The "Other" Joe

I’m sure he won’t mind be referred to as the “other” Joe, since he’s so extremely well known in the industry.  I’m speaking about Dr. Joe Webb, and I want to share this tidbit from some of his recent commentary in WhatTheyThink.

“Speaking of living beings, the Pew Internet Survey reported a near doubling of U.S. tablet computer owners in about a 4-6 week period: “The share of adults in the United States who own tablet computers nearly doubled from 10% to 19% between mid-December and early January and the same surge in growth also applied to e-book readers, which also jumped from 10% to 19% over the same time period.” Pew also stated that 36% of households earning more than $75,000 now have tablet computers, and almost one-third of those with college educations had them. There was a big leap in ownership for consumers under 50 years old. ”

According to an analyst interviewed on Bloomberg, Apple’s profits in calendar Q4-2011 were $13.1 billion, which exceeded average analyst projections by 36%, and revenue beat their forecasts by $7.3 billion, with sales in the quarter of $46 billion. Great, Apple had an excellent quarter, and there’s good reason why the stock broke the $500/share level. Except that’s not the interesting story.

Apple is in the S&P 500 index, which had a gain in profits for calendar Q4-2011 of +4.4%. But if you drop Apple out of the calculation, the remaining “S&P 499” shows a decline of -4.2%. Now that’s a story. So Apple’s $13 billion in profits, more than 25% of its revenues, is distorting the rest of the stock market. The disparity in performance is so large that investors are worried about diversification in exchange traded funds (ETFs); Apple’s value now represents 16% of the value of the NASDAQ 100 index.”

What I find of interest — and what Joe calls to our attention — is that Apple is the 800# gorilla of the digital and financial world.  And this commentary was written nearly a month ago — prior to Apple announcing what they were going to do with the $100 billion in cash they were sitting on and before the introduction of the iPad3.

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