For the love of Apple

By Dian Vujovich

I’ve been a fan of Apple and the computers that company makes since the mid- 1980s. Don’t have the first Macintosh computer I bought but do have the second, a Macintosh SE purchased for something like 2800 hundred bucks in the late 1980s. Why I’ve kept it, who knows. One thing I do know is that Apple made learning how to use a computer simple. Plus, those early computers came fully equipped with everything from word processing to creative art programs. And viruses were something Mac owners never have had to worry about then or now.

So I’m a believer in Apple’s computer products. Don’t own an iPhone or iPad but maybe one day I will.

As for the value of its stock, it’s pretty tough to argue with a company with a share price that has gone from the mid-teens to over $400 a share and split twice between 1997 and 2011. Particularly, if you’ve owned the stock all along the way.

Then again, even if you’d purchased Apple shares at the beginning of this century, the average annualized return has been in the neighborhood of 44 percent.

But with the passing of Steve Jobs is Apple still a buy?

It’s hard to find anyone who would diss the company given the incredible legacy of Jobs and the company’s huge success and cash position. Depending upon what talking head you’re listening too, Apple has somewhere between $75 and $80 billion in cash and roughly 926 million shares outstanding.

Robert Harvey, owner of Harvey Capital Management likes Apple. He explained if the stock is selling at $375 a share and has $75 billion in cash that translates to a company that has about 20 percent of its value in cash.

“There aren’t too many large companies that have 20 percent of their value that’s basically cash,” says Harvey.

Beyond its cash value, Harvey thinks Apple’s iPhone and iPad product cycles are just beginning to roll out around the world. Plus he said that the smart phone concept that is ” a phone that is a computer in your pocket” will have enormous capabilities and apps in the future.

“The next generation phones will probably have a credit card capability where you’ll just swipe your phone to use a credit card. So it will be a camera, a phone, a connecting devise to the internet and then once connected to the Internet you can do all kinds of various things and do them at faster download speeds which opens up all kinds of experiences, “he said.

As for the loyal and almost cult-like customer base Apple seems to have, I personally doubt that’s going to change anytime in the near future. The company’s product line, that encompasses quality with a simple yet elegant and functional design, is hard to top.

“Steve Jobs obviously was a great visionary, ” says Harvey. “But the people at Apple now are as good as anybody else in the industry so they ought to be able to hold their own.”

That said, who knows what the future will bring but investors would we wise to realize that the growth Apple has experienced year-after-year this century can’t really be sustained. But, cut that average annualized growth rate of 44 percent in half, or even quarters and the results would still be attractive.