updated 03:50 pm EST, Wed February 15, 2012
Company disrupting views of American economy
Some financial analysts are having to omit Apple from results to properly track the Standard & Poor 500 stock index, notes the Wall Street Journal. Apple shares are currently worth over $500 each, making the company biggest in the US in terms of market cap, valued at over $475 billion. As a consequence, though, analysts with firms like UBS AG, Morgan Stanley, Goldman Sachs, Barclays Capital, and Wells Fargo have decided that Apple is distorting views of the US economy.
UBS remarks that with all companies included, S&P earnings are predicted to have risen about 6.6 percent year-over-year in the fourth quarter. Taking out Apple shrinks the growth to just 2.8 percent. "By stripping away that one single company, it is like seeing light through a prism -- you see things more clearly," says UBS' Jonathan Golub.
Apple made approximately $13.1 billion in profit off of $46.3 billion in revenue during the quarter, generating about 6 percent of S&P earnings during the period. The effect is amplified when narrowing focus down to technology companies; Goldman Sachs' David Kostin observes that Q4 growth should be 21 percent with Apple, but 5 percent without.
"What's happening with Apple is real, because Apple's earnings are real and any wealth accruing to Apple gets into the hands of US shareholders," adds Barclays Capital's Barry Knapp. "But to actually be able to look at trends and look at what's happening to [other companies], not just the one that's so exceptional, it is important to strip Apple out."