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Why Apple won't become a $1,000-per-share company

Apple's New iPhone 4s Goes On Sale

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Apple Store customers look at the new Apple iPhone 4Gs on October 14, 2011 in San Francisco, United States. The new iPhone 4Gs features a faster dual-core A5 chip, an 8MP camera that shoots 1080p HD video, and a voice assistant program.

Apple finished up the day at $545 a share. So it's almost halfway to being a $600-a-share company. Which would put it $400 from being a $1,000-a-share company. And there's a raging debate right now in the financial world about whether Apple can make it across that finish line and become the first-ever $1 trillion market cap company. 

For perspective, no one has even even gotten close. And $1 trillion is about as much money as has been made on the Internet in its entire history so far. Big number. Very, very, very big.

At Business Insider, former tech stock analyst (and BI CEO) Henry Blodget makes what I think is the best case against Apple getting to $1,000 a share:

The most extraordinary aspect of Apple's business right now is not its revenue growth, which is plenty extraordinary. It's its profit margin.

In fiscal 2011, Apple had a mind-blowing 24 percent net profit margin.

Why is that mind-blowing?

It's mind-blowing because hardware companies just don't have profit margins like that. Even software companies don't usually have profit margins like that.

The hardware business is generally a cut-throat commodity business with razor-thin profit margins.

Dell, for example, which used to be considered a talented hardware manufacturer, has a 4 percent profit margin. HP, which sells hardware and software, has a 6 percent margin. IBM, which sells hardware, software, and services, has a 15 percent margin.

So you can understand why Apple's profit margin is mind-blowing.

And—here's the important point—Apple's mind-blowing profit margin may well be a temporary aberration.

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