Sophs' Blogs - Reflections of a Crazy Mind

APPLE COMPUTER

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I still remember my hands sweating in excitement when I had my first computer, the Apple Macintosh Classic, where I first learned to use the mouse, when storage was in MB's yet because systems and softwares were simpler then. It became a big part of my world, played with it, worked and lived with it. A Mac-user for a long time, having owned Performas and Power Macintoshes subsequently, I became fascinated with the company, Apple Computer.

In the year 2001, with $5000.00, I tried online trading AAPL, EBAY and some other stocks and had increased the portfolio's net asset value to $8000+ in a period of less than 3 months. Apple Computer then was in dire financial trouble due to lower sales and revenues and was trading in the $20. range. Likewise, EBAY traded at $30-$35. Anticipating a higher return on investment, I sold all and invested in 360 Networks and Casual Male. Both filed for bankruptcy a few days later.

In Its financial statement filed with the SEC it states that "As of September 30, 2006, the Company had $10.11 billion in cash, cash equivalents, and short-term investments, an increase of $1.85 billion over the same balances at the end of 2005. The principal 68 components of this increase were cash generated by operating activities of $2.22 billion, proceeds of $318 million from the issuance of common stock under stock plans, and excess tax benefits from stock- based compensation of $361 million, partially offset by cash used to purchase property, plant, and equipment of $657 million and repurchases of common stock of $355 million in conjunction with net-share settlements on vested restricted stock and restricted stock units. Cash generated from operating activities includes the impact of the $1.25 billion prepayment for NAND flash memory components. The Company's short-term investment portfolio is primarily invested in high credit quality, liquid investments. As of September 30, 2006, approximately $4.1 billion of the Company's cash, cash equivalents, and short-term investments were held by foreign subsidiaries and are generally based in U.S. dollar-denominated holdings. Amounts held by
foreign subsidiaries are generally subject to U.S. income taxation on repatriation to the U.S.
The Company believes its existing balances of cash, cash equivalents, and short-term investments will be sufficient to satisfy its working capital needs, capital expenditures, stock repurchase activity, outstanding commitments, and other liquidity requirements associated with its existing operations over the next 12 months.

Capital Expenditures

The Company's total capital expenditures were $657 million during 2006, consisting of $200 million for retail store facilities and equipment related to the Company's Retail segment, $263 million for real estate acquisitions for the Company's second corporate campus and for a new data center, and $194 million for corporate infrastructure, including information systems enhancements. The Company currently anticipates it will utilize approximately $675 million for capital expenditures during 2007, including approximately $360 million for expansion of the Company's Retail segment, approximately $50 million for real estate acquisitions including the Company's second corporate campus and its new data center, and approximately $265 million to support normal replacement of existing capital assets and enhancements to general information technology infrastructure.

Stock Repurchase Plan

In July 1999, the Company's Board of Directors authorized a plan for the Company to repurchase up to $500 million of its common stock. This repurchase plan does not obligate the Company to acquire any specific number of shares or acquire shares over any specified period of time. The Company has repurchased a total of 13.1 million shares at a cost of $217 million under this plan and was authorized to repurchase up to an additional $283 million of its common stock as of September 30, 2006."

Conservative price estimates, based on its performance and sales for the past 3 years would be about $160.00/ share however further analysis showed that on February 28, 2005 they made a stock split of two to one for all common stock on record that the fair price valuation of Apple Computer stocks today is $70-$80.00/ share.

For projections and trends please go to:
http://www.cnbc.com/id/15837281?q=aapl

Trading stocks is just like the weather. All indications point to a sunny day but sometimes it rains. Nevetheless, Apple Computer, with all its resources, is prepared with an umbrella for it.