Student Compares Cost of Apple Products, Stock Value

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Following a wave of renewed publicity, a blog post published by UC Berkeley senior Kyle Conroy has reignited the interest of tech bloggers and market watchers alike.

The post, which was the focus of a March 10 post on the Bits Blog, a technology blog for The New York Times, includes a graph showing the prices of Apple's products upon their release compared with the value of the company's equivalent stock today. Overall, Conroy's research showed that purchasing Apple stock rather than products at the time of their release would have yielded a greater capital profit.

According to the Conroy's research, deciding to purchase $5,700 in Apple stock in November of 1997 instead of a new Apple PowerBook G3 would have resulted in a $324,863 profit.

"It underscores how far Apple has come," Conroy said. "Back then, no one thought that they'd become the company that they are today."

Conroy, a computer science major, said he pursued the idea out of curiosity after reading a forum on Hacker News, a website about computer hacking and startup companies.

"When my parents bought our first computer, it was a Mac, and I had a first generation iPod," Conroy said. "It was interesting to see how much I'd have if we had used that money to buy stock instead."

Conroy said he finished his project in about a day, pulling together information from different websites with code he wrote. When he published his findings last April - at a time when Apple's market value surpassed Microsoft's - the post received immediate media attention. National Public Radio asked him for an interview shortly thereafter, he said.

Some students said that while Conroy's findings were interesting, they would not buy stock instead of Apple products today.

UC Berkeley freshman Jot Grewal said he would not invest, adding that he thought the company's stock was not going to grow as much as it had in the past.

"I think that if people could go back, they would have bought more stock," Grewal said. "Whoever did lucked out."

UC Berkeley freshman Kate Williams said the stock values do not matter as much today now that the company has become so successful.

"If I could personally go back, though, of course I'd invest," she added.

But the economic significance of the research is not an issue of consumers trading products for stocks, according to Martha Olney, an adjunct professor for UC Berkeley's department of economics.

"They're satisfying two completely different needs," Olney said. "If people are buying stock instead of iPods, the price of (the company's) stock will plummet."

Because the price of the company's stock is a reflection of future earning and the earnings of the company come from the sales they make, if everyone bought stock then it would be worth nothing, Olney said.

"If people were buying first generation iPads, it's because they wanted to be the first person on the block to own an iPad," she added.

Conrad, who is expecting to graduate in May, said he will work for Twilio next year, a company that lets developers build applications around voice telephony and text message functionality.


Contact Damien Ortellado at [email protected]

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