Asymco's Horace Dediu has mastered the art of the eye-opening AAPL graphic
Among the rarefied group of amateur analysts who follow Apple's (aapl) financial movements like a obsessed fan tracking a favorite band, Horace Dediu is a rock star. In the six months since he has been posting his thoughts and analysis on asymco.com, he's attracted a small but influential following, including many past winners of our quarterly Analysts Smackdowns. In his debut effort -- our Q3 2010 contest -- he finished first. See here.
An app developer and former market analyst for Nokia (nok), Dediu writes dispatches that are terse and ironic, sometimes at the expense of clarity. His Aug. 1 entry begins: "As despondency over Apple’s 75% earnings growth rate continues, it’s time to revisit the historic P/E in contrast to growth for the company’s earnings."
His graphics, however, are a revelation, each highlighting some vital but largely overlooked aspect of Apple business. We've picked five of our favorites, starting with the "
Sales by Product
" graph above -- as pretty a picture as we've seen of Apple's explosive growth over the past five years. More below the fold.
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This chart below was singled out for praise Tuesday by Daring Fireball's John Gruber, a brush with fame that was enough to crash Dediu's server. The bar graph breaks Apple's enormous holdings in cash and cash equivalents into three types of investments, one of which -- long term marketable securities -- is not included by many financial reporting services. "This is a tragic error," Dediu writes. "The orange colored bars represent long-term securities. If they are excluded, an investor may conclude that Apple’s cash has been *declining* since 2008 when the opposite is true."
This series, posted Tuesday evening, goes where recent reports from IDC and Canalys failed to go: to company earnings reports to get the worldwide mobile phone sales of "all vendors that matter."
From the bar graph, Dediu draws four conclusions:
- The pure play smartphone vendors (HTC, Apple and RIM) are growing rapidly and capturing most of the profits.
- LG and Samsung are taking share from Nokia but losing margins.
- “others” are doing well at the low end.
- Sony Ericsson and Motorola are transitioning from mass market vendors of commodity voice products to niche vendors of Android commodity data products.
This one is so simple I'm surprised I've never seen it done before. It shows Apple's year-over-year sales growth in each of its main product lines as a color-coded spreadsheet. The solid greens speak for themselves. Note the number of two- and three-figure percentage increases within the cells.
Dediu specializes in complex stock fever charts. We've selected this one because it's easier than most to follow. It shows Apple's stock price (green) climbing while it's price to earnings ratio (yellow) and -- even more telling -- price minus cash holdings to earnings ratio (blue) approach historic lows. "(P-$)/E is the same now as it was in August 2009," he writes, "and shows no consideration for 75% average earnings growth since then."
This is why many investors believe that Apple, which closed Tuesday above $261 a share, may still be undervalued.
[Follow Philip Elmer-DeWitt on Twitter @philiped]