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Big Apple vs Bigger Google vs Amazing Amazon, Really? ๐ŸŽ๐ŸŽ๐ŸŽ๐ŸŽ๐ŸŽ๐Ÿ™ˆ๐Ÿ™‰๐Ÿ™Š

August 12, 2013

๐Ÿ™ˆ๐Ÿ™‰๐Ÿ™Š FORTUNE โ€“ In June Rolfe Winkler, writing for the Wall Street Journal’s MarketBeat, and posted an item called Big Apple, Bigger Google. I am not an Investment Banker; I could write Book on what I do Not Know about Investment Banking, nor what drives Investment Brokers with their clients.

๐Ÿ™ˆ๐Ÿ™‰๐Ÿ™Š Big Apple vs Bigger Google vs Amazing Amazon. We would rather rename the article, Big Apple vs Bigger Google vs Amazing Amazon, Really? Sooner or Later, the "Markets" will come to their senses, as in sum, its All About Earnings, Growth. When the Markets Smell the "stuff they are shoveling" these Graphs will Invert for Amazon and Google, with Apple at the Top.

๐Ÿ™ˆ๐Ÿ™‰๐Ÿ™Š Winkler had calculated that Google’s (GOOG) value had just surpassed Apple’s (AAPL). Not in market capitalization, mind you, (i.e., share price times number of outstanding shares), which is the way these thing are usually measured, but in enterprise value (market cap plus debt minus cash and cash equivalents).

๐Ÿ™ˆ๐Ÿ™‰๐Ÿ™Š You can think of enterprise value as what it would cost to acquire a company: The buyer would have to take on the company’s debt, but would pocket its cash.

๐Ÿ™ˆ๐Ÿ™‰๐Ÿ™Š Not being an Investment Banker, nor offering advice, and not having investments in Apple, Google nor Amazon, there are facts and truths that need to be aired.

๐Ÿ™ˆ๐Ÿ™‰๐Ÿ™Š Apple needs to deliver a larger Display iPhone, as millions of folks are buying 5" and 5.5" smartphones, and Apple clients want them too.

๐Ÿ™ˆ๐Ÿ™‰๐Ÿ™Š Amazon better gets its Business Model to the point in making profits quickly, before State Legislatures close the Sales-Tax Gap, that is presently giving Amazon an effective 6% to 8% marketing advantage from its "Brick and Mortar" retail stores, that have to charge sales tax to their customers.

๐Ÿ™ˆ๐Ÿ™‰๐Ÿ™Š Amazon ~ Wall Street Love Fest. Sooner or later "Wall Street" will digest that facts, that if Amazon fails to increase the Income side of its Business Model by say 7% simultaneously or before the Sales Tax loopholes are closed by State Legislatures, Amazon will have even Greater Losses.

๐Ÿ™ˆ๐Ÿ™‰๐Ÿ™Š Google is doing well in many categories of Earnings and Growth; However, Google has a fairly large problem with its Android Operating system. The Problem is the Android operating software has many patent-infringement issues with Microsoft, that are presently mitigated with fees paid to Microsoft the winner in many recent court cases; Samsung is likewise getting ready to dump Android, because of having to pay Microsoft all of the patent-infringement mitigation Fees, and the problems Samsung faces with the Android Fragmentation of its Operating System.

๐Ÿ™ˆ๐Ÿ™‰๐Ÿ™Š Nobody is about to buy either company, of course, but Winkler’s story generated some excitement โ€“ and flurry of copycat headlines โ€“ because it fit the dominant narrative on the Street that Apple is doomed.

๐Ÿ™ˆ๐Ÿ™‰๐Ÿ™Š Apple’s shares have bounced back a bit since Winkler posted that piece, and the company is once again more valuable than Google in pretty much every measure except sentiment on Wall Street (see the stock fever charts above).

๐Ÿ™ˆ๐Ÿ™‰๐Ÿ™Š "The Street sees Amazon as the world’s biggest (online) global retailer with almost limitless growth. [It] sees Apple as a (mobile) device maker that because it is wholly dependent on its ability to innovate nonstop, expand its (ultimately saturated) markets while fighting off competition and controlling its very unstable supply chain, has limited growth."

๐Ÿ™ˆ๐Ÿ™‰๐Ÿ™Š FORTUNE โ€“ In November, the last time we compared Apple’s (AAPL) and Amazon’s (AMZN) price-to-earnings ratios, the simplest and most widely used metric to gauge the relative value of a pair of stocks.

๐Ÿ™ˆ๐Ÿ™‰๐Ÿ™Š Apple’s trailing PE was 13 and Amazon’s was 2,767. We haven’t been able to repeat the exercise because while Apple PE has drifted with its stock price to between 10x and 11x, Amazon’s trailing PE has reached, as Buzz Lightyear might put it, infinity and beyond, (Or, as the stock charts politely have it, NA.)

๐Ÿ™ˆ๐Ÿ™‰๐Ÿ™Š Amazon, gets an NA, on its PE ratio, which reported its June earnings on Friday, hasn’t turned a profit, all Red Ink, for three quarters in a row. What does Wall Street react for this dismal performance, Wall Street rewarded Amazon by pushing its stock to an all-time-high of $312.01.

๐Ÿ™ˆ๐Ÿ™‰๐Ÿ™Š The Apple vs Google vs Amazon can best be told with Graphics. Reviewing these sets of statistics, which reflect actual results… However, the trading values are apparently based on the Company’s Performance by any standard.





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