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Major is not another stock expert. Major is an ordinary guy who believes that: by learning and disciplined investing little guy can beat many “experts”. Major grew up in China and came to US for graduate study in 1997. Currently Major works as technical consultant for a software company. Major... More
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  • iPhone is two years old 0 comments
    Jun 19, 2009 3:32 PM | about stocks: AAPL, MSFT

    Not exactly, but close enough (here is a post I wrote on June 29, 2007 when iPhone started). Today the new iPhone 3G S is on sale at AT&T store, as I understood. This time iPhone did not generate as much buzz, but I heard my favorite tech writer Walt Mossberg was also standing in line (he already has a free iPhone from Apple for review, maybe he is buying another one for his wife/girl friend). Here is his tweets:

    “Just gave up on iPhone line. Have to get to work. Should have ordered online. But scored a free bottle of water.”

    Fun aside, I was thinking, now that millions of iPhone & iPhone 3G have been sold, thousands of iPhone App has been written, what did it do to Apple stock (Nasdaq: AAPL)? After all, a company develops new products to create shareholder value (I mean, after create value for consumers, and taking care of its employees). The answer is not much, from google Finance, we can see, from June 29 2007 to June 19 2009 (today), the stock rose $14.47, or 11.85%. You may say 2 years stock market may not be reflective of the reality, plus we had a financial crisis, and a recession now.

    All right, Microsoft is a much valuable company in 2009 compared to 2000, after Windows XP, .NET, Xbox, Zune, and Bing. But look at its 10 years stock chart (NASDAQ:MSFT) (again via Google finance), from 1999 to 2009, it’s down about 43%.

    What? Something is wrong here. I am thinking one explanation is: at certain point, say a company market capital reach $100 billion, it’s hard for them to grow market cap, because it’s just too big. They can sell more computer or software (much more), develop new products like iPod, iPhone, XBox,…but the needle is so big, it just can not be moved easily.

    Maybe similar arguments can be made to Berkshire Hathaway, Wal-Mart, Coca Cola, General Electric? I remember Buffett used this needle analogy at one time.

    Another point I want to make is, although a large company could not create as much shareholder value as before, launching new products did create value for the whole eco-system (besides employees, customers, they create opportunities for suppliers). One example is the iPhone App developers.

    Disclosure: No postions in AAPL, MSFT and other stocks (BRK, WMT, KO, GE) mentioned.

    Stocks: AAPL, MSFT
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