Apple

This is far outside of our usual discussion, but does anyone have an opinion about what is happening with Apple? I have heard the range from the most powerful company in the universe and a screaming buy to basically just a maker of plastic toys and way overvalued. And everything in-between. Anyone have any thoughts?

- Aggie

7 Comments »

  1. Buck O'Fama said,

    January 24, 2013 @ 3:43 pm

    I think the truth is somewhere in between. The pros for Apple are that it has a lot of cash and no debt, a world-recognized brand name and a huge amount of creative talent. It’s IOS iPhone operating system and Google’s Android are the standard smart phone OSes in the world, and probably why Nokia and Rimm will be also-rans in the smart phone market from now on. Whoever has the OS leadership is basically in the catbird seat, as Microsoft was for PCs.

    The con (and it’s a big one) is that Apple is basically only as good as it’s next product. The iPod, iPad and iPhones were “must have” products that the first-adopters (not me) all went ga-ga for. The next such product, if there is one, is not visible yet and the Android phones are now catching up.

    Also, the law of large numbers is now working against Apple. In 2003, they reported ten CENT per share of profit and this year they will report somewhere around 44-45 DOLLARS per share. It’s damn near impossible to keep that kind of growth up. What you see now is a lot of the high-growth big money (mutual and hedge funds) getting out of Apple and the more sedate value and slow-growth investors starting to come in.

    Apple still has a lot going for it and it is not likely to go away soon. But it is not as steady as business as say, Coke or Hershey bars, businesses which grow slowly and whose products haven’t really changed all that much over time. Apple’s next product (possibly a smart TV?) will determine whether the mo-mo money will come back. My opinion is that if you buy here, the downside is you will own a company with slowing growth, a growing dividend and a good franchise. If the next product is a big hit, you could make a small killing with them. My approach is usually to wade in like someone testing the water at the beach – buy some and see what happens. News that sends the shares up or down a lot would be cause to re-evaluate, either to buy more or sell out, depending on the context.

  2. Bloodthirsty Liberal said,

    January 24, 2013 @ 5:05 pm

    Thank you, Buck.

    - Aggie

  3. judi said,

    January 24, 2013 @ 7:00 pm

    This might not be relevant, but my son just made his high school JV Tennis Team :)

  4. Bloodthirsty Liberal said,

    January 24, 2013 @ 8:47 pm

    Mazel Tov!!! You must be delighted, Judi, and we in Bloodthirstan are almost as proud as you. ;)

    - Aggie

  5. Buck O'Fama said,

    January 24, 2013 @ 8:51 pm

    You’re welcome, Aggie.

    Congratulations to him, Judi. I learned to play tennis years ago at age 49 and I love it. When I play, I don’t bother to keep score, I just like running back and forth like an idiot for a couple hours. Tell him to have fun with it because it’s the one thing the gubbermint can’t tax away.

  6. judi said,

    January 25, 2013 @ 8:13 am

    Yes, I am delighted. Thank you guys!!

  7. Kimmi said,

    January 25, 2013 @ 10:25 am

    Buck,

    They’ll find a way eventually.

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