A Broken Company

[HansTWN]

Originally Posted by wizwor

Or unveil the next Amazing Thing.

That they MUST do to stem the slow decline. And with Jobs gone I doubt they still have what it takes to do that.

[fjtorres]

Originally Posted by wizwor

At $300, what is AAPL P/E? I think it's 10 at $450. Seems cheap in a vacuum. I won't pretend to be a well informed investor. I agree with your second point. AAPL has had a LOT of bad news of late. The problem with brand loyalty, is that people die or become satisfied -- both hurt sales.

The reason for the stampede is that the "growth investors" are reading yesterday's news as signs that Apple has peaked. So they no longer see it as a growth stock. But Apple hasn't been a growth stock for a couple years. They have been riding the momentum from the iPad intro and the global migration to smartphones but their product line is clearly stale. That is where all the rumors about the Apple HDTV come from, the desperate hope that they have "one more thing" to justify the pie-in-the-sky expectations of $1000 for AAPL.

But there is no Apple HDTV and even if there were, (today) that is exactly the wrong market for their business model. No magic bullet there.

But there is a big gulf between irrational expectations and a broken company.
What we have is a company with major problems but that is still thriving. Yes, iPhone 5 has issues--but the faithful simply bought iPhone 4s if they had qualms about the 5. They still have a lot of brand equity with their customers and the iOS lock-in is a powerful force; enough to make the Mini a market-changing product despite itself.

Apple has had a rough year; they've made quite a few back-to-back mistakes. And they're still riding high.

They are what they are.
They're not a "growth" company in tech industry terms but they are a mature company at its very peak. And that is plenty formidable--things have to get a whole lot worse for Apple to be broken. And it will take very little to make the "analysts" forget about 2012.

[Sil_liS]

Originally Posted by HansTWN

The point is that investors look to the future, not the past. And Apple's prospects simply don't look as good as they did 12 months ago. The competition is a lot stronger and they have not shown that they can come up with significant new ideas in the post-Jobs era. As we see in these pages that doesn't rattle iFans unshakeable belief in THEIR company, but it is obvious investors think otherwise.

If the new management started by doing something radically different the same investors that are freaking out now would have freaked out then. There was criticism that Apple maps came out when it clearly wasn't ready. Maybe they are waiting a while to work out any new ideas.

For me it's not a belief in the company, but it's a belief that money will attract good designers. The more companies there are out there, the more chances there are for designers' visions to become reality. I've seen so many absolutely beautiful concept designs that maybe if they get built I will even switch from my dumb phone to a smart one.

[wizwor]

Originally Posted by Sil_liS

If the new management started by doing something radically different the same investors that are freaking out now would have freaked out then.

The iPad Mini was a radical departure from the Tao of Steve.

[Sil_liS]

Originally Posted by wizwor

The iPad Mini was a radical departure from the Tao of Steve.

Same device in a different size. Hasn't Apple done that before?

[SeaKing]

All Apple needs is for its customers to buy more Apple products. That will show the doubters and naysayers.

Who is going to step up?

[wizwor]

Originally Posted by Sil_liS

Same device in a different size. Hasn't Apple done that before?

Well, yeah, but that is not the point. The point is that His Steveness often explained why a tweener would not work...

Originally Posted by Steve Jobs during a 2010 earnings call

One naturally thinks that a 7-inch screen would offer 70 percent of the benefits of a 10-inch screen. Unfortunately, this is far from the truth. … The reason we [won't] make a 7-inch tablet isn’t because we don’t want to hit [a lower] price point, it’s because we think the screen is too small to express the software.

Originally Posted by Steve Jobs citing Apple's research

There are clear limits of how close you can physically place elements on a touchscreen before users cannot reliably tap, flick or pinch them. [Higher resolution] is meaningless unless your tablet also includes sandpaper, so that the user can sand down their fingers to around one-quarter of their present size.

[HansTWN]

Originally Posted by Sil_liS

If the new management started by doing something radically different the same investors that are freaking out now would have freaked out then. There was criticism that Apple maps came out when it clearly wasn't ready. Maybe they are waiting a while to work out any new ideas.

For me it's not a belief in the company, but it's a belief that money will attract good designers. The more companies there are out there, the more chances there are for designers' visions to become reality. I've seen so many absolutely beautiful concept designs that maybe if they get built I will even switch from my dumb phone to a smart one.

No doubt that they have the resources to turn it around and might have something up their sleeves -- but until they show their cards the market won't be convinced they do.

[Sil_liS]

Originally Posted by wizwor

Well, yeah, but that is not the point. The point is that His Steveness often explained why a tweener would not work...

But the software changed, and people became more adept at using a touchscreen so they can work with smaller elements.

Originally Posted by HansTWN

No doubt that they have the resources to turn it around and might have something up their sleeves -- but until they show their cards the market won't be convinced they do.

Is it the market or is it the growth investors?

[Penforhire]

Even when growth slows a stock has SOME correlation to its earnings, the P/E ratio. And even with multiple contraction AAPL is worth way more than some of you figure. Genentech is a past example of severe multiple contraction yet earnings kept price up. You figure a P/E of 11 or less is a fair valuation for AAPL? I disagree.

You want a crazy stock? Try AMZN, not AAPL. That's a company with an leader (Bezos) who is upfront about ploughing profits back into it, makes almost no margins, yet carries an insane P/E ratio. Just goes to show there are all sorts of investors out there.

Oh, and before you figure AAPL means nothing to you, check what 401K funds you own. Got any large cap growth? Or large cap indexes, NASDAC 100-ish? Or science and tech funds? Then you own AAPL, and probably more than you (or even I) want to, lol. It is one of the most widely held, for better or worse, and therefore hard to avoid.

[HansTWN]

Originally Posted by Penforhire

Even when growth slows a stock has SOME correlation to its earnings, the P/E ratio. And even with multiple contraction AAPL is worth way more than some of you figure. Genentech is a past example of severe multiple contraction yet earnings kept price up. You figure a P/E of 11 or less is a fair valuation for AAPL? I disagree.

You want a crazy stock? Try AMZN, not AAPL. That's a company with an leader (Bezos) who is upfront about ploughing profits back into it, makes almost no margins, yet carries an insane P/E ratio. Just goes to show there are all sorts of investors out there.

Oh, and before you figure AAPL means nothing to you, check what 401K funds you own. Got any large cap growth? Or large cap indexes, NASDAC 100-ish? Or science and tech funds? Then you own AAPL, and probably more than you (or even I) want to, lol. It is one of the most widely held, for better or worse, and therefore hard to avoid.

Forget the P/E ratio for past earnings, what matters is P/E ratio for future earnings. Amazon has invested a lot of money during the last 2 years establishing the Kindle reader and tablet range, thus making little profit. But the market considers that to be temporary and thinks they will rake in big profits from those investments soon. Apple is exactly the opposite. They have made lots and lots of profits in the past --- put have shown no clear plan going forward.

Look at Xerox -- they were so successful that the brand name became synonymous with the product category (and there are many similar examples from various industries). A glorious past means nothing at the stock market.

[GA Russell]

Does someone here know Apple's stock price the date of Steve Jobs' passing?

[Carmelreader]

Originally Posted by GA Russell

Does someone here know Apple's stock price the date of Steve Jobs' passing?

$378.25 at the close October 5, 2011

[HappyMartin]

The share price does not reflect the fundamentals of a company, that's obvious, it reflects sentiment.

Apple has a ton of cash, good revenue growth, great margins. I'm not sure what type of analysis of a company would indicate this as broke.

Take out what you think of the products because that is sentiment. Take out what you think of their business practices, that is sentiment. Take out what you think of Jobs, that is sentiment.

Look at the balance sheet, historical performance for the past 5 years and then decide if its broke.

I say this as an iOS and android user. It's just stuff. Boring business stuff for me mostly.

[DuckieTigger]

Originally Posted by SeaKing

All Apple needs is for its customers to buy more Apple products. That will show the doubters and naysayers.

Who is going to step up?

Don't look at me. To be an Apple customer, shouldn't I already own Apple products? Wait, I do own an old iPod Shuffle, but only because it turned into a toy for the little ones.