Apple set to announce likely its best quarter ever on January 24

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  • Reply 61 of 64
    misamisa Posts: 827member
    Quote:
    Originally Posted by melgross View Post


    What some financial people don't understand it that for most of Apple's businesses, they are in a small minority of marketshare, so as long as they make very good products, that marketshare will continue to move up. When they create a new market, they have that first product to lead it. Companies that have that have an automatic advantage. But if the product isn't great, others will take over with the second generation. Investors are afraid that will happen to Apple as its happened to so many other companies in the past, including Apple earlier on when the IBM PC came out.



    Take for example the eeePC which everyone came out with a knockoff product and several vendors like Dell and HP put the weak Atom chips in regular laptops and had significant amounts of the product unsold and returned. Bad product = money pit.



    In my opinion, Apple is not going to survive just on iPhones, which is where most of their money is, one of two things are going to happen:

    a) People hang on to their iPhones 2-3 years and only replace them when the battery no longer charges (which is roughly close to 365x3 = 1000 charge cycles for LiIon batteries) and opt to replace the phone instead of having the phone battery replaced. This is usually what people do with laptops now. A few will switch from iPhones and a few will replace the battery, but most people stick with their favorite brands as long as they like them.

    b) Something better than the iPhone will come out and people will instead migrate to that. Think AR contact lenses or glasses with NI input or something hard to conceive right now because todays electronics consume too much power. I don't think there is anything "better" in the phone form factor that will happen anytime soon unless Apple discovers a way to stretch the screen from an iPhone to an iPad in the same device.



    For the next 10 or so years, Apple is going to remain in the lead, but not necessarily have the best device. Meanwhile Samsung might release somewhat better devices, but the batteries will last a quarter of the standby time and you'll have to replace them every year when the next device comes out because they won't upgrade the firmware or replace the battery. This is the problem with mobile phones today, is that if the user got them for "free", the don't appreciate or take care of the device and just get another when they break it. Apple makes a profit regardless of the carrier's subsidy. As far as Apple cares, the carrier can subsidize the device to the tune of 600$. I don't think Samsung makes very much from their phones. Nobody gives a damn about how many phones Samsung shipped, only how much were sold. As stated from other sources Android devices come at the expense of feature phones and RIM (which was blind-sided and put out inferior product just like HP did.)



    Or Apple can do something absurd like build the California High Speed Rail project, which will tank the stock, but it's something it could do now (in 2012 dollars) and make money forever on. Good luck on the NIMBYs.





    Imagine for a minute what an Apple HSR line would be. It would probably be expensive as a plane trip, but every seat would be business class.
  • Reply 62 of 64
    melgrossmelgross Posts: 33,233member
    Quote:
    Originally Posted by Dr Millmoss View Post


    As you know I've always been a skeptic on the risk factor issue. If you look at AAPL's PE trend, it's been heading steadily lower for about four years. Compare that to the price chart and I don't see a negative correlation between a high PE and high returns. In reality stock price increases pushes up the PE ratio directly so I think in reality we all want a high PE if we'd like to see high rates of returns. It also signals investor optimism, which is good over the longer term. It's only a bad thing if the company fails to deliver, which Apple so far has not. So that's the other side of the valuation coin.



    As far as the current or recent returns are concerned, the 25% return in 2011 (which was great considering the market) was predicated on Apple increasing earnings by over twice that much. I don't think we need to be concerned about a growth rate close to 10%, but what effect does 25% earnings growth have on market valuation? That's the question, I think, because we all realistically have to know it's coming sooner or later.



    The value buyers will jump in when/if Apple declares a dividend. That changes the value proposition considerably.



    Well, if Apple could manage to get half the stock price rise as their returns, then that would be pretty good. Even a continued P/E compression would be ok if it didn't happen too rapidly, as long as Apple continued to do well.



    I just try to be realistic. So for the longer haul, if Apple could manage a 10% stock price increase with the market lagging that, it would be a winner. That would result in a doubling of the stock in, what, about 7 years (I'm not doing the numbers)?
  • Reply 63 of 64
    dr millmossdr millmoss Posts: 5,403member
    Quote:
    Originally Posted by melgross View Post


    Well, if Apple could manage to get half the stock price rise as their returns, then that would be pretty good. Even a continued P/E compression would be ok if it didn't happen too rapidly, as long as Apple continued to do well.



    I just try to be realistic. So for the longer haul, if Apple could manage a 10% stock price increase with the market lagging that, it would be a winner. That would result in a doubling of the stock in, what, about 7 years (I'm not doing the numbers)?



    Or you could be looking at a flatline chart extending over a decade or more, such as with MSFT. I don't pretend to know and I would not try to predict where this is going but the sideways scenario is not without precedent.



    Anyhow, I am personally at the point in my life, and my exposure to AAPL has become so great, that I have to be a seller over time. Only a dividend could change my mind.
  • Reply 64 of 64
    melgrossmelgross Posts: 33,233member
    Quote:
    Originally Posted by Dr Millmoss View Post


    Or you could be looking at a flatline chart extending over a decade or more, such as with MSFT. I don't pretend to know and I would not try to predict where this is going but the sideways scenario is not without precedent.



    Anyhow, I am personally at the point in my life, and my exposure to AAPL has become so great, that I have to be a seller over time. Only a dividend could change my mind.



    I don't see the possibility for some time. I won't worry about that yet. My exposure is pretty high as well, but so far, I can leave it.
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