Apple Is Peaking

Is this thing on? OK, thanks.

Hi. My name is Anders and I'm an Apple (Nasdaq: AAPL  ) skeptic. I made that clear two years ago, and the stock has more than doubled since then. So far, I've been very, very wrong.

Being an Apple skeptic is not a terribly popular position today. Cupertino just posted a monster quarter, breaking records left and right. iPhones are beating the entire Android ecosystem, iPads outsell market-leading Hewlett-Packard's (NYSE: HPQ  ) PC systems, the company is richer than King Midas and Croesus put together, and CEO Tim Cook can probably blow gold bars out his nose at will. All under the watchful spirit of patron saint Steve Jobs, of course.

I get it. What's not to love?

We're talking about an already huge company that's growing larger and larger, faster and faster. Its sleekly elegant consumer devices are not only beautiful but also easy to use, and surely deserve the price premiums that make them so darn profitable. And ever since Jobs presented iTunes with sensational TV ads to the tunes of U2 and Feist, you can look up "cool" in any dictionary and find a full-color Apple logo as the definition.

But empires fall all the time. What makes this one any different?

Examples, please
The transcontinental dominions of Genghis Khan and Alexander the Great fell apart. Once one of the largest retailers in the world, Montgomery Ward is now firmly out of business. Fellow mall anchor Sears (Nasdaq: SHLD  ) is heading down the same path. And do I need to remind you of Eastman Kodak (OTC: EKDKQ), which went bankrupt after 132 years in business and may liquidate entirely before that story is fully told? Note the consumer theme in these sorry tales (well, except for the ancient conquerors).

Many fallen kings enjoyed their greatest moments of glory very shortly before their downfall. Take Enron, for example. The energy trader was revealed as a sham in 2001, and has become a poster child for diversifying your 401(k) portfolio. Just before the scandal blew up, Enron had been named "Most Admired" by Fortune six years running. If everybody says they love your company, don't believe the hype.

This could very well be the peak of Apple's powers.

Everything that took Apple to this summit was envisioned and commissioned by Steve Jobs. There was never any guarantee that even his style genius would deliver hits unending, but it sure doesn't help that he's gone. The common consumer (Latin: Communi accumsan) is a notoriously fickle creature that may grow tired of soft, white plastic at any moment. If and when Apple stops dictating taste trends, will the company be ready to adapt to new market conditions?

The bigger they are, the harder they fall. The plunge from these lofty heights looks painful indeed. I'm not saying that Apple should die a horrible, scandal-tainted death like Enron, but it'd take divine intervention to keep those gleaming cylinders firing. And like I said, the patron saint is watching from the celestial sidelines now.

I'm not kidding around
Yeah, I'm still a skeptic today. I was just a little early to the party the last time I made this call. This time, I'm putting my professional reputation on the line.

The brand new thumbs-down CAPScall I just placed on Apple will probably hurt my All-Star standing for a while. There's a fair bit of market momentum behind this mirage. Well, tough. Market timing is a sucker's game anyway. Come back in two or three years, and I believe that the growth story will start to crumble.

Consumers will move on to the next big, shiny thing and reduce Apple to a niche player once again. Any empire built on the taste buds of retail consumers stands on feet of quicksand. The circle of life complete, Apple shares will be a whole lot cheaper. You can quote me on that.

Apple admittedly had a huge quarter, but there are plenty of other companies out there that investors need to watch during this earnings season. In the Fool's "Fourth-Quarter Earnings Report: 7 Stocks You'll Want to Watch," you'll find information on this quarter's possible big performers. It's completely free for our readers, so click here to access your free report today.

Fool contributor Anders Bylund holds no position in any of the companies mentioned. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.


Read/Post Comments (51) | Recommend This Article (19)

Comments from our Foolish Readers

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  • Report this Comment On January 25, 2012, at 3:54 PM, millsbob wrote:

    " Any empire built on the taste buds of retail consumers stands on feet of quicksand."

    wrong thesis, Anders.

    it's a transformative, disruptive company.

    and the iPhone is not the end of the line, it's only the current point on that line.

  • Report this Comment On January 25, 2012, at 3:59 PM, trickynck wrote:

    The difference between Kodak/Sears and Apple is that Apple is always one step ahead of the game with regards to innovation. Sears and Kodak knew what they did, did it well and pretty much sat complacent while the world evolved without them.

    I think comparing Apple to such companies is nothing short of foolish.

  • Report this Comment On January 25, 2012, at 4:01 PM, Thompr97 wrote:

    Anders,

    You keep saying this, and someday you'll be right. Fortunately, Wall Street is already pricing AAPL as if this is occurring now, so there really isn't much downside for when you become right. In the meantime, I'll be making money on AAPL and you'll just be posting your wisdom, waiting for it to come true. I'd rather be me.

    Thompson

  • Report this Comment On January 25, 2012, at 4:01 PM, bsimpsen wrote:

    You've already lost a boat load of money for anyone who bought your ill-conceived advice two years ago. Keep pounding your drum, people following your advice will continue to lose money until you are right, at which point you will claim you were prescient and I will claim you are immoral.

    Only one of us will be right.

  • Report this Comment On January 25, 2012, at 4:03 PM, bugnuts wrote:

    Anders has had both feet in his mouth when it comes to Apple. Apparently he's now trying to swallow himself whole.

    Thankfully, a billion citizens ripe with Apple lust stand ready to help him.

    Bon apetit!

  • Report this Comment On January 25, 2012, at 4:07 PM, lazyal wrote:

    If there is such a thing as “too successful”, this is it. A good part of Apple’s success is coming at the expense of the major wireless carriers, VZ and T, who’ve seen they’re margins shrink while subsidizing the iPhone. They carry the data without which the iPhone would be useless, leaving AAPL the lions share of the profit. I look for this trend to slowly change as the carriers have come to realize that they’ll never profit if they have to subsidize EVERY generation of wireless devices

  • Report this Comment On January 25, 2012, at 4:08 PM, bugnuts wrote:

    Anders ... please define "failure" for us. Give us a stock price and a date.

    Sears and Kodak are both enduring well over 100 years. Certainly not at the level they once were, but then neither is Microsoft.

    You heard it here first: I predict the demise of Motley Fool well before the demise of Apple.

  • Report this Comment On January 25, 2012, at 4:08 PM, riotfilms wrote:

    Using your 132 year Kodak example, Anders, maybe there's a 100 years left to go for Apple.

  • Report this Comment On January 25, 2012, at 4:14 PM, bugnuts wrote:

    Good grief ... have you checked out Anders' holdings (http://my.fool.com/profile/TMFZahrim/info.aspx?source=iapsit...

    No wonder he's POed at Apple's success. It's costing him dearly.

  • Report this Comment On January 25, 2012, at 4:14 PM, djsantamonicacal wrote:

    Anders, your lack of substance belies the lofty platform from which you spew your dogma. Lucky for you there appear to be no prerequisites for you as an analyst. Your instincts have continually proven to be wrong. How about trying a little old-fashioned logic and/or analysis to back up your wild(-ly inaccurate) guesses? You keep shooting from the hip and missing, who could avoid the conclusion that you're simply a lousy shot? The thing that makes your commentary most offensive, in my opinion, is how you attempt to belittle everything Apple has achieved. And how they've achieved it. And under what economic conditions. Perhaps this is because, in your world, doing the work has less value than acting like you know what you're talking about. You couldn't be any more wrong about a company that couldn't be any more successful. Stick with it, though, pal. Even a broken clock is right twice a day.

  • Report this Comment On January 25, 2012, at 4:17 PM, Ash2012 wrote:

    With all due respect while these controversial stands are good for getting audience and gaining traffic, there is very little meat in the argument.Before we take unrelated historic examples over a completely different time span, let us try to do some analysis here.

    Yes empires crumble but they take a long time. Apple is young hardly a decade old. It is almost like saying that Warren Buffett can become a pauper in no time. Yes he can get Alzheimers or go crazy and start playing in Vegas and blow his entire fortune. But how likely is it that it will happen in his remaining life span.

    If we want to predict Apple's downturn, the least one needs to do is to atleast specify a time frame. The author has been wrong one time, and even this time his claim doesn't include a time frame.

    There is such a thing as momentum, and it takes a long time for a giant of this magnitude to stop. Let us look at their business.

    They have primarily four businesses

    Retail

    Mobile Phones

    Computers

    Digital distribution system for supplying software, music. Now they are making inroads into digital Publishing

    They are not a market leader in any of these areas. They make a lot of money in Retail, but their revenues are less than Walmart.

    Their Mobile phone business is large, but they only comprise of 5% of the global marketshare even though they sell globally.

    Their position in Computers cannot be considered as leadership position.

    Their digital distribution business is new hardly a few years old, while they do have the largest market share, quite frankly doesn't pose the biggest downside risk.

    They have 100 Billion dollars in cash and generating 50 billion dollars in cash a year, and the rate of cash generation rate is also growing.

    So in a matter of four years even with current cash generation rate (expecting no growth) they should have generated enough cash that will be equal to its enterprise value today.

    With that kind of money comes clout. Till now their management hasn't shown indiscipline in their capital allocation decisions. So even if their next five product launches fail and each of them cost around 3 billion dollars, the hole burnt in their pocket is only 15 billion dolalrs, something that they generate in a quarter.

  • Report this Comment On January 25, 2012, at 4:20 PM, 614streets wrote:

    Will google buy kodak out of bk and get the 218 patent? Time will tell.

  • Report this Comment On January 25, 2012, at 4:21 PM, thedataferret wrote:

    Carpe diem!

    Buy, buy, buy.

    Thank you Tim, Sir Jonny and Peter.

    Vision is one aspect of business.

    Getting the job done despite the crises of the last year in Japan, the middle east, Thailand and of course the death of Steve is absolutely amazing.

    $1,000,000,000/week profit is not bad Anders.

    For 2 years you have been on the wrong side. Why are you right now?

  • Report this Comment On January 25, 2012, at 4:23 PM, mshiffer wrote:

    The only thing I agree with is that yes, empires fall. However, what you're missing in your grossly under-analyzed article is the "when". This is why every single commentor disagrees with you.

    No one doubts that one day Apple will stumble and fall. One day, the sun will also implode. One day, the universe will experience a heat death and be no more. The far more important question is "when".

    Your article nimbly dances around this question - and then slips in your answer near the end. 2 or 3 years. That's 8 to 12 earnings blow outs from now. (If one were to agree on the timing.)

    If I were a foolish farmer, I wouldn't be too concerned today about my golden gooses slowly growing cancer. Instead, I would keep him around, keep feeding her, continue collecting her golden eggs and wait until he actually showed signs of disease... and only then I'd chop her up and serve her in a stew.

    As a foolish investor, I plan on doing the same with AAPL. While I won't argue that eventually, AAPL must die, I will continue making huge profits from them while they're firing on all cylinders. This party isn't going to come screeching to a halt. I think we'll see the signs of slowing demand, market saturation, consumer madness for the next big thing, with plenty of time to escape. But by then, we'll have foolishly made money while the company performs gloriously... the same thing we do with every other listed company we invest in.

  • Report this Comment On January 25, 2012, at 4:24 PM, lucasmonger wrote:

    How come all the articles which spawn tons of reader response come from Anders? Will Anders jump into the comments to defend himself?

    In one sense, I do agree with Anders. If you had purchased Apple during the dot-bomb era ($6.50 per share) right now you'd be sitting on a fortune (I wish I could go into a way-back machine and buy more shares). $6.50 to $450 is a huge profit. Even if you bought shares during the financial crisis, $87 to $450 is still very good. People buying now at $450 hoping to even see it double or even earn 50% seems far less likely.

    We need a Netflix-like blunder to pummel the price down a bit so us fools can jump in.

  • Report this Comment On January 25, 2012, at 4:24 PM, ugaexploder wrote:

    It's amazing to me how everyone has jumped on the Apple bandwagon, and many are not exactly sure why. It's almost always the same reasoning, "They make beautiful products that just work."

    This is not why Apple is the giant they are today. And I agree with Anders, they will eventually fall. I'm sure 15 years ago, many people believed AOL would be the gateway to the internet forever. Even Steve Case thought so, as he shelled out 15 million in the 90's for Nsync to perform at his daugther's birthday.

    I'm sure there were many many people who believed Microsoft would not fall due to most users growing up on their software. Wrong again, many PC owners have branched out.

    What makes Apple any different? Their CEO just croked. And it's not like their products are completely different from the competition. They filled a niche. They realized most PC products were cheap, and made for profit. All they had to do, is fill in the niche slightly above the PC products, and way below companies like Falcon Northwest. Like I said, I completely agree with the author, and I have no Apple bias. I own Apple products...but just because I own their products does not mean their empire will stay afloat forever.

  • Report this Comment On January 25, 2012, at 4:43 PM, thedataferret wrote:

    Anders,

    I have to give you a little credit for stirring the pot of skepticism despite Apple's extraordinary results.

    Yes, you are getting feedback. Is that why you have chosen to be the visible contrarian while all the others are crawling under their rocks.

    No, Apple will not repeat these numbers next quarter. But no one else will even come close.

    Now Anders since you are in the fortune telling business (analyst) will the Giants or the Patriots peak in 10 days.

  • Report this Comment On January 25, 2012, at 4:50 PM, noxgear wrote:

    Anders,

    You will be right some day. But you will probably be old and gray when that happens. (or maybe older and grayer?)

    I know why you are doing this, it is to inject a little fun in the debate. Sadly you do not have any serious reasons for your premise.

    Moves like this tend to give financial advisers a bad name, since your opinion is not backed up by any meaningful discourse. I do not understand how or why you are part of the Fool scene?

  • Report this Comment On January 25, 2012, at 4:56 PM, TMFZahrim wrote:

    All my critics here will probably prefer the bullish analysis by my friend Evan:

    http://www.fool.com/investing/general/2012/01/25/welcome-bac...

    To each their own, and I respect my Foolish colleage in every way. But that doesn't change my analysis of Apple. Come back in three years to see who was right, like it says in the article.

    One quick note to @Ash2012: Apple is not 10 years young. That's just the iPod/iTunes resurrection era. The company was founded in 1976, and just didn't amount to much for a couple of decades.

    Anders

  • Report this Comment On January 25, 2012, at 5:55 PM, mattack2 wrote:

    So, you're shorting it right? Put your money where your mouth is.

  • Report this Comment On January 25, 2012, at 5:57 PM, TMFSpeck wrote:

    The only string I see you you using to tie these companies to Apple is their once-dominant market position. That's a specious argument at best, given that there is no other apparent relationship.

    This sounds to me more like an emotional argument than one based in a dispassionate analysis of what has driven -- and continues to drive -- Apple's growth.

    Could they fold in 100 years like Kodak appears to be doing? Sure. But that will be predicated on how they've responded to the market and consumer demand, not to how big they got.

  • Report this Comment On January 25, 2012, at 6:06 PM, pbass003 wrote:

    Anders,

    I don't normally read every comment but this beat down was too entertaining to pass up. Thanks. I guess I should say that I generally agree with your opposition. Your right that eventually the sun will burn out, but it won't be in your next million years.

    Jump in buddy, the waters fine!

  • Report this Comment On January 25, 2012, at 6:16 PM, hiddenflem wrote:

    Wow a thumbs down call in CAPS? You are really putting your money where your mouth is.

  • Report this Comment On January 25, 2012, at 6:17 PM, queeqay wrote:

    Mayan 1: OK, so I was wrong about the whole 2012 thing. But give it time...eventually, our sun will turn into a red giant and then burn out into a white dwarf, vaporizing our planet. then you'll see i was right about the end of the world.

    Mayan 2: ummm...okaaaaaay.

  • Report this Comment On January 25, 2012, at 6:25 PM, Rockfish88 wrote:

    The question of whether or not Apple will someday fail is moot. Nothing is forever. They will someday introduce product that is not successful, announce quarters that are unimpressive. But there is a chance that they might be successful for a few years yet to come. And continue to deliver solid growth and earnings.

    While there are examples of companies that grew big and failed, there are likewise companies that grew and continued to succeed as large companies for an extended period of time, even some companies selling to consumers. (McDonald's anyone?)

    But while we wait for Apple to stumble it sure is fun waking up to a $28/share bump. I guess I must look pretty stupid to have bought at $97 and still hold as we approach $450. I hope I can stay stupid for years to come.

  • Report this Comment On January 25, 2012, at 6:28 PM, PSU69 wrote:

    Anders,

    You have a way of telling a story that is based on your feelings. I hope you earn a lot of cash writing this stuff. Perhaps you should write for Mitt and help him win the oval office.

  • Report this Comment On January 25, 2012, at 6:34 PM, jordanwi wrote:

    Yeah, and the world is going to end to. I'll just keep saying it, it's BOUND to come true.

    Can you count?

  • Report this Comment On January 25, 2012, at 6:34 PM, jordanwi wrote:

    *too

  • Report this Comment On January 25, 2012, at 6:41 PM, ruastar2b wrote:

    You were wrong two years ago and you are wrong today. Do they actually pay you for this lousy advice?

    Onward to $600/share.

  • Report this Comment On January 25, 2012, at 7:00 PM, lojikfool wrote:

    Anders my friend, have you gone mad?

    They're safe for at least 2 years, let's review after that, an under perform call now is going to really hurt your score....

  • Report this Comment On January 25, 2012, at 8:03 PM, ayaghsizian wrote:

    Just my opinion...I only give you credit for being right if you profit (real money) from AAPL dropping or lagging the market.

    Going against the crowd and making a bold call happens all the time when money is not on the line.

    If you are rolling options over every few months to profit from AAPL lagging the overall market then I congratulate you ahead of time. If you are shorting AAPL and it goes down then I congratulate you ahead of time. Otherwise the article sounds like a big "guess" and a way to get many like me to write a comment.

    Cheers,

    Ara

  • Report this Comment On January 25, 2012, at 9:55 PM, Nomadder wrote:

    Let me see if I can sum up your argument:

    Premise 1: All empires fall

    Premise 2: Apple is an empire

    Premise 3: Any business that relies on consumer taste is in a precarious position and is likewise headed for a fall.

    Premise 4: Apple is a business that relies on consumer taste.

    Conclusion: Apple will fail.

    That's it. That's the entire argument.

    As other commentators have pointed out, we might as well simply invoke entropy and call it a day; all systems fail. There we go. Apple is doomed...just like everyone and everything else in existence.

    Premises 1 and 2 are so vague and shallow as to be utterly unworthy of consideration.

    Premises 3 and 4 at least have something that can be addressed.

    Let's assume that the 3rd and 4th are true. Now, apply this logic universally.

    Whoops. No more Hasbro. No more Activision. No more Nike. Looks like a lot of people would have to sell large swaths of their portfolios if they were to follow the logic in this article.

    Now, if the writer truly is in favor of this as an overall investing strategy, I would love, LOVE, to read a strong argument (such as not been presented here), in favor.

    I'm starting to wonder if Mr. Bylund's primary function at the Fool is to simply increase traffic/clicks.

    I'm not against dissenting opinion. In fact, I'm all for it. That is, after all, why I clicked in the first place.

    I am against strong convictions held in service of that for which there is little evidence, and that is all I have found here.

    Feelings should not be used to justify one's positions (in logic or in the market). One's positions should be constructed to justify one's feelings. If, in the construction of one's positions one finds a flaw, then re-evaluation and re-ordering of one's feelings are in order.

    So far, I see a writer incapable of the self-reflection necessary in order to follow through with this.

    Anyone practiced in avoiding self-reflection is someone practiced at avoiding critical analysis at the most basic level.

    I will be avoiding Bylund articles from this point forward. I come here for well-thought-out analysis. Not this.

    I'm not against articles solely for the purpose of entertainment. That being said, education is also part of the mission statement here, and with that in mind I find it highly questionable to find articles that qualify as the former, masquerading as the latter. One might even question the ethics of it.

    Real newspapers don't mix in parodical Onion-esque articles in their publications for this reason, I suspect. They have, by their very position, a responsibility to the public discourse.

    I take it back. I challenge Mr. Bylund to write another article, to write a contrarian position on AAPL based in solid research and meaningful analysis. Do that and I will read eagerly, then and in the future.

    Prove to us, Mr. Bylund, that you occupy a more respectable position than "flamebait". Of course, if that is your function, then congratulations on attaining a truly enviable job, I suppose. You got me, at least this once.

  • Report this Comment On January 25, 2012, at 9:59 PM, jdwelch62 wrote:

    Ahem...

    Let me start off by saying that I am an AAPL shareholder. I also used to be an avid user of Macs... back in the late 1980s/early 1990s. For those of you (alot of you commenting here) who are too young to remember, Apple nearly went backrupt, and not that long ago, either (relatively). Back in the late '80s, the Apple Board ousted Jobs, and the company (and their products) slowly went downhill. Why? One reason might be that they lost their innovative driving force: Jobs. Steve then started NeXT Computers, which I had the privilege of using, working for the same forward-thinking CIO who made Macs a corporate standard at my company before even Windows 95 was even around. A few years later, NeXT isn't doing so well, but their OS is amazing, and what happens? Apple buys NeXT to get their OS, which is used as the foundation for what is now Apple's OS X. In the process, they got Jobs back. Steve had to personally borrow something like $450Million from Bill Gates to save Apple from going under. He saved it, but just barely. Apple survives, but only because of Jobs. Then comes the iPod, the modern-day Macbook, the iMac, the Mac line improves, the OS Apple bought from NeXT becomes awesome (again), and Jobs continues to innovate. Did you know that the iPhone was actually a by-product of the development efforts of what eventually became the iPad? Jobs was working on the iPad concept 10 years before it hit the market (Intel originally came up with the idea of tablet computers, but were, characteristically, ahead of their time and not in the business of manufacturing consumer end products, but that's another story...), and the iPad wasn't coming together like he wanted. But in the meantime, he morphed what they were working on into the iPhone by adding a cellular radio and shrinking the form factor, and voila! The smartphone "revolution" begins! Eventually the iPad gets to the point where Steve likes it, and it comes to market, and voila! The tablet "revolution" begins! That brings us up to today. But guess what? History is repeating itself; Apple is once more without The Great Innovator (Jobs), but this time they can't get him back. Even with all their cash, they can't get him back this time...

    I've stated before that I think Jobs left enough "stuff" in Apple's pipeline to keep them going for 3 or 4 years, and I've made a thumbs up CAPS call for that timeframe. But after that... Without Jobs, we will have to see. Anders has some good points about the fickleness of consumers' tastes. I don't think it will take 100 years for Apple to fall, and I also don't think they'll be in too much trouble in 2 years, as Anders is calling it, but remember to learn from history. Apple lost Jobs once, almost went out of business (came within 1 or 2 quarters of doing so, by Jobs' admission), got Jobs back, and became what they are today. Don't fall in love with your AAPL stock; keep your ear to the ground and an eye to what comes out of Cupertino in the next half-decade, and judge for yourself if they learned anything from Steve and can continue to innovate on their own.

    Then, don't be afraid to take your profit and re-invest in the next thing that's going to work for your portfolio.

    It will happen. It is a question of when, and I don't know that exactly, but I'm a student of History, and based on the history of Apple, the future without Steve Jobs is not as bright as today's present...

    But, that's just me...

    Fool on... :-)

  • Report this Comment On January 25, 2012, at 10:35 PM, lucasmonger wrote:

    @jdwelch62

    Well written. I remember the Microsoft number being $150mil not $450mil but what's a few hundred million amongst friends.

    Steve Jobs was certainly the catalyst and a visionary, but he also spent the last 8-10 years making sure that Apple will continue without him. I think we will continue to see innovation coming from Apple. They might not always be grand slam home runs like the recent run of iPods/music, iPhones, then iPads, but enough to keep the rest of the industry in their wake.

    I'll make a very bold prediction here... While the entire industry is distracted trying to catch up (phones and tablets) or guess what Apple is doing next (tv, textbooks, streaming media content), Apple will come around full circle and indroduce a new touchscreen computer that will make everyone throw out their laptops and desktops and use these instead. Think wild and crazy, like a 30 inch LCD screen that replaces your desk mat with no mouse or keyboard that you talk to like in Star Trek... Just a guess.

  • Report this Comment On January 26, 2012, at 12:06 AM, mmmm101 wrote:

    @jdwelch62

    One gynormous flaw in your wonderful post... Tim Cook is not John Sculley. Thank God. 'nuf said!

  • Report this Comment On January 26, 2012, at 4:13 AM, somethingnew wrote:

    It's time for some perspective here. Yes, Apple will fall and die. When? That is anyone's guess. It might be 5 yrs from now, could be 100 but it will fall eventually. I found this post interesting because it is definately throwing fuel on the fire. There's alot of emotional posters in this forum but let's keep it real someday Apple will die and no one will give a crap who Steve Jobs was. This may take hundreds of years but it will happen. Yes, Steve Jobs was a genius -in products. Not necessarily a genius in anything that will last 1,000 years though. Not a genius in the sense that Einstein was a genius, Jobs was a run of the mill genius but a genius no less. Apple is a great company, so was the Dutch East India Company for about 200 years til it went bankrupt (as well as being one of the most profitable). Now no ones gives a crap about it. People who don't give back financially are typically not remembered. William Clark was at one time the 2nd richest man in the U.S. Who knows of him today? Not very many people because he never really gave back to society financially. Jobs will go the same way and will merely be a footnote in history. I don't hate Apple or Steve Jobs but lets be real, they are mortal.

  • Report this Comment On January 26, 2012, at 7:29 AM, TMFZahrim wrote:

    @mattack, I don't have the capital to put real money on every call I make. None of us do. That's why we writers must make CAPScalls along with our market calls, like this one. That way, you can track us and see how we're performing relative to each other, to the market, and to other investors. To me, and to my bosses here at the Fool, this is a big deal. Read more here:

    http://www.fool.com/investing/general/2012/01/19/moneyballin...

    I've made unpopular calls before, such as defending NFLX (disclosure: I own that stock) all the way down to $63 a share. NFLX is once again one of the top performers in my CAPS portfolio. I play for the long term, my friends. And such is the case with my AAPL call as well, just the other way around.

    Anders

  • Report this Comment On January 26, 2012, at 9:28 AM, pondee619 wrote:

    "Hi. My name is Anders and I'm an Apple (Nasdaq: AAPL ) skeptic. I made that clear two years ago, and the stock has more than doubled since then. So far, I've been very, very wrong."

    And he will continue to be wrong until SOMEDAY he will be right, maybe. There are still several 100+ year old companies doing just fine. How much money can YOU afford to lose waiting for Godot?

    Yahoo still shows Apple's PEG # well below 1.

  • Report this Comment On January 26, 2012, at 11:17 AM, TobiasFunke wrote:

    Anders, think about what you're saying.

    Your main argument for why AAPL will "crumble" is that their growth will slow.

    Have you noticed that even with earnings growth of 120% last quarter and an average of nearly 100% over the last 5 quarters, that AAPL is trading at a P/E of 12??

    If you take out its $97 billion dollars of cash that's earning a measly $500 million annually, the stock's P/E is actually below 10.

    So let's say you are right and the growth story stops. Let's say this happens 3 years from now when AAPL's earnings are double what they are today. Let's say that the stock doesn't move in this period, and AAPL's P/E falls to 6.

    Now what? Let's say AAPL's growth rate crashes down to a measly 15-20%. What do you think the stock will trade at?

    It's shocking that people like you can maintain a job writing ridiculously unsubstantiated, poorly thought out articles like this.

  • Report this Comment On January 26, 2012, at 11:25 AM, TobiasFunke wrote:

    Anders, think about what you're saying.

    Your main argument for why AAPL will "crumble" is that their growth will slow.

    Have you noticed that even with earnings growth of 120% last quarter and an average of nearly 100% over the last 5 quarters, that AAPL is trading at a P/E of 12??

    If you take out its $97 billion dollars of cash that's earning a measly $500 million annually, the stock's P/E is actually below 10.

    So let's say you are right and the growth story stops. Let's say this happens 3 years from now when AAPL's earnings are double what they are today. Let's say that the stock doesn't move in this period, and AAPL's P/E falls to 6.

    Now what? Let's say AAPL's growth rate crashes down to a measly 15-20%. What do you think the stock will trade at?

  • Report this Comment On January 26, 2012, at 11:43 AM, jdwelch62 wrote:

    @lucasmonger

    Thanks. Sorry about the accounting error. And, I think you made a pretty good guess...

    @mmmm101

    Point taken! Yes, Tim Cook is not John Sculley. Seems like John and Steve were always butting heads, while Steve mentored Cook for years for a smoother transition. That might delay the inevitable, but I stand by my prediction; Apple without Jobs will decline, perhaps gradually, perhaps relatively quickly. Depends on whether things like what lucasmonger postulated come out of Cupertino in the next 5 years. In any event, the future will be interesting...

    :-)

  • Report this Comment On January 26, 2012, at 12:22 PM, Truth2Power wrote:

    @jdwelch62:

    I was wondering when someone would point out the near-bankruptcy of the late 80s and Gates' purchasing a huge (1/4, I think?) stake in Apple. However, wasn't part of that problem Apple's failure to enforce their patents on the icon-based operating system combined with an unwillingness to license ASCII to third-party manufacturers? They seem to have learned their lesson (at the very least, Jobs did) and while they are still unwilling to license their technology, they are starting to enforce their patents ("going nuclear" against Android).

    Will it work out? Who can say? I agree that a lot of it will depend on Cupertino's ability to come up with the Next Big Thing. Currently, that Thing is the tablet. If I knew what the NBT would be, well, I'd be a very, very rich man.

    However, Jobs didn't invent the iPad (or Phone or Pod) all on his own. Maybe with his death, the "special sauce" is gone...and maybe it isn't. Only time will tell.

    I am long AAPL, BTW.

  • Report this Comment On January 26, 2012, at 1:52 PM, Ash2012 wrote:

    Yes Apple was founded in 1976 but that company has changed drastically after Jobs took it back in the late 1990s. The growth run we are seeing is

    My only issue is for any optimistic or pessimistic forecasts there should be some numerical basis.

    Currently the company is generating cash of around 50 billion every year without expecting any growth. The stock is undervalued because in effect you are paying only 420 Billion dollars for a company that has 100billion in cash or in other words 320 billion for an investment that generates 50Billion.

    For your assertion to come true in the next two years, the only way to me it sounds plausible is

    Apple invests all of its 100 billion with Bernie Madoff who will spend it over the course of 6 months and make it disappear.

    Apple sees demand for Iphone doesn't just stop growing but falls off a cliff.

    Apple starts closing 50 stores every quarter.

    There are earthquakes that wipe out all of Apple's datacenters and they do not have redundancy built in making ITunes and App store disappear taking away all of the sales associated with it.

    Other than the above things happening I am not sure how you can claim that Apple has reached its peak. I do not see an investment that gives me a 14% Cashflow in today's environment.

    Yes there are several investors who go by Shareprice without understanding the intrinsic value or cash per share etc.

    It is almost like comparing a 30,000 squarefeet mansion with 2000 squarefeet house and saying that the 30,000 square feet apartment is way too expensive than 2000 square feet house and hence it will go down.

    This is despite the fact that the cost of the 30,000 squarefeet mansion with more amenities and luxurious finishes is only 5 times the price of the 2000 squarefeet house which has budget finishes.

    30K Luxury mansion here is Apple while the 2K houses are other companies in similar markets which command far higher premiums or per squarefoot cost (their stock prices are low)

  • Report this Comment On January 26, 2012, at 2:26 PM, Turfscape wrote:

    Anders...for your own sake: PLEASE STOP COVERING APPLE! You are far too emotionally invested in their downturn. You are not objective, and haven't been objective at any point in the past two years.

    You have blinded yourself with your own preconceived notions of what the market SHOULD do, and how consumers SHOULD act...if only they were all as smart as you.

    Stop. Stop. Stop. All your writings are based on your own emotional state regarding Apple. You do not engage any relevant metrics or consumer analysis to support your position.

    "What goes up, must come down" is NOT analysis. It's not prediction. It's not even gambling. It's nothing. Maybe AAPL drops by 20% next month...it wouldn't justify your rantings and ramblings.

    Anders, all I can now say is that you're embarrassing yourself.

  • Report this Comment On January 26, 2012, at 3:26 PM, tgnytg wrote:

    Anders and Apple bears a strong resemblance to Peter and the Wolf.

  • Report this Comment On January 27, 2012, at 7:55 PM, tfreej wrote:

    Not to bash Anders, I like reading articles that challenge common opinion, but he writes all this and touts NFLX as one of his "investing favorites"...

    That has me asking some serious questions...

    How can you not be excited about Apple? one of the main forces spearheading the tech rev and charting a course into the digital era. Meanwhile, Netflix announces to drop its digital streaming in favor of disk rental. Talk about waiving the white flag.

  • Report this Comment On January 28, 2012, at 2:22 AM, HKman wrote:

    These are all valid comments. A large number of big uncertainties exist with Apple - the death of Steve Jobs and the fickle industries they operate in being but 2. It's wise to accept that Apple's future is unclear to mere mortals and therefore Apple is uninvestable at the moment - long or short. Investors who bought in sometime ago can enjoy the profits and the ride - but anybody with money to invest at the moment should look elsewhere.

  • Report this Comment On January 28, 2012, at 1:37 PM, traderguy65 wrote:

    One of the best uinvesting lessons I have ever learned is Never question Apples Capabilities to innovate and grow.

    This is a company with a YOY eranings growth of over 10% , and a PE trailing the S&P 500. When excluding cash and cash equivalents the PE is < 10. This company is so undervalued its almost mind boggling. It is trading like a company which has average growth. Apple is far from an average company.

    Tim Cook is a manufacturing Genius.

    I hope analysts keep the expectations low such as this articles author. It allows me to purchase long term calls at a fraction of what they should be trading at. 2012 earnings will probably be around 44-47$. AT a PE of 14 you are looking at a 1 year price target of almost $600. If Apple TV launches look for a higher price than that.

    GO APPLE!!

  • Report this Comment On February 01, 2012, at 6:03 PM, sharpx2 wrote:

    I think Apple without Steve Jobs will be a stronger company. The corporation has an incredibly deep bench and store of talent. What will be different will be that new products will come from multiple sources rather than from one man's vision. What Jobs has done is to institutionalize the method by which Apple develops products, namely, by using a five year window and actually building prototypes of the products that they will introduce five years from now (and in all the years between.) As the production date gets closer, the prototypes are updated, modified and improved both to make them better, and to more closely reflect the needs of the marketplace, or the intended goal of Apple's latest target. The passing of Steve Jobs should unleash quite a bit of creativity from the rest of the geniuses at Apple.

    The other thing to keep in mind is that Apple is gaining share in the corporate marketplace, where it has been only marginal in the past. Regardless of the (somewhat fickle) consumer market, which could well move on to the next new thing, once you're entrenched in the market for corporate tools, you generally have a devoted customer for years if not decades. Couple this with the potential for huge international growth, and things should be just fine.

    Just a final note: take a look at IBM. The company is still around, still growing, still making money, and still reinventing itself as the world changes. No reason to assume that Apple is capable of less.

    Your next article will probably be about why Sears is the buy of the century.

  • Report this Comment On February 02, 2012, at 9:25 PM, MHedgeFundTrader wrote:

    Apple has become a monster cash flow generator. Apple now has the envious problem in that sales of several of its products are going hyperbolic at the same time.

    Apple announced net profits of $13.06 billion, or $13.87 per share, up 11% from the previous year. If the company just maintains that rate for the rest of the year, it will generate $55.48 in earnings, which at the current 11.5 multiple should take the stock up to $638, up 40%. If Apple makes it up to a market multiple, the stock should rise to $721, a gain from here of 58%.

    If the multiple expands to its pre-crash average of 35 X, that would take the stock to a positively nose bleeding $1,941, giving you a 424% return from current levels. Then the company would be worth $2.8 trillion and rank 5th in the world in GDP, more than France, and just behind Germany. Wow!

    It all reinforces my view that Apple shares will reach my long term target of $1,000 sooner than anyone thinks. Long term readers are well aware that I have been making this call for the past two years back when it was trading at a lowly $240. More recent subscribers will also recall that I predicted that Apple would be the top performing technology stock in my 2012 Annual Asset Class Review.

    I'm not saying that you should rush out and load up on stock today. But it might be worth taking a stake on the next wave of fear that strikes the market.

    The Mad Hedge Fund Trader

  • Report this Comment On April 17, 2012, at 2:45 PM, huddaman wrote:

    Andres, Is this some kind of a funny article? I was laughing all along. Why not instead focus your energy on writing about some large bank with black box balancesheet and unknown loans, mortgages etc. Why would you take aim on a consumer electronics & lifestyle behemoth like Apple with over $100B in cash in balance sheet and over 40B a year in free cash flow? Even if AAPL does not produce a dime in profit and decides to lost over a $1b a year, it will take them 140 years to sink the boat.

    Also, unless you think Mac's and all the other iDivices, not to mention iCloud is insignificant, how do you justify such a ludicrous idea?

    Arguing that all big things end is not good enough. IBM has been around much longer than AAPL. So is Oracle and many other tech companies. And then there are plenty of industrial companies that have been around for more than a century.

    Comparing Enron to AAPL again was a proof of your inexperience as an analyst and as a writier.

    In my opinion, TMF should not allow such articles without properly vetting them. I understand its a Motley but, its should not appear that it's a Motley of fools. (Small f)

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