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A Rational Look at Apple
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By mannprod
August 2, 2007

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I've been an Apple shareholder for almost a decade. I'm not selling a single share, but I'm not adding any either. When I bought Apple it was a 7bil company with 4bil backed by cash, essentially a value play. Right now it's a 130bil behemoth with a P/E in the 30s.

I think, like most Apple longs, that it could capture a much bigger share of the computer market and could be successful with at least one or two more market defining devices such as the iPhone or the AppleTV.

However, any snag will cause major share drops. Right now the share price offers no margin of safety - as you can see by recent action. A major snag that has to do with Job's health or succession could cause a 50% haircut. Also, the bigger the earnings are the harder it is to top them. This is the process that happens to all high growth companies at one stage or another.

Since this is a site for sophisticated investors, I thought it would be fair to bring in the rational non-cheerleader opinion as well. Investors who buy it now without knowing the risks will be the first ones to bail out.

Just my 2 cents.


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