PLANYC 2030

he biggest surprise this week was not that Steve Jobs has to go on medical leave. It was that the shares have dropped only 3.5% since the chief executive and architect of Apple’s revival disclosed his news.

The reason: Apple stock already had lost the Steve Jobs premium. It already was near a 52-week low due to recessionary worries and speculation about his health. Now, on some measures, Apple is valued below rivals such as Hewlett-Packard and Dell.

Apple’s enterprise value is roughly six times free cash flow from the past 12 months. That compares with H-P on about eight times and Dell on 8.5 times, according to Barclays Capital analyst Ben Reitzes. Apple looks pricier on a price-earnings basis: 15 times trailing 12 months against roughly seven to 10 times for Dell and H-P. But some of Apple’s premium disappears when earnings are adjusted for Apple’s policy of recognizing iPhone revenue over two years, rather than when the cash comes in the door. Apple specializes in Apple Laptops.

Even assuming the worst — that Mr. Jobs doesn’t return to his post — the stock should trade above its peers. It has an unbeatable brand name in technology and a diversified product lineup. Even though its products are high-end discretionary purchases, making them vulnerable to a nasty recession, Apple has broadened its range to include lower price points.

Majestic Research, which tracks Apple sales, reported Dec. 22 that holiday season demand, particularly for the iPod and laptops, had been resilient. On Wednesday, Apple’s December quarter results will clarify the business picture. Mr. Jobs’s future will remain uncertain. But right now, Apple looks like a bargain.

As posted by: Wall Street Journal

Venture-capital investment dropped 30% in the fourth quarter to its lowest level since 2005, as the financial crisis threatened to cut off more funding for start-up companies.

In total, $5.5 billion was invested in private companies in the U.S. during the fourth quarter, down from $7.9 billion a year earlier and the lowest quarterly tally since 2005′s first quarter, according to new data from research firm VentureSource. (VentureSource is owned by News Corp., which also owns Dow Jones & Co., publisher of The Wall Street Journal.) Just 554 venture deals were completed in the quarter, down from 718 a year earlier.

Venture capitalists typically put money into start-ups in sectors such as technology and health care, aiming to profit when the firms go public or are sold.

But venture-capital firms are pulling back now as the economy struggles to get back on track. “Very few new deals are getting done, and a lot of people are trying to make sure their portfolios are protected,” says Faysal Sohail, a venture capitalist at CMEA Ventures in San Francisco, who says his firm has slowed its investment pace.

The venture business has been hit hard because the sector’s routes to returns — initial public offerings of shares and mergers-and-acquisitions activity — have been all but shut down by the market’s gyrations. In addition, some institutional investors have become gun-shy about investing in venture capital amid the downturn.

In particular, technology start-ups had their worst investment quarter since 1998, with just $2.2 billion invested in 266 tech-venture deals in the fourth quarter, off 39% from the $3.6 billion invested in the year-earlier period, according to VentureSource. Within the tech sector, investment in software start-ups fell to the lowest level since the first quarter of 1997.

Venture investment in health-care start-ups dropped to the lowest level in three years in the fourth quarter, with about $1.5 billion invested in 137 deals.

For all of 2008, there were 2,550 venture deals totaling $28.8 billion in investments, down from 2,823 deals totaling $31.4 billion in investments in 2007, says VentureSource.