Why Everyone is Afraid of Apple

[robotrout]

      if you wanted to buy the entire company it would 
      cost you about $240 billion.

      To put that in context, for the same amount of money 
      you could own Newmont Mining Corp. (NYSE: NEM - News), 
      the world's largest gold-mining company,

      And E.I. Du Pont de Nemours & Co. And Kellogg Co., 
      And Shrek studio DreamWorks Animation SKG Inc,
      And H&R Block Inc. (NYSE: HRB - News), 
      And The New York Times Co. And Molson Coors Brewing,
      And the Estee Lauder Cos Inc. And Tiffany & Co.,
      the Hershey Co., Harley-Davidson Inc., Expedia Inc., 
      Abercrombie & Fitch Co., American Eagle Outfitters, 
      Burger King Holdings Inc., CBS Corp., Chipotle 
      Mexican Grill Inc., Whole Foods Market Inc., 
      Starbucks Corp., Netflix Inc., JetBlue Airways Corp.,
      NStar, and Dr Pepper Snapple Group Inc.

Not even the most ardent Apple fan, I would assume, could believe this is a fair valuation.

[Edited to add list of names that didn't make my original cut and paste.]

[sandee]

I think is that Apple is doing something which no-one else may have done in recent past.

1. Apple is in software business where it has championed the model of fixed engineering cost and variable revenue streams.

2. They execute well and their products are neat. (That is a understatement)

3. They are market makers. There products are not just stealing customers but also creating new customer base for these products

4. Their marketing model is un-parrelled. And no-one in industry has any chance to replicate that in near future

Compare that to other companies. Most of them are not innovative but profitable because they are big, have low cost products. Some are in utility/F&B domain where its tough to increase the price. And others don't have much competative advantage.

Software is still the most profitable business (by a big margin), if done right. Apple is just demonstrating that.

[laut]

Apple is very profitable. It made 3 billion last quarter, about twice Jet Blue's market cap. Apple has no debt and a lot of cash. Apple could essentially buy Starbucks with cash. Apple's current assets is more than 30B and Starbucks market cap is less than 20B.

[randrews]

He actually goes on to list another dozen or so companies; Apple's valuation is all of those combined.

[sh1mmer]

Does anyone know the combine revenue, debt and liquid assets of those companies?

It would be interesting to see how Apple matched up.

[vtail]

"Journalists are terrified of this company too.

Why? Just ask Jason Chen - the editor at tech blog Gizmodo who got his hands on the next iPhone. Apple's response? They sent in the police, who smashed down Chen's front door, ransacked his house -- while he was out -- and carted off computers and files. When Chen returned home from dinner with his wife, they frisked him too."

This is the kind of argument they are making to support the point????

[wmeredith]

This also raised my eyebrow... Chen bought stolen property as defined under California law. Then published evidence of his doing so in a very public manner. Apple may have called the police, but they hardly "sent them in". I was with the article until that point.

[czhiddy]

> Apple's response? They sent in the police ...

This, like much of the article, is complete hyperbole (unless you actually believe Apple controls the police force).

[pohl]

"Word, Judge, I didn't purchase no hot item...I just 'got my hands on it', nah mean?"

[hswolff]

This type of writing: "That new iPhone? What a total meh. So what if it has new volume controls? Or a metal strip around the side? Apple needs people to line up round the block for its next product. Will this really be enough?" shows that this author isn't so much as writing an opinion piece as he is sensationalizing and capitalizing on a trend of articles hearkening the fall of Apple for reasons I cannot truly fathom.

I can't help but remember the article posted yesterday IIRC which made the point: Why are we worried about Apple? Isn't it Wall Street that truly has the power to make everything get fubar'ed?

These articles just tire me...

[calebgilbert]

Gotta post this somewhere to get it off my chest, so might as well be here -

...as someone who was using OS9 when Apple had a death watch on it there's a certain amount of schadenfreude, mixed with wonder, at this situation of Apple as the 800lb gorilla. I get a giant kick out of the whole thing. :-)

That is all.

[jacquesm]

I'd get a kick out of Apple if it were showing microsoft how you can be successful without pulling all kinds of (dirty) tricks.

Unfortunately it looks like they are at least as bad as microsoft ever was and that the gospel according to Jobs is not that far removed from the gospel according to Gates. The one thing they've got going for them is that stuff appears to look better and works better, otherwise the new boss is the same as the old boss.

[keltex]

One metric of how negative sentiment is the short ratio of the stock (percent of shares sold short). For comparison:

AAPL - 1.3% (http://finance.yahoo.com/q/ks?s=AAPL+Key+Statistics)

MSFT - 0.7% (http://finance.yahoo.com/q/ks?s=msft+Key+Statistics)

GOOG - 1.4% (http://finance.yahoo.com/q/ks?s=goog+Key+Statistics)

[nandemo]

Every time someone sells short someone is buying. So how is short ratio useful to measure "negative sentiment"?

Short selling might be used for technical reasons. For instance, an option trader might sell put options and at the same time sell the stock short for hedging. If the stock price goes down he loses money on the options but gains when he covers the short sell. That is, he might be betting on variables other than the stock price.

[jteo]

I humbly disagree. Markets are not 100% efficient in aggregating information. The list of examples is endless. Remember 3com and Palm?

[csomar]

I think it's very challenging for Apple. Apple is making a skyrocketing revenue because iPad and iPhone sales has boomed. But iPad won't sell for 300K piece everyday, that only happened the first day... actually it can sell! Yes, but there is an interesting point (so that it sells at such high rate): Apple "must" dominate the market.

For the iPhone, the competition is now fierce: Android, BlackBerry, Palm, Windows mobile and Nokia! Nokia is already a major player, they won't let Apple take the market easily and cheaply. They'll do marketing, new phones and crazy things to preserve their position.

That said, as competition is getting though, Apple has got to spend more on marketing and improving their products (taking down their profit, even if their sales are up, because they are spending more). Only if they dominate the market, then your investment will pay back.

My advice is: don't get in this stock. It's very risky; unless you believe that the iPhone and iPad will become standards ;)

[visava]

After using the Mac for the first time ( bought it just for iPhone development ) I was impressed . Forget iPhone and iPad , what if Mac becomes the standard. Read 'Mac is back' by Paul Graham. Many of my friends who do not do any programming bought Mac recently. Windows PC now feels like a waste of time to me. Maybe the masses will catch up later.

[cubicle67]

> For the iPhone, the competition is now fierce: Android, BlackBerry, Palm, Windows mobile and Nokia! Nokia is already a major player, they won't let Apple take the market easily and cheaply

Have you seen how much market share Palm, Microsoft and Nokia have lost to RIM and Apple over the last three years?!

[itg]

He is giving Apple way too much credit. It's not like Apple did shady business deals/practices to get in their current position, it's because people genuinely like their products for whatever reason (interface/ease of use/design). And because a niche group of people (tech geeks) don't like apple products doesn't mean the general public won't find those products appealing.

[Terretta]

So you mean he's not giving them enough credit.

[adrianwaj]

I'd love to see Apple do a watch, or a clip-on to a watch that enabled financial transactions as a substitute for cash.

It'd probably need some type of rfid, and the merchant some type of biometric, otherwise if someone saw the watch, they might be tempted to steal.

[jacquesm]

Why wait for Apple to do it?

A friend of mine is doing this, but on a card, not a watch:

They'll be going live within the next couple of months, keep an eye out for something called the real X card.

[cubicle67]

something like a credit or eftpos card perhaps? :)

[jaekwon]

A lot depends on iAds.

That could be a game changer, though I don't see the profit from iAds matching that of mac/iPhone/iPad/app sales.

Ugh, are we going to see iAds in addition to Google ads while browsing the web?

[danudey]

The numbers that have been floating around for inclusion into the iAds are in the millions. You don't get to be part of iAds unless you have serious money, so I think we can assume Apple's going to at least cover their costs.

As for seeing iAds elsewhere - perhaps, but it seems unlikely. Still, Apple's take on ads is that they want to make ads people like. The example he demonstrated, the Toy Story 3 ad, is something I can honestly see myself playing around with for a while. It's entertaining, it's involving. It's not going to be boring, garish text ads like Google ads, uglying up the page.

There's something to be said for the idea of adding taste and style back into online advertising.

[xsddkfj]

How about this statistic:

    Apple could pay, today and in cash, over 13% of Greece's debt.

Astonishing, isn't it? :)

[krschultz]

On the other hand, the P/E ratio of Google's stock is still higher than Apple's.

Apple - 21.72

Google - 23.10

Microsoft - 15.44

[InclinedPlane]

Apple is fundamentally a different kind of company than almost all other software or hardware companies. The prospect of J. Average Computer Company competing against J. Other Average Computer Company is straightforward, all that it takes to win against them is to keep doing what you're doing, only better, or more. The prospect of competing against Apple might be a bit more daunting, because potential it requires completely remaking your entire company to be more Apple-like, which is something most companies are utterly incapable of doing.

This is despite the fact that Apple isn't even especially dominant in any area, not to the same degree that Microsoft, Google, or Amazon are dominant.

[rimantas]

Apple is fundamentally a different kind of company than almost all other software or hardware companies.

I was just reading this today (it's not fresh, I just got around to read it finaly): http://www.pragmaticmarketing.com/publications/magazine/6/4/...

[whakojacko]

Apple has been fairly dominant in the mp3 player business for quite some time now...

[TotlolRon]

Me thinks it is mainly because Apple delivers what others only envision. Which is scary.

[smokinn]

I find it's rather that they take care of every detail. I refuse to buy an iPhone but I'm still not satisfied with the state of Android phones.

There's the phones with the great cameras (but are underpowered). There's the phones with the great cpus (but wasted because of low ram) There's the phones with the good extra UI (wasted because they're underpowered) There's the good middle ground handicapped by a really old version of Android and no multi-touch.

Etc.

Whereas the iPhone just has it all.

[randrews]

Microsoft "saw to" that? What about IBM, Netscape, the bundling deals with hardware manufacturers... Microsoft has screwed at least as many small companies as Apple.

[sandipc]

there is definitely truth to your argument, but remember that apple != app store

[joubert]

I have to thank apple for higher ebook prices?