Is this it? At P/E ratio around 50 and no profit payouts to stock owners, Apple stock isnt your typical buy. In fact, many buy Apple stock based on the expectation that the company continues to beat Wall Street estimates.
Apple in the last 5 years kept up with that demand mostly thanks to iPod sales. These pretty boxes sold like hotcakes…. no, “better than” hotcakes. Apple’s financial figures continued to beat wildest expectations on the streets regardless of the rest of the market, and each time AAPL price hiked like no other… Until this quarter.
I predicted long ago that the company’s stock price hike will gradually slow down if everyone is dead focused on looking at Apple Inc. as “the iPod maker”. Unfortunately, that time is here. Go ahead and walk around the streets of San Francisco. You will quickly give up counting the number of iPod headphones. We are saturated with iPods.
Sure, iPod Touch is sexy but would you buy one? I bet most of you will say “nay”. Why? Because you’ve already got a damn iPod! You’d rather spend your money on something else, right? Is it Nintendo Wii? GPS? A season pass to a ski resort? I don’t know what you are buying, but I know iPod ain’t that hot anymore.
Despite the disappointing iPod sales growth, I still thought Apple would do well. Looks like iPhone is going strong, having a significant share of the new smartphone sales. And this latest firmware update and the upcoming SDKs are any signs, Apple is constantly reevaluating its policies and technologies carefully based on consumer voices. That can’t be bad.
And then there are Macs. With the introduction of Leopard and Bootcamp, Macs are fast becoming practical alternative to buying Windows PCs. Last year, PC World called MacBook Pro the fastest Vista PC. Whoa. Ironic, isn’t it? Apple’s been making Windows PC for a couple of years and already kicking Dell and HP in their you-know-what.
MacBook Air, despite what digg-generation kids may consider as a “mediocre device everyone on interweb knew about”, is an engineering corner stone in my eyes. A sign that at core Apple is still a company driven by innovations. These days, $1800 for a light weight executive notebook computer (with a big performance) seems reasonable.
All these positives add up to one thing. Apple is still growing.
But maybe I am wrong. If the big slump in the last couple of days is any sign (sudden shift in ask-bid spread as well as a big drop in the P/E ratio are truly dramatic), maybe this is the beginning of the “maintenance” phase for the company as opposed to the “growth”. After all, it doesn’t matter what I think. At the end of the day, if people see Macs and iPhones as being luxury, especially in these slow economy times, it won’t help Apple sell goods.
My hope is still up. Technology ignorant investors have been wrong about Apple far too many times. With the surge in consumer technologies market, maybe Apple will one day become a company as big as or bigger than Microsoft (today, MSFT market cap is twice that of AAPL). For now, I’m holding onto my AAPL shares and see what happens…
