Another Motley Fool Commentator: Apple a ‘classic rule-breaker’ poised for outsized economic gains

“Apple is trading at more than 70 times trailing earnings. That’s more than twice the multiple of market leader and Motley Fool Stock Advisor pick Dell and three times that of the S&P 500,” Tim Beyers writes for The Motley Fool. “So why in the world would you want to be a part owner of Apple at that kind of premium? Because, dear Fool, the company is a classic Rule Breaker.”

Beyers writes, “For the uninitiated, the core tenet of rule-breaking investing is to find companies that take a stick of dynamite to the conventional wisdom on the way to outsized economic gains and, thereby, investment returns.”

Beyers looks at some Mac myths in his full article, here’s a sample:

Windows is just as good as the Mac; there’s no reason to get one anymore. “Sorry, wrong again. But this time I need only five words to prove it: no Mac OS X viruses,” Beyers writes.

It’s too expensive to sell Macs in a retail store. “Apple now has 86 lavishly decorated stores. For the first nine months of the year, retail sales up 89% over 2003, to $809 million. ‘Nuff said,” writes Beyers.

“The old saw that Apple is the premium player in a commodity market completely misses the point. Here’s the rub: Kids love Apple. Kids love the iPod. Apple has a way of appealing to this crowd more than does Dell, iPod partner Hewlett-Packard or IBM. And that’s good news, because they have deep pockets. Pollster Harris Inactive says Generation Y — kids and young adults born between 1981 and 1995 — has more than $200 billion in annual disposable income. They’re only going to earn more as they get older,” Beyers explains. “Standards that used to lock customers to a platform such as the Mac or Windows don’t matter that much anymore. And they’ll matter even less in the future. That means kids who develop a liking for Apple now may have no obstacles to becoming customers for life.”

Beyers asks, “Does that sound far-fetched? Maybe. But every Rule Breaking endeavor does at the beginning. Now, who’s up for a vacation in outer space?”

Full article here.

MacDailyNews Take: It’s dueling Motley Fool commentators day! Which one do you agree with most?

Related MacDailyNews article:
Motley Fool Commentator: Apple’s ‘a rotten, slowing, sub-par nerd-niche operator with a shiny surface’ – October 07, 2004

14 Comments

  1. And when is thinking different a bad thing? My English teacher even told me, “Many famous writers break the rules.” Now they’re famous. Tolkien, Hemingway, on and on. I think if we can get the iPod generation on Macs, they’ll certainly stick with it. All we need are some of the most popular games to lure some college students. The security and less hassle would be enough to justify a little added cost to an already stretched wallet. If Half-Life and Counter Strike were/are on Mac, there’d be some people at my school who might switch.

  2. I hope this time is different…

    When I was in college in the early 1990’s I prognosticated that Mac would destroy Microsoft once my generation, Mac-loyal, moved into the workforce and saw what crap Windows was. Windows has always sucked, but if you thought 95 etc, were bad, compare it to Windows 3.1 ( won’t even mention DOS…) It didn’t happen.

    This time, though, I’m starting to allow myself to be optimistic again. Hope I’m right…

  3. Tommy Boy. Since you mention the Honeywell lawsuit it’s not just Apple. It’s also Dell and dozens of other companies. The only problem is that neither Apple or Dell are liable. The suit pertains to LCD screen technology. In case you are not aware, neither Apple or Dell make LCD screens. They buy them from vendors and it those vendors that may be in violation of patents. Since it has yet to be judicated, the parties being sued are innocent until proven guilty.

  4. hahahaha I had a guy tell me today that Macs have barely cracked 1 Ghz.. and IBM owns Compaq and Dell …

    oh yeah.. and MSFT owns 20% of Apple and 10% of IBM…

    This is your market Jobs.. you have to sell to these ignorant quacks…

    PS. Don’t bother talking about Vertical Integration to PC drones.. they.. don’t .. get.. it…

  5. I’m sorry but the fool is a fool. He needs to play catch up on his facts that’s for sure. How can a niche operator have 4 BILLION Dollars in the bank and no debt! I suppose Mercedes Benz, and Ferrari are niche operators too? These commentators really need to get there head out of there A…!
    Apple makes really good products that don’t get viruses, worms, spyware, pop ups, and are now looked at as having the most secure operating system. The OS is rock solid and getting better with every major update. The hardware is just as reliable and there is enough quality software on the market to satisfy just about anyone. Don’t believe me then go visit an Apple store and look for yourself. Sure there’s a lot more software for windows but how much of it is worth the box that it is sold in. My guess only about a quarter which puts the amount of quality software for the PC right in line with what is out there for the Mac. Oh and Macs are at 2.5 gigahertz people and that’s 2 processors. Plenty of power.

  6. Part 1: Seth vs. the worm

    I liked it. I think it is important to pause here and look at Apple’s success. You can persist quite “small” for some time and yet be an important part of the overall niche.

    Increase market share yes, but not too much and not too fast.

    Regardless, the whole paradigm of computing has to change. I have said it again and again and so tossing his “short sighted enthusiasm (memory)” and iPod envy, omitting the return, the iMac the history that Apple is forging. These guys have a path, you can feel it. It goes beyond Jobs now.

    Shortsighted enthusiasm, OK, dem’s fighting words.

    I have an infrared, what I call “no button mouse”. That is all that I need the ctrl key does find.

    However, if I were to have a 2 button mouse or scroll wheel, I would not only wish to use it up or down but interact with the interface, forward or backward.

    I no longer wish an interface that is like a flat desktop. I am looking for a true object 3D (well 4-5 if you want to start talking to me Steve Jobs, this is but a free sample of interface design for the next few years once it is developed. I am trolling here (no bait, that is how I like it).

    I am looking to move through the interface as through a room. Twirling color shapes. Think of the patents.

  7. It might take a dip, but not yet.

    So my motto to address this “Think Different”
    is

    “Think 3D”

    1. Alpha numerical line command
    2. GUI (graphic user interface)
    3. OUI (Object User Interface)

    Remember who told ya first…LOL

  8. ^&#$^&#% sorry about that

    Part 2: Back to the story.

    I won’t challenge this guy’s numerical analysis, I like Motley Fool. Now here he beckons: “A flash-RAM iPod, a set-top box”.

    I have a suspicion that this article was written prior to the release of the G5. After all this is a show down, and they probably have been preparing this for some time now. I am willing to contemplate this article being written prior to the G5 and I see it in a different light.

    He is simply telling the people that it is going to take a dip, and most likely so. However the mind set is changing. And their server business is scary believe me. The people who buy that stuff have bucks, are intelligent and require the best.

    That has always been the best of Apple, 2-20% market share. You don’t want bulk when you are a leader.

    On the other hand, when you are a follower, you need all the bulk you can get.

    Developer developers developers.

    Well can’t end on a sour note. Lets wait for the stand off and see if the guy replying had more time. Will he mention the iMac and G5, both to me gaping holes of the argument.

    It might take a dip, but not yet.

    So my motto to address this “Think Different”
    is

    “Think 3D”

    1. Alpha numerical line command
    2. GUI (graphic user interface)
    3. OUI (Object User Interface)

    Remember who told ya first…LOL

  9. Part 3: Tim comes back

    Nice and short and sweet. He mentions the G5 and the iMac, getting Seth at both ends but we know he loves it that way.

    Experience Apple. Feel the halo. Used to be called a localized reality distorting field. Oh yeah it’s wormy, good protein. Yet that wax shine means you know it is virus free.

    Gonna be a time that the stock will need to settle. Remember there are a lot of shaky investors out there and perhaps some looking for a quick return. Apple is being noticed on the stock due to it’s persistance.

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