Nothing trades on fundamentals anymore. With Apple PE below 10 when accounting for their cash... And Amazon PE of 2800 or so... With razor thin margins....
How can anyone pretend the stock market is anything but a casino.
Apple getting hammered...
By BoomAndBustCycle Follow Thu, 15 Nov 2012, 9:19am 1,757 views 24 comments
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BoomAndBustCycle says
I don't think that conclusion resembles fundamentals.
Amazon is transitioning and investing. They may have earned 2 cents a share to get that outrageous PE, but that's not the right conclusion.
Who knows what the future holds, my bet is Amazon will one day become the biggest retailer in the world, outselling Walmart. Given that background, of course there's a lot of support for Amazon. I have seen it firsthabnd with my own habits, bye bye target, best buys, home depot, Bloomingdales, any retailer, its all Amazon.
Apple is going through what Microsoft went through, their growth is getting close to topping out and it impossible to meet historical comps. They have to excecute at a level that is unprecended. They earned 50B more last year after tax, pretty hard to just make 10B more.
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Good post SFAce.
While it does indeed seem ludicrous that investors would abandon a company that is still growing because of something seeming innocuous like less-growth-than-expected, it makes total sense. Growth is an exponential function, and slowing growth is actually a pretty big deal. It certainly cannot keep up forever, and this might be Apple hitting the limits of reality. Expansion into the Chinese market can probably provide a good bump in growth, for a while. It is a very different market, though. Apple will probably make a good long term dividend-return stock once they accept that they are no longer a growth story. They are a solid business, and although their new-stuff-every-6-months business model offends my common sense as far as sustainability goes, I think that they will be around for a very long time.
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bmwman91 says
Hello, is there an echo in here? LOL!
SFace always makes good posts. You included so don't sell yourself short. :)
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SFace says
There will always be a competitor in any market. The AMD to Intel, Samsung to Sony, Coke to Pepsi, Netgear to Linksys, Home Depot to Lowes, etc. etc.
Amazon has a bright future, but do not count out that competitor. It could be Walmart, Target, Ebay, etc. But it will be someone. Amazon's future is bright, but its stock price is only for the people that can afford the risk. I'd pay double for Apple at today's prices before buying Amazon. That's just me.
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Everything is getting hammered. Who knows why. War in Gaza. Fiscal Cliff. Sunspots. Fuck it, who really knows?
All I know is if AAPL drops much further I'll add to my holdings. Oh yeah, aren't dividends about to get paid?
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Sunspots, definitely sunspots.
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What planets are retrograde?
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SFace says
I agree, but with all that cash, and huge profit margins.. couldn't they easily lower prices dramatically.. take smaller profits and CRUSH their competition in volume by offering a premium product priced more competitively than all the competition. Their margins are obscene compared to all other electronic companies. They have far more wiggle room when it comes time to go "thermonuclear" so to speak.
Not that I think it's in their culture to do so.. But with Jobs gone... and with growth going stagnant. I could see Apple going in a pure AMAZON marketshare direction.
Amazon is selling their Kindles practically at cost, marketshare and volume is all they have.. Apple still makes 30% margins on their iPhones... lots of room to put pressure on the competition.
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BoomAndBustCycle says
Nope, Apples most valuable asset is their brand. Why would I hurt it? (Louis Voutton hand bags don't go and sale, you do it once and it will ruin everything) And you're not going to crush Samsung with "price war" anyway, they are HUGE in their own right and they make 5 or 6 internal components anyway. Apple has brand and scaling.
And why do you want a price war or go "thermonuclear", $100 flows directly to the bottom line. They can't fill inventory fast enough anyway therefore they never had to discount their phone until a new model replaces it.
Have anyone really step back and wonder, how the f__k can you make 20B more after tax in one year. That's the standard Apple set. When they launch a product, they need to execute 100M units in one year or get several million on the first day. You think it is easy to build 200M Iphones and 80M ipads a year? You think it is easy to ramp those goals 30% more?
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BoomAndBustCycle says
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apple exec’s new digs. 740 Church Street, San Francisco CA
how many foxconn suicides did it take apple exec richard p howarth to afford this little shack?
http://www.trulia.com/homes/California/San_Francisco/sold/1751965-740-Church-St-San-Francisco-CA-94114?source=Patrick.net
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the foxconn ghost chorus refrain:
just wait and see, they will go the way of the twinkie.
just wait and see, they will go the way of the twinkie
‘ cause mama always said that time wounds all heels!
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Steve Jobs was a douche and outsourced thousands of jobs. One day people will wake up and recognize Apple products for what they are, overpriced dumbed down shiny toys.
All style, no substance. I'm willing to bet that aapl will be less than $450 by 2015
Sent from my iPhone.
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The gravy train won't last for ever. Somebody will start to discount and offer the same product for lower. Their saving grace is the "it" factor. That is hard to build.
They do have a massive cash buildup. But they are esentially in the business of making fancy chinese made junk and selling it at premium prices. Who really needs a phone every year?? You do-until you don't. For now, it is a very strong company and they can take on tremendous hits over the next few years. But we will have to wait and see.
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Apple has more miles to go.
while the Iphone ("smartphone")market is maturing, the tablet market is expanding and will provide many years of Growth for Apple.
It will be telling to see how the Microsoft Surface and Blackberry 10 will perform to see if Apple is a keeper for 2013.
It's not like Apple is trading at 30X PE.
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The Surface really is a top-notch piece of hardware. I know that MSFT specifically set a goal to have the hardware quality exceed that of Apple. While that is important, it doesn't address the fact that the Surface has to break into an already competitive, and somewhat saturated market. Doing that requires a huge software ("app") selection and brand recognition. I am very curious to see how those obstacles are handled.
Apple isn't going anywhere. They will remain highly profitable for at least a decade, unless a reincarnation of Steve Jobs starts a company that manages to disrupt Apple's entire market. It is not out of the realm of possibility, but it is also not very likely.
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Wow, it's sinking a lot faster than I expected.
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BoomAndBustCycle says
It's not when you buy stocks for the dividend.
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zzyzzx says
As suspected, It turns out the dividend and buyback was the warning sign.
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Nothing ever trades on fundamentals. Nobody gets rich that way.
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A couple of observations about apple:
1. on fundamentals, they look fantastic...
2. they have to stay cool to keep making money; so far, they have managed to stay very cool... I'll probably by an Imac for my next desktop... though I'm not sure i'll ever spring for an iphone, I use my ipad all day long...
3. I wish I'd bought them a few years ago!!!
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I love it when a company that's already over leveraged to the hilt, their innovation days are long behind them and their chief visionary dies, the stocks at 700 and people still pretend that there's still room to grow.
If Steve Jobs never got sick, I think he would have realized by now, that Apple's days would be severely numbered, if he sat idly by and watched the Android OS marriage into every third party appliance and electronic device capable of being managed by yet another hand held Android device of multiple platforms and manufacturer. While Apple continued to be a limited Fanboy club, with limited distribution outlets.
Even today, Apple talks about releasing more ultra proprietary devices, with very limited distribution.
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Growing U.S. trade deficit with China cost more than 2.7 million jobs.
http://www.epi.org/publication/bp345-china-growing-trade-deficit-cost/
With no-one at the helm encouraging Manufacturing recovery, the US is adrift with Lawyers and Accountants. Ben only knows infinite QE.
Electronics is the tip of the spear of enabling manufacturing. It enables washing machines, all packaged parts, toys, phones, tvs, planes, trains, and automobiles.
Since China and other countries are "dominating" this, I am afraid this may contaige into HP, Dell, and the other US firms.
Hope that I am wrong - Hope for Change.