later Steve Carroll <fretwizzer@gmail.com> - 2015-04-13 14:13 -0700
Re: It was bound to happen sooner or later owl <owl@rooftop.invalid> - 2015-04-13 21:52 +0000
How many barrels of oil will the stock produce ? Jeff-Relf.Me <@.> - 2015-04-13 23:42 -0700
Re: How many barrels of oil will the stock produce ? "Ezekiel" <zeke@nosuchemail.com> - 2015-04-14 13:37 -0400
How many barrels of oil will the stock produce ? Jeff-Relf.Me <@.> - 2015-04-14 10:55 -0700
Re: How many barrels of oil will the stock produce ? "Ezekiel" <zeke@nosuchemail.com> - 2015-04-14 15:20 -0400
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