Michael Church

Apple: Biting off More than It Can Chew?

Look around, i think you will find some rock solid commentary. Obviously there is good and bad.

As to this article specifically, its a rookie assesment. Apple fanatics abound. However, i take note in the recent rise in negative sentiment regarding apple. Its arguement is too simplistic. iPhone is too expensive? Cmon. Pricing in mac book? Cmon. They have the best margins in the business. In fact it is the only PC company with any semblance of pricing.

The biggest mistake in this analysis as i see it, is its complete neglect of the Apple TV product. Shorting apple in the mid 90's is highly unlikely to net you anything but a loss. Apple has made its play to become the defacto distributor of video content. If you have used iTunes you will understand how large this opportunity is. Sure iTunes is not a major earnings driver, however, it has helped drive ipod sales. The video opportunity stands to be even bigger than iTunes, driving both hardware sales and content alike.

Apple has unbundled video. Whether or not they ultimately win as the standard for video content distribution, is anyones guess. But there is one thing certain. Now (or even the mid-90's) is not the time to short apple. not even close. They are on the verge of a major technological and sociological shift. Think about it. They just made a play to become Comcast and DirectTV. Victory may be 2 years out, but its here now. And if they begin to show signs of life in this battle, you will see a lift in price. The market for distributing DVDs and Television is much larger than even iPod. Controlling content has numerous intangible beenfits. And with this platform, distribution is easily scalable to a GLOBAL level.

For those of us who do not soak up 8 hrs of programming week, the decision to rid ourselves of our monthly Comcast bill will be easy. Why would i pay 100 a month for something of which i use 3% of? the answer: i wouldnt. And i wont. And im not alone. Buying the episodes of the Wire and being content with that, will save me some bucks, and make Apple some money. Its a simple concept, but investing in apple takes a simple approach, must liek its products.

Of course, apple has its work cut out in the meantime. Like signing up networks and production companies. Now if they fail in that; u may have a shortable idea. But shorting on its valuation at 95 is a dangerous game. This stock is expensive for a reason.