KenC

10 Reasons Not to Buy Apple

You wrote: <<1. Highly competitive markets
The chart below shows Apple's (AAPL) revenue share according to product. All of Apple’s product lines are in highly competitive markets and subject to rapid technological change and aggressive pricing.>>

Yes, and what tech companies don't compete in highly competitive markets? Wouldn't it be better to say that Apple has ALWAYS competed in highly competitive markets and has carved out a successful niche in all of them? They are at the forefront of rapid technological change and have been driving aggressive pricing where they have pricing power, like in iPods and iPhones, iTunes and the AppStore.

You wrote: <<2. Lower margin
Business Week reported on June 19, 2009 that the cost of components for Apple’s iPhone 3G is $179.16, while its retail price starts at $199. >>

This illustrates that you don't even know that the iPhone is subsidized, and is Apple's highest margin product!

You wrote: <<3. iPhone relies on single carrier>>

Uhm, room for growth?

You wrote: <<4. No room to grow for wireless market
In the US, 90% of Americans eligible to use a cell phone already have an account. There is simply no meaningful growth in this market sector.>>

Yeah, and there was no room to grow when Apple entered this sector two years ago, and look at how they've grown! You need to stop overgeneralizing and look at specific sectors that Apple is targeting. They are targeting smartphones, not the general cellphone market.

You wrote: <<5. No room for iPod growth>>

Apple is evolving the market from pure music players to include game players and cameras and whatever else they can think of. There's plenty of room for growth if you look at what the iPod touch can do.

You wrote: <<6. Wrong market target>>
And, what is the right market target? The one Dell is in? Why is BB trying to expand into the consumer space? And, pc share stats are skewed by the proliferation of cheap netbooks. You need to segment the pc market to those areas Apple actually competes in to show that their market share is declining.

You wrote: <<7. Heavy investment needed for Mac stores>>
Yes, and Apple has about $30B in cash that they can spend. As an investor, would you rather they not have stores?

You wrote: <<8. Steve’s health
It’s the process, not the pocketbook, according to the management consultancy Booz Allen. Without Steve Jobs, no matter how much more money Apple spends in R&D, there are unlikely to be more many new, revolutionary products coming to market from Apple soon.>>

Of all the companies out there, Apple may have the strongest corporate culture of all. They have internalized "the process", so that all the top execs from Cook to Ives to Shiller know it. Why should any investor rely upon your unsubstantiated conclusion that there won't be any more new and revolutionary products?

You wrote:<<9. Unclear future strategy
The next big thing in consumer electronics seems to be in home digital entertainment. With iPhone, Apple is moving into communications. I doubt iPhone could be a central control for home entertainment systems.>>

Wow, you are clueless. The iPhone AND its descendents, are the most likely devices that will be the central control for home entertainment.

You wrote: <<10. SEC investigation
Apple’s past stock option practices and the restatement of financial statements may result in additional litigation against the company.>>

The SEC investigation of Apple's stock option grants is CLOSED.

I am thinking of writing an article on ONE REASON NOT TO READ HAO JIN's posts: 1. Total lack of clear thinking.