“If you are investor in [Apple (AAPL)] stock, brace yourself for a dose of reality. The shares’ best days are surely behind them. Future returns will be much more modest — and the risks will be greater,” Brett Arends opines for The Wall Street Journal’s “R.O.I.” or “Return On Investment” column.
“Yes, Apple Inc. is a great company that makes terrific products,” Arends writes. “Steve Jobs can lay a plausible claim to the title of the world’s most successful chief executive.”
“But do the math,” Arends implores. “Once the nimble outsider in the computer industry, Apple is now valued at $135 billion. It’s the tenth most valuable company in America and 19th worldwide. For the shares to rise at a similar rate from here would take it to $1.25 trillion by 2014. Even to grow at a more modest 20% a year would take it to $333 billion — more valuable than ExxonMobil today and twice the value of Procter & Gamble or Johnson & Johnson.”
“Anything is possible, but that’s quite a bet,” according to Arends.
MacDailyNews Take: Arends’ little “R.O.I.” bio explains, in part, “Brett has spent his life rifling through department store bargain bins in London, Boston and New York…” In other words, it’s highly likely that Brett’s yet another cheap, shortsighted Windows PC sufferer who screws himself with sticker price fixation. Brett doesn’t get R.O.I., even though that’s the name of his column. And he can’t do the math. For growth potential, Apple has some 90% headroom in the PC market, about 99% in the cellphone market, and some 70% in the iPod replacement market. Now, there’s a real dose of reality.
Arends continues, “Revenues from selling Mac computers actually fell 8% last quarter compared to a year ago. The company sold just 4% more Macs than it did in the same period last year, and this time at a lower price point.”
MacDailyNews Take: Arends must have missed the little news tidbit about the macroeconomy. How did the Windows PC market do? According to Gartner, in the second quarter of 2009, worldwide PC sales fell 5%. Boy, it’s a good thing that Gartner includes sales of Apple Macs in their totals, right, Brett?
Arends continues, “Last quarter’s growth came from iPhones. Apple stock is now a mobile phone stock. And that’s a brutal business. Apple is competing with the likes of Research In Motion’s BlackBerry, phones running Google’s Android platform, and many others including Nokia, SonyEricsson and even Palm.”
MacDailyNews Take: This is like picking up Sports Illustrated and reading about the brutal competition that the Boston Red Sox face from the Kansas City Royals, Cleveland Indians, and even The Washington Nationals. Puleeeze.
Arends — inexplicably making some sense for a change — continues, “Sure, Apple may even defeat them all. Few of them are that impressive. But even if the iPhone defeats all takers, what will happen to profit margins? This is an industry of mutual assured destruction.”
MacDailyNews Take: Was, not is. Apple remade the industry, Brett. As with many other things, you just happen to have missed it.
Arends continues, “And then there is the issue of Steve Jobs’ health. This remains a major worry. He was notably absent from the company’s conference call.”
MacDailyNews Take: Jobs has an almost perfect record of not participating in Apple’s conference calls, Brett. There was absolutely nothing “notable” about him not participating. This is mis-, make that disinformation, at its worst. Because Brett’s a hack. Where’d the WSJ get this fool, from the NYT? No, even worse (if that’s possible): TheStreet.com, birthplace of fomenting hacks. Beyond all the iHype and iMania, let’s get one thing clear. The iPhone isn’t the future. It isn’t a revolutionary mobile device ushering in a new era. – Brett Arends, TheStreet.com, June 29, 2007.
Rearend continues, “Apple chief operating officer Tim Cook, who has been running the company in Mr. Jobs’ absence, may turn out to be as brilliant as his predecessor. But it’s highly unlikely.”
The full article – we’ve already covered everything of interest, so Think before You Click™ – is here.
For a more, read Daniel Eran Dilger’s “Who’s paying Brett Arends to malign Apple?” article over on RoughlyDrafted here.