UBS

The S&P 500 with and without Apple: Round 2

March 25, 2012: 6:21 PM ET

The picture is even more striking than it was a month ago

BarCap via Business Insider

In February, Jonathan Golub at UBS started a new fashion on the Street by publishing two versions of his regular quarterly forecast: one for the S&P 500, and another for what he called the "S&P 500 ex-Apple."

Strategists at Morgan Stanley, Goldman Sachs, Barclays and Wells Fargo soon followed suit.

In Golub's February calculation, the S&P 500's Q1 2012 earnings were on track to rise 6.8% with Apple (AAPL), but would shrivel to 2.8% without.

"By stripping away that one single company," Golub told the Wall Street Journal, "it is like seeing light through a prism — you see things more clearly."

Last week, Dan Sanborn of Ned Davis Research took another look at the S&P 500 through Golub's prism and saw an even wider spread. Now, according to Sanborn, the index's total earnings growth drops from 7.8% year over year with Apple to just 2.7% without.

Meanwhile Barclays Capital has produced the chart above -- spotlighted Sunday on Business Insider by Joe Weisenthal -- showing the earnings growth of the tech sector with and without its star player. What was a gap has become a chasm.

I'm reminded of Horace Dediu's response the last time this came up. In his Feb. 22 Critical Path podcast, the founder of Asymco.com described his "visceral reaction" to the notion that Wall Street would take Apple's stellar performance as a sign of pessimism, an indication that things aren't as rosy in the broader economy as they seem.

In his view, these with-and-without-Apple analysts have it exactly backward.

Rather than being the exception, he suggests, Apple may be the rule that defines a new era in business. The company is not there to make up for the deficiencies of the rest of the economy. Rather, it is the engine of growth for its era, redefining our ideas about marketing and productivity and changing business processes across whole industries, much as GM (GM) did in its time and IBM (IBM) did in its.

See Apple as the new GM for a summary of Dediu's analysis and the last third of The Critical Path, Episode 26, for the whole megillah.

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