Friday, January 29, 2010

Avoiding the "commodity trap" at Apple (AAPL, DELL)

Dell will do $57billion in revenue this year. Apple will do about the same, on a calendar basis. Yet Apple's stock market value is $175billion, about 7times the market value that Dell has.

The reason? Margins. Dell's most recent quarter saw 17% gross margins while Apple's clocked in at 41%.

Below is a discussion of how Apple prevents its wares form being commoditized like Dell's. Oh and in full disclosure, I'm long Dell instead of Apple, thanks to Dell's juicy Free Cash Flow Yield.


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