Bernard Tan: Who's a better cash machine
Firstly, it seems Apple is being financed by its suppliers. Their accounts receivable is only $8.9bn but accounts payable is a whopping $18.2bn. That's a nett accounts receivable of NEGATIVE $9.3bn. For the layman, this means that Apple owes its suppliers $9.3bn MORE than what its customers owes Apple.
Secondly, have you ever thought about the billions in $$$ in iTunes card sales that have not yet been utilised at the iTunes store? This is buried in deferred revenue item of current liabilities and amounts to $4.9bn. This is cash that Apple's customers have handed over but have not yet claimed the corresponding goods or services.
In other words, if Apple stops being a going concern, about half of the $30bn in cash, equivalents and marketable securities would disappear as Apple has to pay off its suppliers and refund the unutilised iTunes balances.
David Fuller's view Few firms can match the profits generation
of a successful technology company, although that soon invites competition which
can be correspondingly intense. Apple (monthly,
weekly & daily)
has justifiably dazzled the world in recent years while Microsoft (monthly,
weekly & daily),
although also a cash generator, has often been overlook, except by those who
appreciate its current yield of 2.65%.
Since Apple does not pay a dividend, confidence in its trend momentum is all important. Currently, Apple is somewhat overstretched against its 200-day MA and susceptible to mean reversion. However, should the share first accelerate higher, we could anticipate a more dramatic reversion to the mean, quite possibly including a temporary overshoot to the downside. That is what we saw with gold last August, when confidence was also correspondingly high.
Microsoft has certainly done well since late November but it has been a comparative sleeper for years. Although currently somewhat overstretched, underlying support suggests that no more than temporary resistance will be encountered near the 2010 highs before sideways to higher ranging occurs.
Apple is a religion but Microsoft may be the safer play today and offers the comfort of a reasonable yield.