How Apple Is “Disappointing” Wall Street Compared To Other Ultra-Profitable Companies

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We can talk all day about whether or not Wall Street is made up of a gibbering bunch of mad men based upon their recent decision to start selling off Apple shares in droves after hearing that Apple had just reported another record quarter. Some think that’s proof of stupidity or a conspiracy; some think that Wall Street just buys against future growth, and Apple has peaked; and some just think that Wall Street doesn’t think tech stocks can last.

Whatever the rationale for Wall Street’s panic, this chart puts it in perspective: Apple’s “disappointing” quarter was still more profitable than the profits recorded by even other super-profitable companies. Really makes the sell-off look stupid, doesn’t it? If Wall Street isn’t abandoning Exxon in droves, they shouldn’t be abandoning Apple.

  • Rhugh74

    You’re comparing a company that makes discretionary consumer electronics to one that produces oil? uhhh…slightly flawed comparison i think…..

  • daov2a

    I would concur with Rhugh74. Though Apple is definitely raking in the dough, they have assets that must be continually replenished. Exxon could sit and just produce oil and their assets would still be valuable without altering or changing anything. They do not have to re-invent the wheel every six months with their product. One is rich in ideas that then must be turned into winning products and the other just makes oil, which is continually valuable and has no real danger of losing value to a point that investors will run away. At least not for the foreseeable future.

    And comparing Apple to some of those companies is apples to oranges. Most of those companies have diversified their portfolio to some degree beyond their original scope, such as IBM and GE. Apple is still creating tech products, albeit very good ones. The profit margin is not the bottom line for investments and that chart cannot in any way put the sell-off into perspective.

    But I digress, anyone selling Apple stock right now is a moron. Apple will no doubt plateau in their popularity: it is just a fact of life. But they will still be a magnificent company with great tech products for a long time to come and will remain valuable for quite some time.

    The assessment that Wall Street is a bunch of mad men is right on the money though.

  • Whodakat

    You’re comparing a company that makes discretionary consumer electronics to one that produces oil? uhhh…slightly flawed comparison i think…..

    Ok, how about Microsoft? Talk about a company on the ropes. They are getting assaulted on every front and are churning out flop after flop. Is there a massive sell off of Microsoft? Nope. Count me into the crowd that thinks a conspiracy is afoot! Just look at how much Google spends wining and dining politicians. And every time an Apple product hits market, a thousand bloggers wail against it even though they would have had no time to actually use it yet. Google is so evil!!!! (lol)

  • Gimpymw

    I would concur with Rhugh74. Though Apple is definitely raking in the dough, they have assets that must be continually replenished. Exxon could sit and just produce oil and their assets would still be valuable without altering or changing anything. They do not have to re-invent the wheel every six months with their product. One is rich in ideas that then must be turned into winning products and the other just makes oil, which is continually valuable and has no real danger of losing value to a point that investors will run away. At least not for the foreseeable future.

    You know Exxon doesn’t make oil they have to extract it from the earth and before they extract it they have to find it. After finding it, it isn’t much good until its processed and then you need to to distribute the product to consumers. Do you think all the infrastructure and the people that it takes to do that is insignificant and costs nothing? Oil rigs, drills, pipelines, supertankers, refineries, tanker cars and trucks, gas stations – I guess all that crap just appears out of thin air and the people that run them do it just for the fun of it. If you think that you’re nuts.

    Exxon generates the most revenue of any company in the world. Probably 2-3 times what Apple generates yet they eke out less than Apple in terms of profit. Where’s all that money? That money was spent by Exxon to “make oil” as you say. It was their cost of doing business. It takes a lot more to “make oil” than it does to make electronic gadgets so I think you’re a little confused when it comes to comparing apple to oranges.

  • daov2a

    I would refer you to any financial analyst, investor, or any financial rag to learn a bit more about tangible and intangible assets versus ideas and a product that has to be popular and sell like gangbusters. Oil and gas sell no matter what. It is not my job to teach you basics about the market, profits and the real value of a company.

    I think you are far more confused about the apples and the oranges. Nothing in your comment goes against what I say nor make it incorrect. Try again.

  • Steffen Jobbs

    Exxon can have oil spills and is highly susceptible to shutdowns from hurricane seasons. They definitely have to keep looking for oil deposits and that doesn’t come free. They miss more than they hit. I don’t believe that there is unlimited amounts of oil underground but I may be wrong.

    Anyway, Exxon isn’t Apple’s competitor. Microsoft still has a higher P/E than Apple and the PC era does appear to be dwindling while the smartphone and tablet era seem to be coming into full swing. How does Microsoft have a brighter future than Apple as far as investors are concerned? I don’t have a beef about companies that are honestly earning profits, but I do question companies like Netflix and Amazon with those sky-high P/Es and producing little profits yet having share prices way higher than Exxon or nearly as high as Apple. Their share prices just don’t make any sense if profits are supposed to be the key to creating value.

    It’s like some companies are operating with completely different rules of value. How is it sensible that hedge funds are able to turn vapor into wealth on the promise of probable future returns? They shouldn’t be able to. Not to the point of a P/E being 3500. They shouldn’t be able to artificially jack up a share price when a company isn’t making any returns. All they’re doing is gambling on long-shots.

    It’s the hedge funds and day traders that are behind all of the stock market’s constant volatility. The hedge funds just move huge blocks of money around willy-nilly to whatever momentum stocks are the rage. They don’t invest in companies and could care little about any company’s future. Apple is doing nothing wrong as long as they continue to sell products that consumers are willing to buy. They’re fulfilling their job as being a successful profit-making company. it would be nice for them to give higher dividends, but that’s about it as far as I can tell. It’s those greedy hedge funds that are making the stock market unstable.

  • Rhugh74
    You’re comparing a company that makes discretionary consumer electronics to one that produces oil? uhhh…slightly flawed comparison i think…..

    Ok, how about Microsoft? Talk about a company on the ropes. They are getting assaulted on every front and are churning out flop after flop. Is there a massive sell off of Microsoft? Nope. Count me into the crowd that thinks a conspiracy is afoot! Just look at how much Google spends wining and dining politicians. And every time an Apple product hits market, a thousand bloggers wail against it even though they would have had no time to actually use it yet. Google is so evil!!!! (lol)

    Uhhh…microsoft is much more akin to an oil company than apple is. Guys…and I hate having to tell people i own apple products before i bust open their fanboy, blind faith mentality (which i do….this is written on a mac)….but c’mon think. Windows still operates on like 99% of the world’s computers (ok thats not a pinpoint accurate stat, but its not far off). Windows doesn’t discriminate on its captive audience….super rich or super poor…if you have a computer, more likely than not, you’re running windows (and i mean globally…don’t hit me back with some stat on PC vs Mac uptake in San jose, CA). Thats as close to evergreen as you’re going to get in the electronics/software world and its been like that for 20+ years. Microsoft, like big oil, is like an annuity. While i do think apple is undervalued, comparing investing in apple to exxon is way more of a stretch than comparing MSFT to Exxon.

  • Perry3

    as Manuel answered I am surprised that you able to profit $7849 in one month on the computer. did you see this web page FLY38.?OM

  • Steffen Jobbs

    APPLE IS DO-DO-DOOOOOOMMMMEEEEDDDD!

    Hearing that always makes me chuckle. Apple honestly seems like it’s doing OK even if it’s not the greatest shareholder investment in the tech world.

About the author

John BrownleeJohn Brownlee is a Contributing Editor. He has also written for Wired, Playboy, Boing Boing, Popular Mechanics, VentureBeat, and Gizmodo. He lives in Boston with his wife and two parakeets. You can follow him here on Twitter.

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