6 ms·

Why Apple Shareholders Should Be Cautious

15 points by martey 17y ago

dwwoelfel 17y ago
"4. Steve Jobs's ego" This is Apple's main asset. It doesn't belong on a list of Apple's weaknesses.
- zacharypinter 17y ago
  Double-edged sword.
deleted 17y ago
[deleted]
tptacek 17y ago
One thing keeping Apple from lots of extra iPhone sales to business users is that Mr. Jobs, for some reason, has a thing against keyboards. There's no business reason for it. It's a silly, unforced error. Not building products that fully appeal to "business users" isn't an "unforced error". It's a market segmentation decision.
- zackattack 17y ago
  I read it as the author implying that not going after as many markets as possible is an unforced error.
  - nostrademons 17y ago
    ...which would be wrong. If going after another market makes you mediocre in the market you're already winning in, you should say no. A physical keyboard adds bulk and weight to the device that make it a lot less attractive to consumers.
    - zacharypinter 17y ago
      Would having an optional version of the iPhone with a keyboard (or an optional addon, even third party) make Apple more money? If the answer isn't no, then the author's point has some merit, even if you prefer a slimmer device without a keyboard. Quick question: with all the third-party devices and addons that Apple permits via its proprietary iPhone/iPod/iPad connector, is there one that provides a mini physical keyboard? If not, do we know if Apple is intentionally preventing it (via API's or licensing)?
      - catch23 17y ago
        There are dozens of physical keyboard addons for the iPhone. Apple doesn't prevent any of these 3rd party addons from working. So if some business really wanted a physical keyboard for the iPhone for their employees, they could make it happen.
- gte910h 17y ago
  Yes, he also hates "Women with nails" (Nails don't work on the thumbkeypad that iphone uses).
jacoblyles 17y ago
There are a lot of statements I disagree with in this article. At the same time, it is true that if Apple were bought to the same ROI as Microsoft then the stock price would be less than half of what it is. Buying put options to cap your downside is not a bad idea, especially if the stock has already made you a few dimes.
steveplace 17y ago
"Cautiousness" has been the prevailing investor sentiment over the past 9 months, and it hasn't worked.
jsm386 17y ago
And [Verizon's] data traffic just jumped 20%, even without the Apple phone. To put that in perspective, mobile data traffic on AT&T's network has increased 5000 percent over the last three years. In 2009, which presumably this article references for Verizon, AT&T was up 200%. http://digitaldaily.allthingsd.com/20091118/time-to-cut-att-some-slack-iphone-users/ http://digitaldaily.allthingsd.com/20091118/time-to-cut-att-...
catch23 17y ago
Apple fatigue? The ipod mania has lasted almost 10 years... my sister wants to upgrade her ipod nano to an ipod touch because her nano "feels" old. I have a feeling the ipod will still have a good share of the mp3 music player market for at least the next 10 years or so.
- zackattack 17y ago
  I would like to see more iPod innovation.
  - zacharypinter 17y ago
    Phones are the direction for iPod/mp3 player innovation. Once battery life and storage size reach a certain point, there's no reason to carry a dedicated device.
    - zackattack 17y ago
      ok, well, i'd like them to have loud speakers and the ability to transfer music p2p
    - catch23 17y ago
      I'm not sure -- Apple sold as many iPod Touch models as iPhones. Considering that they still sell iPod classic, nano, and shuffle, someone at Apple probably has the data that shows that it's still necessary to sell all these other models.
gamble 17y ago
There are reasons to be cautious about Apple, but not in this list. Most of the OP's concerns boil down to a perception that Apple has been 'too' successful, and it's due for a failure. On the one hand, Apple's valuation is extremely high. On the other, their products are selling like gangbusters and the iPhone in particular has nowhere to go but up. The current emphasis on software and interfaces gives Apple a substantial advantage over the legacy players like Nokia and RIM; as the iPod showed, it's not a trivial advantage to overcome.
kadavy 17y ago
These reasons are pretty weak. For example: #3. The Share Price Apple still has a P/E ratio of only 22. Meanwhile, Amazon's is 70. If Apple traded at that P/E ratio, the share price would be $940, instead of $270. Whose investors should really be worried?
- nostrademons 17y ago
  In 2006, Motorola traded at a P/E of only about 12, despite huge and rapidly growing profits from its wildly successful RAZR phones. They were nearly as dominant in the cell phone market as Apple is today. Between 2003-2007, Motorola sold roughly 110 million RAZRs, compared with the 50 million iPhones that Apple has sold to date. Then Apple came out with the iPhone, which was light years better than the RAZR. And further models of the RAZR continued to disappoint. The Motorola stock that you bought at a P/E of 12 in 2006 has lost nearly 75% of its value today. Motorola runs at a loss now (well, technically they've turned a thin profit in recent quarters, after losing more money in 2008 than they earned in 2006). Its P/E is negative. Beware P/E ratios. Earnings can head south very quickly, particularly if they're based on one breakthrough tech product.
  - kadavy 17y ago
    That's an excellent example that you seem to have been able to access quite readily - impressive, +1. And I do agree that you can't just look at P/E ratio. But the key difference is ...based on one breakthrough tech product... Apple has a much more firm footing in people's digital lives - and more brand loyalty - than Motorola could have ever hoped to have.
    - nostrademons 17y ago
      Are they really all that dominant, though? As I see it, they have 3 major product lines: the Macintosh, the iPod, and the iPhone (perhaps the iPad will join that soon). They have massive brand loyalty among a certain segment of the population, but a good number of people don't give a rats ass about them. I'm typing this on a Macbook Pro, but I honestly regret that purchase (I wish I'd gotten a System76 Pangolin instead). I've got a iPod Nano sitting unopened in a box, an unused gift from my employer. I couldn't live without my N1, but have never felt the need for an iPhone.
cmer 17y ago
Is it just me or these are all terrible points the guy made? WSJ, fire that guy!
jhawk28 17y ago
All these "weaknesses" can be turned around to be strengths. Much of this is why Apple is successful.
isleyaardvark 17y ago
Right now they're paying most of the cost of each new iPhone, and under-charging for the data plans too. That's great for customers and great for Apple, and bad for the networks. Provider-wise an influx of new iPhone customers sounds like one of those good problems to have. Word is you'll be able to get a Verizon plan on the next iPhone, Verizon doesn't seem to be shying away from it.
zacharypinter 17y ago
Perhaps this is wishful thinking, but I'd say a good reason to be cautious about Apple right now is the growing discontent that they're creating amongst "alpha geeks" (http://www.martinfowler.com/bliki/AlphaGeek.html http://www.martinfowler.com/bliki/AlphaGeek.html). I get the opinion from the swarm of recent Apple-related articles here on Hacker News that Apple-loyalty is down and that a large number of alpha geeks are, at the very least, prepped for competing devices to sway them away if they haven't left Apple already.

15 points by martey 17y ago

dwwoelfel 17y ago

"4. Steve Jobs's ego" This is Apple's main asset. It doesn't belong on a list of Apple's weaknesses.

zacharypinter 17y ago
Double-edged sword.

deleted 17y ago

[deleted]

tptacek 17y ago

One thing keeping Apple from lots of extra iPhone sales to business users is that Mr. Jobs, for some reason, has a thing against keyboards. There's no business reason for it. It's a silly, unforced error. Not building products that fully appeal to "business users" isn't an "unforced error". It's a market segmentation decision.

zackattack 17y ago
I read it as the author implying that not going after as many markets as possible is an unforced error.
- nostrademons 17y ago
  ...which would be wrong. If going after another market makes you mediocre in the market you're already winning in, you should say no. A physical keyboard adds bulk and weight to the device that make it a lot less attractive to consumers.
  - zacharypinter 17y ago
    Would having an optional version of the iPhone with a keyboard (or an optional addon, even third party) make Apple more money? If the answer isn't no, then the author's point has some merit, even if you prefer a slimmer device without a keyboard. Quick question: with all the third-party devices and addons that Apple permits via its proprietary iPhone/iPod/iPad connector, is there one that provides a mini physical keyboard? If not, do we know if Apple is intentionally preventing it (via API's or licensing)?
    - catch23 17y ago
      There are dozens of physical keyboard addons for the iPhone. Apple doesn't prevent any of these 3rd party addons from working. So if some business really wanted a physical keyboard for the iPhone for their employees, they could make it happen.
gte910h 17y ago
Yes, he also hates "Women with nails" (Nails don't work on the thumbkeypad that iphone uses).

jacoblyles 17y ago

There are a lot of statements I disagree with in this article. At the same time, it is true that if Apple were bought to the same ROI as Microsoft then the stock price would be less than half of what it is. Buying put options to cap your downside is not a bad idea, especially if the stock has already made you a few dimes.

steveplace 17y ago

"Cautiousness" has been the prevailing investor sentiment over the past 9 months, and it hasn't worked.

jsm386 17y ago

And [Verizon's] data traffic just jumped 20%, even without the Apple phone. To put that in perspective, mobile data traffic on AT&T's network has increased 5000 percent over the last three years. In 2009, which presumably this article references for Verizon, AT&T was up 200%. http://digitaldaily.allthingsd.com/20091118/time-to-cut-att-some-slack-iphone-users/ http://digitaldaily.allthingsd.com/20091118/time-to-cut-att-...

catch23 17y ago

Apple fatigue? The ipod mania has lasted almost 10 years... my sister wants to upgrade her ipod nano to an ipod touch because her nano "feels" old. I have a feeling the ipod will still have a good share of the mp3 music player market for at least the next 10 years or so.

zackattack 17y ago
I would like to see more iPod innovation.
- zacharypinter 17y ago
  Phones are the direction for iPod/mp3 player innovation. Once battery life and storage size reach a certain point, there's no reason to carry a dedicated device.
  - zackattack 17y ago
    ok, well, i'd like them to have loud speakers and the ability to transfer music p2p
  - catch23 17y ago
    I'm not sure -- Apple sold as many iPod Touch models as iPhones. Considering that they still sell iPod classic, nano, and shuffle, someone at Apple probably has the data that shows that it's still necessary to sell all these other models.

gamble 17y ago

There are reasons to be cautious about Apple, but not in this list. Most of the OP's concerns boil down to a perception that Apple has been 'too' successful, and it's due for a failure. On the one hand, Apple's valuation is extremely high. On the other, their products are selling like gangbusters and the iPhone in particular has nowhere to go but up. The current emphasis on software and interfaces gives Apple a substantial advantage over the legacy players like Nokia and RIM; as the iPod showed, it's not a trivial advantage to overcome.

kadavy 17y ago

These reasons are pretty weak. For example: #3. The Share Price Apple still has a P/E ratio of only 22. Meanwhile, Amazon's is 70. If Apple traded at that P/E ratio, the share price would be $940, instead of $270. Whose investors should really be worried?

nostrademons 17y ago
In 2006, Motorola traded at a P/E of only about 12, despite huge and rapidly growing profits from its wildly successful RAZR phones. They were nearly as dominant in the cell phone market as Apple is today. Between 2003-2007, Motorola sold roughly 110 million RAZRs, compared with the 50 million iPhones that Apple has sold to date. Then Apple came out with the iPhone, which was light years better than the RAZR. And further models of the RAZR continued to disappoint. The Motorola stock that you bought at a P/E of 12 in 2006 has lost nearly 75% of its value today. Motorola runs at a loss now (well, technically they've turned a thin profit in recent quarters, after losing more money in 2008 than they earned in 2006). Its P/E is negative. Beware P/E ratios. Earnings can head south very quickly, particularly if they're based on one breakthrough tech product.
- kadavy 17y ago
  That's an excellent example that you seem to have been able to access quite readily - impressive, +1. And I do agree that you can't just look at P/E ratio. But the key difference is ...based on one breakthrough tech product... Apple has a much more firm footing in people's digital lives - and more brand loyalty - than Motorola could have ever hoped to have.
  - nostrademons 17y ago
    Are they really all that dominant, though? As I see it, they have 3 major product lines: the Macintosh, the iPod, and the iPhone (perhaps the iPad will join that soon). They have massive brand loyalty among a certain segment of the population, but a good number of people don't give a rats ass about them. I'm typing this on a Macbook Pro, but I honestly regret that purchase (I wish I'd gotten a System76 Pangolin instead). I've got a iPod Nano sitting unopened in a box, an unused gift from my employer. I couldn't live without my N1, but have never felt the need for an iPhone.

cmer 17y ago

Is it just me or these are all terrible points the guy made? WSJ, fire that guy!

jhawk28 17y ago

All these "weaknesses" can be turned around to be strengths. Much of this is why Apple is successful.

isleyaardvark 17y ago

Right now they're paying most of the cost of each new iPhone, and under-charging for the data plans too. That's great for customers and great for Apple, and bad for the networks. Provider-wise an influx of new iPhone customers sounds like one of those good problems to have. Word is you'll be able to get a Verizon plan on the next iPhone, Verizon doesn't seem to be shying away from it.

zacharypinter 17y ago

Perhaps this is wishful thinking, but I'd say a good reason to be cautious about Apple right now is the growing discontent that they're creating amongst "alpha geeks" (http://www.martinfowler.com/bliki/AlphaGeek.html http://www.martinfowler.com/bliki/AlphaGeek.html). I get the opinion from the swarm of recent Apple-related articles here on Hacker News that Apple-loyalty is down and that a large number of alpha geeks are, at the very least, prepped for competing devices to sway them away if they haven't left Apple already.