Bye Bye Apple 40 comments
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I sold my remaining shares of Apple, Inc (AAPL) yesterday, into strength after their earnings report. This was a strategic decision. I have wanted out of Apple for a long time, but wanted to get more money for my shares.
My reasons for selling Apple are outlined here. That article was published more than a year ago, but all of its points are still valid. Actually, they are more valid now. Point by point:
Steve Jobs' health is much worse, and Apple still doesn't disclose this material information. Even the SEC is investigating the matter.
iPod market is not growing.
Computer market share is down, in the faltering economy. It will grow back, but growth is limited for obvious reasons (price). I still don't see serious attempts to get into enterprise computing.
iPhone market share is growing fast, so far. But there is competition around. Research in Motion's (RIMM) Blackberry is still king of corporate smart phones. Palm Pre might or might not be Palm's (PALM) savior, but it's a pretty interesting product. Google's (GOOG) Android OS is making inroads, and there is a lot of free software for it. And, unlike iPhone, Android plays flash movies (and flash plugin is promised for Palm Pre). There are also a lot of smart phones using Simbian OS. And some Linux based.
Another problem is size. Apple is just too big to grow as fast as it did the last 10 years. But P/E is still suggests fast growth. I don't see any new areas where Apple can introduce new products and make money. Unless they want to change the video game industry. But margins on game hardware are not what Apple is used too.
In short, Apple is not good enough as an investment. The stock can be used for trading and I will keep it on my radar for that purpose.
Full disclosure: at the time of publication author had a long position in GOOG and no positions in other stocks mentioned. Positions can change any time.
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This article has 40 comments:
ericsmusclecars.com
oooo kkkkkkay.
Hanging on for the ride. Praying for another split.
Kids will love it after I'm gone
He may leave some money on the table, but I applaud his decision making process, only one person gets the top price.
Palm Pre ? Thats already a has been product... bring out the next "iphone killer".
Yessir ... I gotta agree with the others... the author is an idiot.
But how long the moment? What about this company -- it's "DNA" if you will? Easy. This is one smart, hot, loved, energized company hitting on every damn cylinder. The investor in me loves that, and I'm a REAL investor -- long, family, steady, eye on retirement. Where else should I be?
Job's health - his chances of surviving the next five years are greatly improved.
iPod - it's a mistake to separate iPod and iPhone sales numbers. But even so it's still a cash cow.
Computer market share down - this is murky at best when there has been an explosion of net-book devices to muddy the waters. AAPL still get about one out of every four dollars spent on a computer.
AAPL too big - with 7 percent market share (or less) AAPL has tremendous room for growth. And the iPhone is just getting started.
Conclusion: AAPL is still a buy at the 155 level - with $34/share in cash and the economy likely to recover in the next year there are good times ahead yet for AAPL.
That old horse has been around since forever.
But it doesn't explain my 12.00 purchase of Apple stock which has split twice and grown in value to 157.00.
Let's see...Buy aapl at 12, split, split, own at 3.00.
3.00 to 157.00...yup, that's to the sky all right.
Maybe Apple trees grow to the sky...
2) Of course the iPod market isn't growing; it's reached saturation. That point becomes moot, however, when you consider the number of current iPod users that are eager to invest in the newest incarnation of the iPod when they are introduced. How many other media player manufacturers can boast that kind of confidence from their customer base?
3) Computer market share down & current sales reports up due to the new MacBook Pros? Ever heard of preparation meeting opportunity? This equates to stocks on sale! Now's the time to be buying, not dumping! Oh well, more for me!
4) Yes, there is competition for the iPhone, but so far nothing has trumped Apple's "sex appeal." Would people rather own an iPhone, or the latest iPhone wannabe? What Apple understands that no one else seems to get, is the best position is to be the innovator, not the company playing catch-up.
5) Apple is big. Yes. But look at their market share in computers. As far as computer companies go, they have so much room to grow into! And their computers are getting increasingly more popular, due in no small part to the halo effect of their other peripheral products.
You, like so many others, just don't get Apple. When you analyze a company, don't try to fit it into the generic mold of a number of cookie-cutter tech stocks, look at their pattern as an autonomous company. Apple bucked the system years ago and shows as much innovation in their market behavior as they do in their products. They are an anomaly, and that's not by accident. If anything, Apple's size only reinforces its stability in addition to their still-very-viable room-for-growth status.
On Jul 23 09:00 AM lovethelanguage wrote:
> What a strange series of statements to make about a company that's
> killing in a down economy. Of course you don't see the new areas
> for Apple to move into and dominate, but that doesn't mean that they
> don't exist. Apple finds these and others don't; that's why they've
> performed. You have no idea what Steve Jobs' level of health is,
> and though I agree we all should have a little more info, the company's
> performance these last few months should have allayed some of your
> fears. With China's iPhone market on the way, the near certainty
> of a video-recording-and-ed... refresh on the iPod, and the likely
> continued halo effect (did the recent MacBook pro numbers escape
> you?), AAPL's probably got some room to run. I'm long and staying,
> so bye bye, Alex!
That iPod replacement???????
All new iPods will have cameras and or a choice of Wifi or not.
That is what the kiddies want.... and that is what Jobs & Co. will deliver.
OH WAIT!!!! Maybe I will hold out for a ZunePhone. COME ON!!!
These new iPods are going to FLY off the shelves!!!!!
www.businessinsider.co...
I believe you should rethink the whole issue. First, sell google. Next reinvest all of your trading cash and sidelined cash in a long position in Apple. Get away from the market and get a good nights rest. You wont have to wait long to reap the benefits. In fact this is good advice for most who haven been able to predict the moves of most stocks in this market...and the long position will probably yield you 150% by sometime around Jan 23 of next year....
By the way, please do keep writing articles such as those you normally author...some very thoughtful ... in revisiting essential economic justice issues - especially while the economy remains in a flux and were still in recovery. No one else is doing these very thought provoking pieces in spite of in-the-box thinkers and nay-sayers who populate the comments sections following them..
Apple still owns a tiny share of the overall market. It will easily pass all forecasts for the following reasons
1. Steve Job's illness heightened the strength of Apple's Management Team. I have full confidence in the direction of the company over the long term.
2. The ipod market, while a driver for sales has transistioned as a growth vehicle for the company. There will always be strong steady sales of these devices - however customers will flock to iphone/itouch/itouchpad solutions --- rather than shuffles. Over time the price of these high end devices will come down as adoption rates increase. Additionally ipods have a halo effect. - Trust in the ipod yields trust in Apple laptops and desktops. Energizing sales.
3. Enterprise - Enterprise adoption will skyrocket with Snow Leopard. The achilles heel of the corporate market is Active Directory and Outlook/Exchange. Snow Leopard will "cure" - corporate america's passe view of Apple's enterprise offerings.
It will be a better long term choice to purchase at a premium Apple's solid hardware offerings -- than to continue to invest in Dell/HP/Chinese PC offerings - Corporate America will understand that by the time Windows 7 is launched.
4.Changing technology - Apples investment in its own chip DNA and the arrival/adoption of new battery technology will herald Apple's continuing dominance at the upper end of the market.
5. Microsoft. - Will continue to imitate Apple and disappoint customers. Cloud offerings of the Office suite will diminish the sales.
6. China.- Apple's iphone offering and its support for languages will blow a new revenue channel. Africa.( Hey they just got high speed access to East Africa this week. LOL).
7. Areas where Apple is missing - rugged computers, Point of Sale Software, Database/Cloud Clients (Filemaker is a gem with potential), Speech/Natural Language interfaces, an imovie type of application for Animation - the areas for innovation are limitless. Anywhere Apple can create an application to simplify a process it can create a market leader.For example iTunes started as a music app for the Mac made by a third party company before it was bought by Apple and made into iTunes
The seismic shift in computing will not be faster processers but streamlined Apps.
Disclaimer. I own 1 Apple share and wish I could afford more.
I'm a single-digit holder also - think I paid about $8 per share, now split twice to about $2 per share invested (can't find my original order, but it was an IRA buy, so $2000 for 245 shares) Still can't keep my stomach from churning through these ups and downs, but I keep looking at what the future could bring. Could end up with a fortune in AAPL, or ???
On Jul 23 09:26 AM faithful wrote:
> BOT in single digits years ago. Splits YEA.
> Hanging on for the ride. Praying for another split.
> Kids will love it after I'm gone
1) Don't sell out Steve Jobs. I've had a liver transplant. I would love to know what he came up with while laying there recovering. Nothing drug induced - I know. When your body has been beat down to nothing, your mind is your savior.
2) I think they will do well in a down Christmas this year, too. For many, if you have to cut back it's going to be one good gift instead of a bunch so-so gifts. We saw this last year, too.
Answering to some of them in no particular order:
They can't fire me from financial analysis industry, I am IT specialist (it's in my profile, BTW).
Apple is a great company, but company and stock are different things.
It's quite possible that there is a lot of money to be still made on Apple stock, but risk, as I perceive it, is too high. I always claim the right to be wrong.
I bought Apple in 1999-2000, when almost nobody believed in company. I pocketed around 1200% at average.
Last, but not least: I always tried to zig when everybody zags, and the fact that majority of comments are in support of Apple (and, I assume, already bought stock), confirms that selling now is a good decision.
Again, I claim the right to be wrong.
As for Jobs, he seems good for a few more years although a bit less dynamic. I figure by that time competition in the high end cell phone market will be sizzling. there is still time to get out if your worry is Job's health.
go AAPL go Steve
There is a large elephant in this room.
APPL results.
I think you should be made to disclose what YOU know then.
You said "Steve Jobs' health is much worse". Dude, if anything, Apple's ability to execute while Steve was on leave, should reassure investors that Apple will continue to execute with Steve or without.
You said, "iPod market is not growing." Yes, because it is being cannibalized by the iPhone. When you add the iPhone back in, then the mobile music player market is still growing, as are iTunes downloads.
You said, "Computer market share is down" Of course it's down. The computer market is being diluted with netbooks. If you were to separate out this group, then Apple share is up. If you include netbooks amongst computers, why not include smartphones, seeing as they both are used primarily for email and surfing the net.
You said, "I still don't see serious attempts to get into enterprise computing." You do know that Apple is building in Exchange support into the core of the OS? Not even MS does that.
You said, "iPhone market share is growing fast, so far. But there is competition around. " Thank you for stating the obvious. You have added no insight whatsoever.
You said, "Another problem is size. Apple is just too big to grow as fast as it did the last 10 years. But P/E is still suggests fast growth. I don't see any new areas where Apple can introduce new products and make money." So, which is it? Apple is too big, or it suggest fast growth? Huh? And, do you really think you know where Apple will innovate next? Did you predict the iPod? Did you predict iTunes? Did you predict the iPhone? No? Why do you think you have the ability to predict or not, the next thing Apple does?
You said, "In short, Apple is not good enough as an investment." LOL, based upon your analysis or lack thereof, I think you should not consider investing as a means of employment. Perhaps, as a hobby.
However, if one thinks this maket rally is headed for another downer this fall, now might not be the worst time to get out on top - and but back in lower if/when the markets sink again this fall due to the possibility that all this jobless recovery will actually result in a huge drag on consumer spending this fall/winter season.
Tough to buy an iMac or PS3 if you have no job and your unemployment benefits ran out mid-September.
"1. Steve Job's illness heightened the strength of Apple's Management Team. I have full confidence in the direction of the company over the long term."
AAPL announced no dramatic innovations during his absence, which was too short to expose any impact we will see should he leave the company.
"2. The ipod market, while a driver for sales has transitioned as a growth vehicle for the company. There will always be strong steady sales of these devices"
Never say always. Sony invented portable music with Walkman. Go look at their market share now.
"3. Enterprise - Enterprise adoption will skyrocket with Snow Leopard. The achilles heel of the corporate market is Active Directory and Outlook/Exchange. "
I think this is naive. I don't see AAPL having any experience in or focus on the corporate market. Think - why does iPhone not challenge Bberry in corporates? AAPL excels on aspects that consumers care about and businesses don't. When was the last time you saw an AAPL product in use in a bank, airline etc?
"4.Changing technology - Apples investment in its own chip DNA and the arrival/adoption of new battery technology will herald Apple's continuing dominance at the upper end of the market."
There may be differentiators here, but differentiators don't make products. Nobody will ever buy an AAPL battery for the sake of owning the battery. These things aren't products. While innovation is good, we need to see products, not technologies that go in products.
"5. Microsoft. - Will continue to imitate Apple and disappoint customers. Cloud offerings of the Office suite will diminish the sales."
Agreed on Office, but I don't see AAPL getting this business. In my opinion windows 7 is brilliant. It is just about as easy to use as Mac. OS's are now almost completely commoditized. MSFT will eventually fully catch up with Mac. Do you really think we will see dramatic innovation in the OS space?
"6. China.- Apple's iphone offering and its support for languages will blow a new revenue channel. Africa.( Hey they just got high speed access to East Africa this week. LOL)."
Yes. AAPL isn't nearly done exploiting iPhone which is the primary reason I think this author's call is early. As others have questioned, what comes after iPhone?
"7. Areas where Apple is missing - rugged computers, Point of Sale Software, Database/Cloud Clients (Filemaker is a gem with potential), Speech/Natural Language interfaces, an imovie type of application for Animation - the areas for innovation are limitless."
These are all commercial application areas. AAPL has shown no appetite for or ability to tailor it's product for the needs of this segment which are very different from consumer areas. You won't see a corporate IT dept. buying iphone because the screen rotates when you turn it, no matter how much it pleases a consumer.
Agreed - but does it not seem prudent to hold AAPL until the point where you are no longer satisfied you are seeing sufficient innovation?
For me the iphone is enough to carry AAPL another 2-3 years along with all the other brilliant products. By perhaps half way through this time (and you're right I can't predict what it is) I will need to SEE the new product. The fact that they innovated in the past and ARE LIKELY to innovate again in the future is not enough.