APPLE INC. – BULL VERSUS BEAR
25 January 2012 by Cullen Roche
14 Comments
There’s no doubt that the story of the day will be Apple’s blowout earnings (shocking analysts of course!). But not everyone is an Apple fanboy. Gregg Abella, a portfolio manager at Investment Partners Asset Management says the shares are at a “peak of expectations” and “priced for perfection”. He believes Apple’s competitors are beginning to strike back and that the Apple fad could be coming to an end.
On the other end of the spectrum is Gene Munster, an analyst at Piper Jaffray. He’s been a long time Apple bull and sees no real risks to the company’s growth. He thinks the iPhone 5 will be another monster product and that it’s very difficult to make a bear case for the shares.
Apple Bear:
Apple Bull:
Source: Bloomberg
I don’t own a single Apple product so I don’t have dog in this fight but I seem to recall people having made the same sort of dire predictions about the decline of the empire for a number of years. Could be, but I wouldn’t go short.
It’s all about expectations. And people have very high expectations for the next Apple products coming out this year.
The Iphone 4S, although overall a big success has shown some weakening of Apple’s share gains in the phone business. In Europe for example, Apple has lost ground to Samsung and disappointed many users who made the switch to Android.
Off course any mind controlled Apple fan will forgive this little “faut pas” in communication with customers in a breath, but I doubt they can pull it off twice without hurting their image.
So for me it is clear that Apple has to come out with a great phone and/or a nicer tablet this year or else expectation won’t be met and share prices will follow.
not yet – but it’s setting up nicely for one in the near future. I know a broken record but but it’s a coming. until then enjoy the party.
I’m surprised the collectivist wing of the Dem party has not yelled for a Windfall Profits scam similar to the one they cry for vs Exxon etc. Those poor companies scrape by on 1% margins while Apple bangs out 40% and now even makes more money!
Christ, give it a rest. This a blog post about whether Apple’s a good investment or not.
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The stock trades at a P/E of 12 and a P/E of 10.5 if you back out cash on the balance sheet. How in the world is that “priced to perfection”?
The near-term downside risk is pretty low on Apple.
- growing target markets; lots of adjacent market potential
- strengthening brand
- major cost-reductions in electronics and displays
- data everywhere
- at >$100B, it has incredible scale, that can sustain low cost competition (ZTE, Huawei) for quite a while
Where they can stumble (again) is hubris. When you start thinking that the only color customers can have is black, that subtle background resentment builds slowly over time. One lesson they (painfully) learned from the 80s is too take advantage of commodity hardware so as competitors drive costs down they benefit as well.
got a Nokia Windows phone recently and am thrilled with it – does everything I expect plus the commonality with Windows is reassuring. In contrast, my son’s Iphone4 was out of commission for more than a month since the Apple ‘genius’ bar couldnt figure out why the required software update was causing the sim card to malfunction and forced him to buy a replacement iphone(which of course ran into the same problem). You can see the hubris beginning.
I’m assuming he was trying to swap his old sim card in for the one that comes with the new phone?
If so, why?
he wasnt trying to change sim card – just doing an OS update from Itunes . The update locked up the sim card. The genius bar at the Apple store in Cupertino (Apple’s backyard) claimed that the sim reader wasnt working and made him buy a new phone. And this had the same problem eventually. This back-and-forth went for about a month and then the phone started working. Deafening silence when my son asked why he was forced to buy a new phone.
There are always good and bad anecdotes on customer service. The home button started flaking out on my wife’s iPhone 4, which was about 4 months out of warranty. She went to an Apple store and they swapped it for a free new one with a new 90day warranty in under five minutes.
Sorry for your bad experience but it is by no means the norm.
I don’t know what it is about AAPL bringing out so much emotion, but to me the bull case is pretty clear.
PE 12, same as S&P 500, if America is priced in for a “muddle through”, so does Apple.
Apple is priced in for a “muddle through”, only a little better than Microsoft. Microsoft has been priced in for a near “recession”.
If you take in the picture of treasury yield U.S. stock market is priced in for flat sales for five years and corporate margin drop to half. Apple is similarly priced.
The big disconnect here is that Apple and MSFT now have almost equal PEs while AAPL grows revenues 8 times faster than MSFT and earnings more than three times faster. If MSFT is undervalued as many people think, what would you say about AAPL? It’s a yard sale out there.