patrick.net

$500 is inevitable. How soon will be interesting to see. What I would love to see is Apple using their Mt. Everest of cash to wire houses with internet a la comcast. Could you imagine having just high speed internet and an Apple TV that did everything?

I don't think they can keep making the profit levels they are making now. There are only so many people who want a new iPhone.

There are 5.5 billion more people who want to buy an Apple product. In China everyone wanted to have something Apple. In Mexico in a Starbucks last year I saw Apple products. In airports I saw macbook airs, iPhones, and iPads all over the place.
My friend who is from Shanghai tells me how people there save up for a month for an iPad. There is a famous story of one kid who sold a kidney to buy one.
Eventually Apple profit growth will slow down, but I don't know when that will be.

Disclaimer: I work for an AAPL competitor, and am long on some of their competitors.

I'm bearish on AAPL. Their revenue shot up so steeply largely because they managed to capture a huge share of the total profit on all iPhone activity, including (many think --it's hard to say for sure) taking a chunk of what would be the carrier's portion if the user had any other manufacturer's unit.

Going forward: don't expect the carriers to be neutral. Expect salesmen in stores to aggressively push other brands to customers. Don't be too surprised if some carriers make shady discriminatory moves. Brand loyalty will help Apple in retaining existing customers, but that doesn't mean Apple won't face a choice between taking a hit to mobile margins (to appease carriers) or accepting more limited growth prospects in mobile.

More generally: there aren't any many businesses they could enter that have margins comparable to their current ones. So, depending on their next move, they may also have a fundamental tension between growth and margin preservation.

Vicente says

Consensus on AAPL to $500? It's testing 52-week high.

PE is 15 while Dell and HP are 8. SPDR S&P 500 (SPY) at 12
Not over the top and worth looking into.

clambo says

My friend who is from Shanghai tells me how people there save up for a month for an iPad. There is a famous story of one kid who sold a kidney to buy one.

That is twisted and sick.

I am typing this on a used Apple G4 that I bought about a year ago for $150. It looks old but it works well. Loaded 2003 Office for Mac onto it. I am good to go.

Many of the counterpoints are ones I could have heard 2 years ago. Yes of course every market darling will hit it's limit. However take for example AT&T losing it's "exclusive deal" well sure but that just opened them up to sell to all those Verizon and other customers. I recall hearing it makes more profits than all other makers combined, which is startling but not to me an indication of anything other than they are on top and have no need to cut margins.

I think the only worrying point for me is what's been pointed out about it's market cap. At this point any single megafund losing confidence in AAPL would trigger an exodus.

I love hearing the Apple contrarians, this means Apple stock will go way UP!
The other cell phones have no cachet.
Here is an experiment. Give an Android phone to your girlfriend, but inside of an Apple iPhone box. Watch her surprise and joy when she finds you tricked her!
The Android phones are nice, but they are not the quality and status of iPhones. And, this is why I would buy BMW stock over Volkswagen.
Counting their enormous mountain of cash, I think AAPL p/e ratio is not so high.
AAPL will just 1. split 2. start paying out dividends OH BOY!
Do you guys know how much $ Apple stores make per square foot? $5626. Tiffany=$2974
I have my own direct evidence. I saw people in Mexico who had fancy iPhones. One sheepishly admitted to me she could not afford to have the Telcel Data plan, but she just LOVED the Apple phone.
I gave a young Mexican lady an iPod Nano a couple of Christmases ago, and MAN was she brand aware. But, buying her the Apple product had its rewards ;)
My friend who is the scientist at the institute also wishes they could upgrade to all Apple.
Apple's making so much money and they are not even in the whole world's markets YET. I say worry about Apple after about 15-20 years.
I like Deere and Caterpillar too. Sure they have competitors. So what?

Android is buggy, I like my phone, but it does mysterious things. If you have one you know. I won't detail it.
Cheaper plastic phones will run some system or other, it doesn't matter. Apple phones will run iOS and Apple even makes 30cents from each app sold! ca-ching.
The world's true consumers are women and teenagers. We're men so we logically know that an Android phone has features and I have a plan that's only $25/mon with unlimited data. Try that with an iPhone, impossible.
But, the women and teenagers also know that the Andriod is "cheaper", "a better deal" and they are not interested in showing off their new "good deal".
One time I saw a sale and on a whim bought some great piece of clothing for my Shanghai girlfriend. Months later she was annoyed with me and said "and that thing you gave me wasn't even a name brand!" She of course only knows several "name brands"=C.Klein, T.Hilfiger, etc. She felt slighted because she had not heard of the clothes brand. She is the typical worldwide hungry acquisitive consumer.
Women worldwide will sell their bodies to buy Apple products, not motorola. They would do the same for LVMH products, or BMW, Tiffany, etc.
Try it with a Walmart giftcard and see your results.

When someone posts they are "short" Apple, does that mean they 1. own no AAPL 2. sell AAPL short (losing money) 3. bought AAPL puts? 4. other?

clambo says

When someone posts they are "short" Apple, does that mean they 1. own no AAPL 2. sell AAPL short (losing money) 3. bought AAPL puts? 4. other?

means they are betting against it.

clambo says

When someone posts they are "short" Apple, does that mean they 1. own no AAPL 2. sell AAPL short (losing money) 3. bought AAPL puts? 4. other?

Typically it means they bought put options on it. Trading in these contracts does not neccessarily involve owning the shares, although it could. One of my few dabbles in options trading was some Goldman Sachs puts where I never held shares just bought the contracts and sold them a few days later before they came to their expiration date, made some beer & pretzel money.

My question about those posting they are "short" Apple was sort of rhetorical: I guess they mean to say they "don't like Apple", that they did not have the strength of their conviction and actually lose money buying those worthless puts.
The reason Apple will just grow and make more and more money is their inpenetrable moat of exclusivity: you cannot buy the cars of the movie stars, you can't buy their clothes, their houses, their girlfriends, their champagne, their jets, yachts, etc. BUT, you can buy the same phone and macbook air and other gadgets.
I think the consumer is fickle so in about 20 years Apple won't be so cool.

I thought the stock market was an auction. Therefore, whether or not Apple makes $50 billion is not important, but rather the herd's expectation that it will make $50 billion.

You do realize Apple is only doing Marginally better than Chipotle Mexican Grill?

If a fucking hoitey toitey burrito company can be worth 300 plus clams, then damn it, Apple should be like $1200.

I really wish I had a shitty product to sell, the *Mullets have never ran stronger.

*Mullet a fish that will bite anything, and I mean anything.

As a side note, my aunt (mid seventies, never touched a computer) was talking about buying an iPad to connect to the internets. Still more sales to come...
FWIW, from their 2011 10-K (probably a bit stale at his point):
Break down of Sales:
iPhone 43%
iPad 19%
Mac HW 20%

PCs are dying a slow death, yet Apple has been able to take share as its iPhones/iPads introduce more users to the Apple brand (and Macs). My crystal ball says that iPhone/iPads (and other Android based phones/tablets) are the true "personal" computers. Traditional PCs/laptops will go the way of the dodo. Apple needs to capitalize on this shift; they own the processor, so its their market to lose -- just need to make it easy to add keyboard/monitor. Currently Android based systems seem to have the edge in this area. YMMV, alot!

Never!

The tablet style OS is not robust enough to replace the needs for personal computing. They don't do graphic production, sound production, it's not very useful for multi form data entry. They aren't expandable, they don't print.
In fact they are Ironically getting larger and larger in format by the minute. Even handheld platforms are getting larger. It's only a matter of time before they become their own platform that only use is. It allows some limited computing functions away from a proper computer.

I do believe Linux or a flavor there of, will eventually overtake MS and Apple in the Full blown computer OS market though. In most part due to this naive backward thinking. How long has the television been around? Just in the last decade there were no less than 4 new format of televisions. At the end of the day, it's still a television. They still haven't managed to make that a portable personal on the go experience. One of choice anyway.

iOs is perfect for people who are afraid of computers. I like Linux and it will cannibalize the windows desktops in the developing world. (Android is linux by the way).
Apple will continue to grow sales of 1. phones 2. ipads 3. computers 4. software.
Wait until Apple decides to expand into other services like internet. Would you like broadband internet from Apple for $25/month and cut your comcast cable and cancel your landline from AT&T? Apple has the cash to wire our houses.
OH man it's fun to predict how much more money Apple will make.

clambo says

Would you like broadband internet from Apple for $25/month and cut your comcast cable and cancel your landline from AT&T?

That's not likely to happen. If it were possible Microsoft would have done it already. Their Vision in 2000 when the .Net platform first came out was cheap broadband wi/fi or (their vision of 4G), for around 25 a month. This of course was a time when DSL was the fastest connection in 90% of the American markets. SO that was a vivid dream.

Ironically though, Apple has beaten Microsoft implementing MS vision of the Smart Phone. Even though Microsoft had a decade to so to develop something on the CE platform or a variation there of. They failed to deliver a usable user experience, integrated with the internet as they described before Apple.

But I still think if cheap internet was possible Apple would have delivered it along with the iPhone, Apple doesn't have a good track record of partnering with anyone. The AT&T partnership was that of convenience, and necessity. Or Apple would have had their own satellites when they launched.

I think Google is in a better position to buy or build the infrastructure it would take for that, more so than Apple. And I don't think Google is going to risk their good name, on something so fickle as communication infrastructure.

They start a cheap race on internet fare, and they end up dragging their Powerful Titan status down the tubes with it with in five years.

If AAPL got into broadband, they'd charge far more money for less bandwidth than anyone else. They'd aim to recoup their Herculean infrastructure investment by capturing a status-conscience prestige market. The beauty of the modems would be the differentiator.

AAPL getting into broadband is about as likely as them getting into waste management or electric power.

The GOP says

I think Google is in a better position to buy or build the infrastructure it would take for that, more so than Apple.

Goog has no knowledge to build or run such a business. Its one thing to sell advertisment, another to run an ISP.

Actually, Apple did provide ISP service back in 94-95 but was folded. http://en.wikipedia.org/wiki/EWorld

EBGuy says

PCs are dying a slow death, yet Apple has been able to take share as its iPhones/iPads introduce more users to the Apple brand (and Macs). My crystal ball says that iPhone/iPads (and other Android based phones/tablets) are the true "personal" computers. Traditional PCs/laptops will go the way of the dodo.

you do know what a server is ? right ....

you expect apple to run their whole business and ERP on Ipads ?

Soon China Telecom will sell a version of the iPhone that works on their 3G. They are about 60 million subscibers I think. The other one that is still not with Apple iPhone yet is Chinamobile, which has 300 million+ subscribers. They're still "negotiating". Chinamobile is owned by the Chicom govt. I believe.

EBGuy says

Traditional PCs/laptops will go the way of the dodo.

No way. Try working on an excel spreadsheet all day with a touch keyboard. Even a netbook is easier than a touch screen.

I know many people who have TWO 19" Wide monitors to work on their spreadsheets with. They would have a really hard time with a 5-7" screen.

If you're changing the amount of hot dogs sold last week from 384 to 452 in F33, no problem. If you're a Realwhore writing a quick "Thank you for coming to my open house. If you need more assistance finding the perfect home for your family..." email, no problem. If you're trying to write a white paper, I pity your wrists and fingers. Or designing a 6-page marketing brochure with lots of images.

There's a difference between a quick edit or email/text reply and substantial content creation.

msilenus says

If AAPL got into broadband, they'd charge far more money for less bandwidth than anyone else. They'd aim to recoup their Herculean infrastructure investment by capturing a status-conscience prestige market. The beauty of the modems would be the differentiator.

you don't really understand the first thing about Apple or how it came to its $100B stockpile of cash, nor how the existence of this $100B stockpile of cash alters the strategic landscape for the company going forward.

Apple can now do whatever the fuck it wants, for whatever reason it wants (outside of antitrust and IP issues of course).

Worth a read:
http://seekingalpha.com/article/314378-apple-fiscal-q1-2012-the-biggest-earnings-blowout-in-history

thunderlips11 says

Try working on an excel spreadsheet

Try thinking a bit beyond the 1970s sometime.

No way. Try working on an excel spreadsheet all day with a touch keyboard. Even a netbook is easier than a touch screen.
Read my entire post. I said just need to make it easy to add keyboard/monitor. Currently Android based systems seem to have the edge in this area. We already have systems out like the Motorola Lapdock that allow you to turn a smartphone into an ultra portable PC. We'll always have power users that need the horsepower of an Intel iX product, but increasingly, more functions will be good enough on an ARM (quad core Tegras are coming out in consumer tablets this next round). Again, YMMV.

Bellingham Bill says

thunderlips11 says

Try working on an excel spreadsheet

Try thinking a bit beyond the 1970s sometime.

“Nessuna soluzione . . . nessun problema!„

That spike is two to three years on. But if we were to go back to the internet when we only had dial up, look at all of the communication technology that we had then, that we don't have now with broadband. Even back then there was a push to go tablet, AT&T Safari anyone?

I'm sure the Tablet format will settle into it's own. But it will find new users, that typically weren't tethered to a computer. Or data entry gets manually entered after their duties are performed.

Tablets will be great for Warehouse inventory tracking systems, Bar and Restaurant hostesses, devices given to employee applicants or devices given to customers to enter information or order completion.

But when the dust settles, sales men, finance people, graphic artists, computer software development, database administration, network administration, HR responsibilities, will be done by Laptop or Work Station.

As for the home use, let's face it, we love our gadgets. People buy universal remote controls, not because they work as intended and are able to incorporate every function on every device, but because they look cool.

That will be the same with Computers and Tablets. Most will have both if they can, but most will still want both, even if they only have one or the other.

And hey prices are only getting cheaper on both technologies.