3 Things to Loathe About Apple

LONDON -- There are things to love and loathe about most companies. Today, I'm going to tell you about three things to loathe about U.S. tech titan Apple  (NASDAQ: AAPL  ) .

I'll also be asking whether these negative factors make Apple a poor investment today.

DNA
"Innovation is in the company's DNA." Apple is the company to which this cliche is most frequently applied. It's a comforting idea for fans of Apple to believe that innovation is hard-wired into the business and that it will always continue to innovate, as if that's its biological destiny.

The idea is rubbish, of course: Nurture, not nature is responsible for innovation. And the environment within a business that nurtures innovation can easily change for the worse.

In its heyday, ICI was a top-three global company and one of the greatest innovators around, creating polythene, perspex, and Paludrine (the first really effective synthetic treatment against malaria), among a host of game-changing products. Innovation was in ICI's DNA -- except one day it wasn't, and the business went into decline.

Loss of Jobs
How important was Steve Jobs to Apple's success? It's only been 18 months or so since the death of the company's charismatic leader and we don't yet know.

It takes a good few years for a new Apple product to get from conception to market, so the mystery new product category the company is currently talking about, in which it expects to launch later this year, will still have come from Jobs's vision.

We won't discover until a next generation of Apple products whether the company, post-Jobs, has the same degree of innovation and instinct for what will ring up big dollars in the marketplace.

Analysts still love Apple
Despite the decline of Apple's shares over the past nine months -- from over $700 to around $430 -- the majority of analysts are standing by the company, recommending it as a buy or strong buy. In the most negative roundup of recommendations I've seen, just two out of the dozens of City experts that cover Apple have it marked down as a sell.

I prefer to see the market and the analysts bearish on a company before rating the stock a possible "darkest-hour" contrarian opportunity.

A poor investment?
The City experts are by no means always wrong, and on the face of it, Apple's stock does look cheap. At a share price of around $430, the company is on a price-to-earnings ratio of 10.8 for the year ending September 2013, falling to 9.7 the following year -- and that ignores the $153 a share in cash on the balance sheet.

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Read/Post Comments (11) | Recommend This Article (3)

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 May 16, 2013, at 1:24 PM, Blubberx wrote:

    This article's title is so provocative and its content so superficial as to be little more than link bait, which is something I didn't expect from the Motley Fool. If you look at the three reasons given, none of them are any reason to loathe Apple in any objective sense. There are actual reasons to be careful with Apple as an investment, but they're not discussed. Seriously, what is the point of this article other than getting people to download the entirely unrelated 5 Stocks report?

  • Report this Comment On May 16, 2013, at 1:40 PM, SamuelKirz wrote:

    Maybe I can't count but that doesn't seem like three things. Innovation and Jobs death seem tied to one another (in the author's view). Apple spent 3.4 billion on research and development in 2012. Jobs died in 2011.

    Surely no innovation at that company.

  • Report this Comment On May 16, 2013, at 1:49 PM, larryw101 wrote:

    Another worthless article from Motley Fool. The article has very little new thought insight. Just old news repeated in a different manner.

    The article goes absolutely nowhere and makes no point.

    Come on, MT, you can put something better out there than this. Right ?

  • Report this Comment On May 16, 2013, at 1:58 PM, H3D wrote:

    "The idea is rubbish, of course: Nurture, not nature is responsible for innovation."

    Terms like "rubbish" and "of course" are subconsciously used to flag arguments for which you have no evidence, just a position.

    There are many great parents in the animal kingdom. The nurture their offspring well. It's in their DNA. It doesn't make their offspring innovative.

  • Report this Comment On May 16, 2013, at 2:05 PM, H3D wrote:

    "It takes a good few years for a new Apple product to get from conception to market, so the mystery new product category the company is currently talking about, in which it expects to launch later this year, will still have come from Jobs's vision."

    True. Apple were developing the iPad since 2000.

    We could be well into the 2020s before we know for sure that SJ truly managed to redesign Apple with innovation in its DNA.

    And then there will be the argument that its just momentum, and it'll all fall flat in the 2030s. And maybe it will. But if it doesn't, then it'll be certain proof of doom in the 2040s

    Or 50s

  • Report this Comment On May 16, 2013, at 2:10 PM, H3D wrote:

    "I prefer to see the market and the analysts bearish on a company before rating the stock a possible "darkest-hour" contrarian opportunity."

    Good for you.

    I prefer a clearly valuable stock with great fundamentals and which is cheap because of panic selling.

  • Report this Comment On May 16, 2013, at 2:13 PM, H3D wrote:

    "If you already have Apple tucked away in your portfolio and are looking for blue chip shares in other sectors, you may want to help yourself to the very latest free Motley Fool report. You see, the Fool's top analysts have identified a select group of FTSE 100 companies that they believe will deliver superior long-term capital and income growth."

    Superior is a relative term and in this context implies better than Apple's.

    Why do I suspect that this is just another deception?

  • Report this Comment On May 16, 2013, at 2:18 PM, mdl00 wrote:

    Should have said "Three Reasons why I Personally Loathe Apple." Then you would reduce your foolishness.

  • Report this Comment On May 16, 2013, at 2:56 PM, Embers1 wrote:

    The Motley Fool articles as of late have become trivial and this one is no exception. Their motto is "Educate, Amuse, & Enrich". They got one right and have dispensed with the other two.

  • Report this Comment On May 16, 2013, at 3:41 PM, larryw101 wrote:

    @Embers1

    Well said! Motley is losing credibility daily with all these worthless, flip, flop articles and don't even realize it.

    Some of their authors say to buy one day and write an article the next saying to sell.

    It's not even amusing, but is foolish.

    Wish they would edit these better before flooding the net just for advertising dollars.

  • Report this Comment On May 22, 2013, at 9:09 AM, JaanS wrote:
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