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10 Reasons Not to Buy Apple

Apple's added value is its OS, including iPhone 3 and its Safari browser. The hardware in its MP3 player is available elsewhere, but iTunes and the iPod, iPod Touch software is available only from Apple. These products and the iPhone are actually small computers. Their numbers will help convert massive numbers of persons who, until now, used PCs driven by Microsoft's OS or by variants of Linux. Because OSX is so stable, based on a Unix kernel, it offers a good alternative to Windows, which still has a commanding share of the PC market. These factors lead me to believe that Mac computers will continue to gain share at MS's expense. I am long AAPL and short MS, originally in equal dollar amounts. Current dollar position is better than 3:1 AAPL and continues to increase. As the author points out, the consumer market is very competitive. Apple has been rewarded by consumers because Apple continues to provide very satisfying products to those who seek such satisfaction. I expect Apple's GMs to remain above those of most of its competitors, if not all of them. Only the policies of the current administration give me reason to be more cautious. So far, Obama's policies have destroyed about $4.5T in equity. His bias against free markets, favoring central controls, is a much greater threat than MS, Sony, HPQ, Ericcson, Palm and RIMM combined.

AAPL's Time For Greatness Is Now

The "market" "knows" that Apple's iPhone revenue is deferred. Hence, the current share price reflects that knowledge. Why then does the share price appear to undervalue the stock? I believe there is a general mentality in financial markets (and in the culture) that focuses on short-term results. Many do not forsee continued growth in earnings that would lead to P/E multiples closer to 30 than 20. Hence, Apple in my opinion is currently undervalued. If you agree that the long-term will bring greater rewards, then buy --and be patient. In the interim short-term traders will be rewarded or punished -- both for the same reason, Apple's inherent volatility.