Apple's 'Misunderstood': David Einhorn

NEW YORK ( TheStreet) -- David Einhorn doesn't think Apple ( AAPL) is just undervalued, he thinks it could be the world's first trillion dollar company.

Speaking at the Ira Sohn Conference yesterday, Greenlight Capital's Einhorn classified Apple has being "misunderstood."
David Einhorn (Greenlight Capital)

The misunderstanding is that Apple is not a hardware company, but rather a software company, he said. The value of the Cupertino, Calif.-based technology giant lies not within the iPhone or iPad, but within iOS, iCloud and the App Store.

Consumers will tend to want to buy more Apple products because of the "stickiness" of Apple's software, and there are no privacy problems. Einhorn, who also said he was wary of investing in China, said that if the Chinese want Apple products, they have to buy Apple, not a fake.

Einhorn noted that Apple has a great balance sheet with a low earnings multiple, and could eventually be worth $1 trillion in market cap if CEO Tim Cook continues to build on the legacy of his iconic predecessor, Steve Jobs.

He offered a solution that could eventually cause Apple to rise 62%, where the company would offer perpetual preferred stock at a dividend rate of 4% to 6%.

Einhorn also discussed a myriad of other companies during his presentation, including Amazon ( AMZN), which he said was taking market share away from retailers, but had low operating margins.

Amazon has recently started expanding into sporting goods to compete with Dicks Sporting Goods ( DKS). Einhorn said that Amazon's future was a "riddle," while Dicks' future was not.

Einhorn also had negative comments on Martin Marietta Materials ( MLM), saying the company should not be trading at 35 times earnings, especially for a cyclical company.

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-- Written by Chris Ciaccia in New York

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