Thursday, January 19, 2006
Steve Jobs on A Roll
The latest news about Steve Jobs rumor Pixar being acquired by Disney. If such an acquisition occurs, Mr. Jobs will likely become a director and own over 9% of Disney stock. It's appropriate. If there were a modern-day incarnation of Walt Disney, it would be Steve Jobs. Steve Jobs has an eye for what makes us feel good. Just as Walt Disney created cartoon characters that made us feel good, so, too, do the animated characters of Pixar and the products of Apple make us smile. In fact, the holiday season at our house was practically a Steve Jobs event. Despite the vigorous protests of my Apple-hating and trend-averse son Ross, the Granowski household acquired two iPods and one iBook. I'm learning that for evaluating a "consumer franchise," that most profitable kind of business, there's more than Microsoft/Intel functionality. There's good feelings - and people are willing to pay for that. If you don't believe it, look at the net margins of Pixar - an amazing 50%! (For the non-financial reader to have a sense of this number, the average net margins for a company in the stock market are about 7% and only rarely exceed 20%.)
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Sounds like your family bond is pretty superficial. Maybe next year you could make gifts for each other. I find that homemade presents are so much more meaningful than iPods or similarly shallow substitutes for love.
ReplyDeleteWow. It took another 10 years before AAPL stock became cheap enough to buy. In the meantime, AAPL was up nearly 10 fold, DIS doubled and the market was up by 50%. The "consumer franchise" concept is so valuable that it is difficult to find reasonably priced entry points. The same issue has followed the pricing of Facebook (FB) and Amazon (AMZN). Does this really point to "throwing away calculators"? It's certainly an argument against traditional valuation methods.
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