Recs

4

Is Apple Too Big for Its Own Good?

By | More Articles
February 7, 2012 | Comments (7)

The following video is part of our "Motley Fool Conversations" series, in which senior technology analyst Eric Bleeker and Chief Technology Officer Jeremy Phillips discuss topics across the investing world.

In today's edition, Eric and Jeremy reflect back on the fall-out from Apple's earnings on Jan. 25. One fascinating aspect of its earnings report was that Research In Motion's stock actually outperformed Apple's the next day, returning more than 8%, while Apple's gains were only 6%.

Another interesting aspect of Apple's earnings was that the company's P/E fell from more than 15 before earnings to less than 13 after! That creates a question: Who's left to buy Apple? As Eric says, that question has been around for more than a year, and in that time, the company has returned close to 40%.

Looking forward, one key catalyst left for Apple could be offering a dividend that brings in more income-focused funds and investors looking for yield. While investors often look down on Apple for its capital structure, it also presents a key catalyst for future gains.

Apple is an amazing company, but remember that it's just one way for investors to profit from the mobile revolution. The Motley Fool has just released a free report on mobile named "The Next Trillion Dollar Revolution" that details a hidden component play inside mobile phones that's also absolutely dominating the exploding tech market in China. Inside the report, we not only describe why the mobile revolution will dwarf any other technology revolution seen before it, but we also name the company at the forefront of the trend. Hundreds of thousands have requested access to previous reports, but you can be among the first to access this just-released report by clicking here -- it's free.

Jeff Fischer and team have demystified options. And they can rack up income like $1,030... $2,626... and $3,228 on a schedule you can set your watch by!
That's why we're glad to announce every single one of their closely guarded strategies is available to YOU during May and June – 100% FREE, no strings attached! Just enter your email address in the box below...

Eric Bleeker owns shares of Cisco Systems. Jeremy Phillips has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (7) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 07, 2012, at 8:53 PM, TMFBiggles wrote:

    The preceding post has been brought to you by Computer Mad Libs!

  • Report this Comment On February 07, 2012, at 8:58 PM, H3D wrote:

    Great, RIM was up 8%.

    But even then it was down 7% from two days before and a many years low the day before that.

    Kodak thrashed about in a similar manner before it coughed it's last.

    I guess RIM will do the same.

  • Report this Comment On February 07, 2012, at 9:33 PM, jdwelch62 wrote:

    Three months ago I was worried that I would be too late to the Apple party, but I bought some anyway, then bought almost as much more on a dip a little later, and since then it's returned 19%. I would love it if Apple started paying a dividend; what else are they going to do with all that cash??? Initiating a dividend should give the price of the stock a huge kick in the butt upwards, as it will make it that much more attractive to a wider audience of investors to jump in and own it...

  • Report this Comment On February 07, 2012, at 10:03 PM, BlackMarlin wrote:

    Why pay a dividend? It would basically be an invite for fund managers to keep and attract investors. AAPL doesn't need enticements to market its stock. It stands on its record.

  • Report this Comment On February 07, 2012, at 10:50 PM, jdwelch62 wrote:

    Apple is a publicly traded company. It has shareholders, who are, in effect, the owners of the company. The company has an obligation to return value to its shareholders in return for their good faith in investing in the company in the first place. Hoarding cash is not returning value to the company. Initiating a dividend that makes an already high-priced (albeit, low PE) stock attractive to more investors should, in theory, drive up the price of the stock, thereby returning more value to the shareholders (owners).

    BTW, Apple's "record" that it is standing on at the moment is a fairly recent status in the company's history. Don't forget that they almost went out of business before Jobs pulled them from the edge of the abyss with an emergency loan from Bill Gates. They don't have Jobs to fall back on again any more, and history has a habit of repeating itself if one is not careful and learns from it. The time has come for Tim Cook to take Apple in a new direction, one that it has earned, and part of that new direction is, IMHO, initiating a dividend to return value to his shareholders...

  • Report this Comment On February 07, 2012, at 10:51 PM, jdwelch62 wrote:

    Sorry... Wrote "Hoarding cash is not returning value to the company". Meant to say "Hoarding cash is not returning value to the shareholders."

    Fool on!... :-)

  • Report this Comment On February 10, 2012, at 7:48 PM, shanghaid wrote:

    I remember the article a couple of years back when Apple was close to $250 that asked "Can Apple double?". I think you will see the same responses to that kind of question now.

Add your comment.

Compare Brokers

Fool Disclosure

DocumentId: 1773075, ~/Articles/ArticleHandler.aspx, 5/23/2013 4:29:29 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 15,294.50 -12.67 -0.08%
S&P 500 1,650.51 -4.84 -0.29%
NASD 3,459.42 -3.88 -0.11%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

5/23/2013 4:00 PM
BBRY $14.43 Down -0.03 -0.21%
BlackBerry CAPS Rating: *
AAPL $442.14 Up +0.79 +0.18%
Apple CAPS Rating: ****
MSFT $34.15 Down -0.46 -1.33%
Microsoft CAPS Rating: ***
GOOG $882.79 Down -6.63 -0.75%
Google CAPS Rating: ****
CSCO $23.51 Up +0.17 +0.73%
Cisco Systems, Inc… CAPS Rating: ****

Advertisement