Apple Value and the Android effect. Solution: Buy Google

Posted on by Mike Evans

Many analysts have commented on Apple's market discount. On the face of things, the share price (and thus the valuation of the company) should be much higher than it is. Sales plough on at a furious rate and profit margins just seem to keep on getting better. Yet the stock is priced at only 13 times earnings. For a tech stock of Apple's dynamism, that's pretty low and out of kilter with major competitors.

Now Horace Dediu speculates on the oft-mentioned suggestion that it is the Android effect that is depressing Apple's stock price. He goes on to suggest, tongue in cheek I presume, that Apple could solve this alleged problem by buying Google, which is worth "only" $160 billion, and shutting down Android. Apple already have a third of Google's net worth in cash.

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