Measure twice: Then pick whichever measure makes Apple look worse


Would you be surprised to learn that while Apple is still tops in one measure, it is no longer tops in another, less meaningful measure?! Shocking, but true!

The Financial Times warns of “Another bite taken out of Apple’s status.” (Tip o’ the antlers to @JonyIveParody.)

Another. Because there have been so many, you see. So many dainty, dainty bites. What is this, a cotillion? Dig in, Miss Amelia Farnsworth of the Charleston Farnsworths.

Apple is no longer the world’s biggest public company, by one measure at least.

One ridiculous measure.

Without any fanfare, it was surpassed last month by Alphabet, formerly known as Google. Measured by market capitalisation, Apple remains bigger, at $535bn compared with the search giant’s $485bn.

Alphabet, which, according to Oracle, has made as much on all of Android as Apple makes in one quarter on the iPhone and paid Apple $1 billion to stay the default search engine in Safari.

Apple still remains the largest by the measure most people use. Yes, possibly because it’s the easier one to calculate but also because it’s not entirely the wrong measure like the one the Financial Times wants to use.

But looking at enterprise value, which includes debt and subtracts cash to give a more complete picture of a company’s worth, Alphabet overtook Apple in December and is now worth $420bn compared with the electronics company’s $393bn.

This is completely bass-ackwards. It’s practically Bassmasters-level bass-ackwards. It’s the Bass Pro Shop of bass-ackwards, with a fishing pond, archery range and a bowling alley. It’s the Big Mouth Billy Bass of bass-ackwards, is what the Macalope is saying.

Bass jokes. Who knew there were so many? Rural standup comedians, probably.

Enterprise value is a fine measure if you want to buy a company, but as a measure of status — you know, like what is says in the headline — it’s completely wrong. Because under this measure, you could just run up your credit card a few hundred billion dollars and be considered more valuable than Apple. The fact that debt is what makes Alphabet more “valuable” probably should have been a tipoff.

From its high in 2015 to now, Apple has shed more than $200bn in equity value.

The Macalope would not be surprised to learn that this is the most quoted statistic in all of finance over the last three months. Because, you see, AAPL must always be compared to how it’s fallen from its 2015 high of 133 instead of, for example, its 2014 low of 71. Yes, that’s right, AAPL is at a catastrophic low not seen since October of 2014 when it was, as we all remember, worthless. What were its key products from way back then? The Performa 6400? Cyberdog? Who can even remember?!

Investors are haunted by Apple’s overreliance on the iPhone.

Investors should read this piece by Neil Cybart. Or this one by Jamal Carnette. Or maybe enroll themselves in a 12-step program for nervous nellies. Or just read something about long-term investing.

Regardless of the merit of enterprise value as a measure of status, it’s certainly true that Apple’s share price has fallen since all the way back in mid-2015. But that says more about the cognitive skills of investors and analysts than it does about Apple’s performance and prospects.

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