Apple Is Handcuffed to the iPhone. Just Like Its Customers
Tim Cook has worked hard to remove the “hardware company” valuation discount. The coronavirus shows how far it still depends on the iPhone.
No masking the problem.
Photographer: BloombergApple Inc.’s earnings warning is an unfortunate reminder that, for all of its work to change investor perceptions over the past few years, it remains “the iPhone company.”
For much of its six-year reign as the world’s biggest company by market capitalization through to the end of 2018, Apple was actually less valuable than Google parent Alphabet Inc. and Facebook Inc. on one crucial measure. The smartphone maker’s shares traded at a discount to those of the advertising technology giants based on its projected earnings — meaning investors were willing to pay more for a share of its rivals’ future profit. Even in its pomp three years ago, Apple’s stock traded at just 14 times forward earnings. Alphabet and Facebook traded at 20 times and 24 times earnings respectively.