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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

by 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.
    - mattyb 17y ago
      Why do you wish you went with the System76 model (I'm considering both right now)?
      - nostrademons 17y ago
        I found that pretty much the only applications I use on the Mac are Terminal, Macvim, Chrome, VLC, and BitTorrent, all of which are just as good or better on Linux. Plus, I like to play around with advanced programming languages and other command-line only programs, and usually the apt-get packages are a bit stabler and more problem-free than the MacPorts ones. I'm perfectly familiar with Ubuntu - I use it at work - so the usability/eye-candy benefits of a Mac don't apply to me. In fact, I found it harder to get used to and learn a whole new set of keyboard shortcuts, because I'm so used to Linux. If I'm just going to use it like a Linux machine, I might as well pay half the price and get a real Linux machine. The Mac does have some nice points. Two-finger scroll is great, as is the magnetic attachment for the power cord (I can't count the number of times I've tripped over that). The battery life is significantly better. I can get more & better games for the Mac than for Linux. But the screen on the Pangolin is better, and for half the price, I think I'd end up liking that more than all the little fit & finish on the Mac. Plus, the Mac had a firmware bug when I bought it (thankfully been fixed since) that randomly would lock up the computer for 30 seconds at a time. Not impressed, Apple.
danek 17y ago
when it peaked at $200 in 2007 the P/E was about 40. The company has grown a great deal since and the stock has a long way to go just in terms of post-recession P/E inflation, if that ever happens. meanwhile they continue to dominate. the only thing I'm worried about is another market collapse, but that's not specific to apple. I get the feeling that the WSJ only understands products in terms of feature lists. it's like they are frustrated because all they can attribute apple's success to is "it's a hipster/yuppie fad". they just don't get it. It's the kind of analysis that I'd imagine someone who reads a lot of Ayn Rand to come up with.

by kadavy 17y ago

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.
  - mattyb 17y ago
    Why do you wish you went with the System76 model (I'm considering both right now)?
    - nostrademons 17y ago
      I found that pretty much the only applications I use on the Mac are Terminal, Macvim, Chrome, VLC, and BitTorrent, all of which are just as good or better on Linux. Plus, I like to play around with advanced programming languages and other command-line only programs, and usually the apt-get packages are a bit stabler and more problem-free than the MacPorts ones. I'm perfectly familiar with Ubuntu - I use it at work - so the usability/eye-candy benefits of a Mac don't apply to me. In fact, I found it harder to get used to and learn a whole new set of keyboard shortcuts, because I'm so used to Linux. If I'm just going to use it like a Linux machine, I might as well pay half the price and get a real Linux machine. The Mac does have some nice points. Two-finger scroll is great, as is the magnetic attachment for the power cord (I can't count the number of times I've tripped over that). The battery life is significantly better. I can get more & better games for the Mac than for Linux. But the screen on the Pangolin is better, and for half the price, I think I'd end up liking that more than all the little fit & finish on the Mac. Plus, the Mac had a firmware bug when I bought it (thankfully been fixed since) that randomly would lock up the computer for 30 seconds at a time. Not impressed, Apple.

danek 17y ago

when it peaked at $200 in 2007 the P/E was about 40. The company has grown a great deal since and the stock has a long way to go just in terms of post-recession P/E inflation, if that ever happens. meanwhile they continue to dominate. the only thing I'm worried about is another market collapse, but that's not specific to apple. I get the feeling that the WSJ only understands products in terms of feature lists. it's like they are frustrated because all they can attribute apple's success to is "it's a hipster/yuppie fad". they just don't get it. It's the kind of analysis that I'd imagine someone who reads a lot of Ayn Rand to come up with.