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July 01, 2007

Comments

Sharon Loveheart

Well I did my research at http://www.aaabooksearch.com
Both Apple and RIMM are a sell. Google would be a buy if it pulled back to 470's.

beanie11111

AAPL is a buy on any dip. It won't go much lower than 115. Believe it! Nokia sells 650 million phones. Watch them start losing market share, especially on high end phones. Once you go iPhone, you'll never go back. And that's a fact, Jack!

GOOG is a buy on any day of the week, including Sunday.

www.beanie11111.blogspot.com

JP Checa

I agree with this post to some extent. I think that analysts and investors have already factored in what Apple is expected to perform in the next few months into the price of the stock. However, I don't see any reason for Apple's stock to go down, primarily because they've hit a stride with their product announcements that 1) keeps people guessing and 2) increases marketshare. There have been some posts in the blogosphere where people comment the average time period an Apple product goes through before getting a significant upgrade.

As for Google, I think they'll be coming out with a lot of new things, especially in the mobile space. But from a financial point of view, I don't think these new services are going to amount to anything (the same reason AT&T's stock hasn't budged from the iphone). Investors and speculators will take that into account.

Jon T

This is a joke. Why would you sell Apple when it just had a very successful release of the Iphone. Stop reporting garbage Business 2.0.

africandoglady

All cell makers can say goodbye to their business. iPhone is it, game over. The only one that will do well is RIMM and that's only until iPhone can auto-synch with exchange, adds GPS and IM. Once Apple puts those in, RIMM will also go out of business. I just dumped my blackberry (ok, it was 7290 but I've played with both the 8800 and the curve)once iPhone was activated and I ain't going back!

Tim

Apple is a BUY!!! Don't read these news reports, they've been wrong for years now. The execs at Business 2.0 must be shorting Apple because everything is bad about Apple despite the huge rise in stock price.

Anonymous coward

The author of this article just doesn't get the fact that what differentiates between Apple and its competitors is not that it makes better hardware, it's that it makes better software!
The main draw of Apple products is their friendly usability and innovative functionalities that are hard to new and exciting. If a technical analyst fails to recognize this, he is simply short sighted. So it's completely fair to compare Apple to a software company because in some sense, it is one.

If you were to compare the Apple to Nokia, the question that immediately comes to my mind is, Of the 650M phones that Nokia sells, how many phones of those costs $500? Majority of Nokia phones are under $100, and they are sold at much lower margins. The article just pop out this 650M number to startle you, and without really going any deeper into the Nokia comparison, just left it at that.

My opinion is that Apple's valuation might be rich at this point, but it's not so unreasonable.

Brian T.

I wish it was that simple...like there are only 2 stocks to choose from and their future depends on how one chart has moved more than the other. Aren't they both working together on a bunch of stuff? Isn't there a possibility that both companies can grow at a nice speed, or is it that only one can, and we need to pick "the one". And, if this writer (with the job of selling copy and ads) had looked at a few 10 year stock charts, he might know that over time, stocks can continue to go up. Yes, there are stocks that have done 1000% over the years. SURPRISE

ValueGuy

Interesting article. Doesnt make a bit of sense however. A share of a cmpany's stock represents a a tiny piece of that companies earnings. And in the case of apple, a share costs around 39 times a years earnings. That is kind of expensive until you look at the fact that not only has apple been dominating the personal music player space, but they are also growing their computer business at 30% a year, while the rest of the industry is around 10 to 15%. That means they are taking market share from somebody (can you say Dell)

So when you add another whole line of business (the iPhone line) on top of pretty damn good earnings growth from the PC and the personal music biz, you've got a receipe for explosive earnings growth...and that my friend has everything to do with why you should own this stock - even at 120.

And just one other point...apple has opened something over 160 retial stores in the last few years. Each store is profitable, on its own by caputuring the retail mark up that Apple was giving away before...but even more they are controlling the consumber expierence. If you haven't been in one of their stores -- do yourself a favor and check it out. It is a case study in how to do retail right. These are little money makers that put the products in the best possible light. Even if the iPhone is a moderate success (and by all indications it will be a blockbuster hit) the follow on effect on Apples computer business will be profound.

At its current profit margin, each 1/4 of point of market share in the home computer market that Apple caputures is equal to 16 cents a share in earnings. If you want to see why Apple is a good buy, check out what happens when you price a few percentage points of market share gain into the price to earnings ratio. If you want to see why Apple is going double in the next 24 montsh, check out what happens if they mange to capture just 10% more of the personal computer market over the next 24 months. I'll help you out. They will add approximatly $6.40 cents a share in profit. They only make $3.16 a share now -- that would put them at almost $10 a share in earnings. Hmmm -- at the current price of $120 a share, that is around a PE of 12. And that my friend is a very cheap high tech growth stock.

GSchwinn

Eric,

There's a very good reason for the recent out-performance of Apple over Google. Apple's earning's are now actually growing faster than Google's and accelerating. Google's earnings are growing but decelerating. Buy Apple. Buy Google also but expect Apple to continue to outperform. Apple's product cycle trumps everything Google has going for it. I say Apple stock increases 30% more than Google's over the coming 2 years.

toto le heros

I say the folks at 2.0 don't know much and have to start from some other piece of news - sell aapl today buy goog? sure, why not? they're just trying to get page views for their ads onthe side, they dont really care one way of the other.... the best part though are the comments.

rip

Another moronic comparison to cell phone companies. Since when did Nokia have a multi-billion dollar division that sells computers? Or own a dominant position in digital music? I'm sorry, but is Motorola growing at 20%+ a year?

Don't get me wrong, I like Nokia. I own the stock and think it is a buy at this point. However, Apple is also a buy.

Pfft. This comparison to Motorola and Nokia is simply, retarded.

Apple, simply put, is fairly priced relative to earnings and cash flow. At most, it is maybe 5-10 points over. And looking forward, this stock is a BUY. This stock is going to 180+ in 12 months.

My analysis says Apple is going to increase revenues from computers by 7 billion/year. iPod revenue should increase by 35%, or 3 billion. iPhone revenue, for 12 months, should be around 1 billion, at least. Which all adds up to an additional 11 billion in revenue. About a 50% increase in revenue... 180 is easy.

mobilevijay

What this article does not talk about in terms of nokia vs apple...
nokia might sell 650 million phones, but what are the margins on those phones. They are mostly the low end phones in china, india and other asian countries. The price / handset for nokia on these phones is not that great.
On the other hand price point for apple is on their side, since they are addressing the expensive side of the market.

Also, companies like nokia, motorola do not have an ecosystem like itunes, and iphones is another great distribution story for apple.
iTunes is a great triple play convergence story...
a) iPod medium to buy the content
b) Apple TV to buy the tv shows, music, record albums,
c) iPhone using the wireless internet
d) Ofcourse the itunes desktop version for internet

It is definitely a win-win for apple to address the missing leg for iTunes distribution. It can truly become a great service story with their hardware providing the digital rights for the content distribution.

J

Some comments above explained well on author's "blindness", and below I just add some questions purely from quantitative analysis:
1)Did the author calculate the correlationship by yourself? If not, how can you draw the conclusion?
2)Does the author think 6 month's data are sufficiently to do correlation?
3)What kind data confidence level do you think is appropriate?
Besides several institutional investors are both big holders of both Google and Apple, did their trading patterns impact "the chart"?
If the author didn't think about those questions, please go back to college first and don't draw any conclusions to mislead readers...

Kasimani Baskaran

The author of this article is clueless on
(a) Apple is gaining market share on the Mac
(b) It is going to dominate the living room soon (AppleTV). Steve started it as a hobby. Hobby is much more serious than work for some people like him.
(c) Microsoft is going down and is good for Apple to take more of the PC market share. Microsoft without bill gates is body without soul. No more innovation. So win for Apple. Forget those Virus and Anti-virus companies. Welcome to Apple
(d) Apple is entering the enterprise. This will bring a lot of revenue and profit to apple. High end server platforms from Apple are even cheaper than Dell - of course with the reliability of Apple. Tell me where is competition?
(e) Windows users have tasted the Mac by using iTunes, Safari for windows. Once people are hooked Windows looks boring. So more switchers in 2008 once Balmer becomes the hero of Microsoft
(f) Multi-touch is going to be everywhere soon in 2007. So you will see a full-screen iPOD that will replace all except a phone. So people are going to be crazy about the Apple brand.

---
Tell me with this if you want to sell Apple?
Apple will be glorified in 2008. It will hit 200 soon.

Jon M

How can you do a serious evalutation of Apple and not even talk about the Mac or iPods or other business. The iPhone is just one aspect of many. The Mac is still their bread and butter and it is getting more innovative and capturing market share all the time. The key date for Apple is it's July 24 financial reporting.

Luke

The two companies' p/e ratios are NOT identical!

GOOG p/e : 45.35
AAPL p/e : 38.61

Should Apple trade at p/e 45 its stock price would be $142.

Who is this Cowen guy trying to play here?

Jizzy

What a dumb review by Business 2.0. Apple has just gotten more than expected launch of iPhone and people should dump it? What a foolish advice, a fool on the street knows that, you should always be with a winner and someone that can deliver. How about reducing your child's allowance, because she has just outperformed your expectations in the recent school exam? Off course, the argument should also be that, she has outperformed her peer group too much and she must be punished so that she can temper it a little so that it peers can catch up with her

Agreed, Google is a big name, it has been around for a long time. Apple is in a league of its own, a nice niche growth company, Apple has a following crowd, a fan base, some people even call them cult. People! If you missed Google, do not miss apple!

When in the history of telecommunication in the world have you heard that, so many people want to activate their cell phone in one that, that the server of one of the biggest players could not handle it and there are delay for up to 48 hrs? AT&T never saw it coming, they thought it would be business as usual; they were blown out of water.


It is myopic to put Google and Apple in the same basket and say that since their stock prices had been growing at the same rate for sometime, they must grow at the same rate forever and that if Apple's have raisen alot lately, people should start buying Google & sell Apple, so that their stock growth rate be at par again. What is dumb analysis, if stock analysis and focus is that easy, then you are an overpaid, overrated analyst.

Apple sold 525,000 units of iPhone, & average price of $549.00 each, ie $0.3 billion in one weekend. Analyst projections were around 400,000 units. Let assume analysts factored these sales into the current price of Apple, does that mean Apple will stop growing?

Simple wall street Math will tell you that, current stock prices are approx. in tune with future growth. So if Apple's last weekend growth is now at par with it current price, I think it is now time for analysts to revised their estimates and move them higher, because their former expectations had been met.

The only other logically reason why anyone will put a 'for sales' sign on Apple after a successful launch is either

1.) So that fund managers, who dump the stock before the iPhone release, for fear that it might not go well to get in at a lower price before earnings on 07/25/07.

2. For the shorts to cover before the stock takes another upward trajectory.

When Apple finished correcting some of the flaws in the current release of iPhone i.e. add things like GSP, support for exchange, solution to battery, solution to storage, etc. Blackberry will be a thing of the past and Apple will steal huge market shares from Rimm, Palm, etc……

Craig Mazeska

PE ratio..... Het smart one....Goog's FORWARD pe is 25 as is appl's........ Come on now....

Brad

If you are a long term investor, I see no reason to sell Apple. It's a great story and will only keep getting better. For apple to double their market share takes a lot less than for dell or hp to do the same, and they are now on the map, big time.

I held the Jul 07 calls and sold them because I think that for the next qtr (or month in my case), the price won't run much from here. With apple it is all about buying the rumor and selling the fact. I think it might be smart to buy up a month or two before they release their next qtr results although a lot of that would have already been priced in.

I bought Google last week, and think there is a lot of juice left in the tank still. I use pretty much every one of their services to run and analyse and market my online business (www.lindgolf.com.au). There is nothing in the world as targeted and measurable as google adwords, capable of generating significant levels of traffic.

Larry Blumen

Apple fanatics.

Woodman

So here it is, 5 days since this article was posted and Apple is up 9% and Google is up about 3%. Sure glad Mr. Schonfeld is not my Investor Counselor. Sheesh!

AAPL to $250

Clearly you don't know WTF you are talking about!

GOOG IS GOING TO $250 and so is AAPL!!!!!!!

SHORT GOOG, BUY AAPL!!!!!

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