The bear case against Apple; what could go wrong

Invisible Shield for Apple iPhone 4!“Bernstein Research’s Toni Sacconaghi, an analyst with a long history of bearish Apple predictions chose an odd day to make what he calls the ‘bear case [for] a darling among buyside investors,'” Philip Elmer-DeWitt reports for Fortune. “Apple was trading at record highs for the third day in a row Monday when Sacconaghi offered his clients these bullet points:”

• Apple’s market cap is too large for it to outperform, and its image has migrated from underdog to Silicon Valley bully, which will increasingly pit competitors against it.
• Increased regulatory scrutiny threatens to undermine Apple’s powerful iOS ecosystem.
• Sustained growth in iPhones will inevitably lead to margin pressure.
• Near-term expectations for iPhone and iPad units are getting heady, risking disappointment.
• Apple insistence on retaining cash points to a risk of the company squandering it on a flawed acquisition.

Elmer-Dewitt reports, “In the end, the analyst seems unconvinced by his own analysis.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]

33 Comments

  1. The only bear case that can be made against Apple is that a meteor has been sighted, headed for earth, and it’s projected impact point is Apple headquarters in Cupertino.

  2. Some areas are starting to report modest turnarounds in the economy; we may have possibly hit bottom and are starting a slow climb out of the hole.

  3. Somebody has to look at the negatives, people. It can’t all be bright skies and happy faces.

    The overwhelming majority of outlooks on Apple are sunny and optimistic. This is the case against that optimism. And as we can see, it’s a very weak one.

  4. Apple is selling everything they can get made and product is back ordered by more than a month and this idiot thinks Apple is going to have to cut profits?

    I vote Toni Sacconaghi to be this month’s village idiot!

  5. Now apples $50b is a liability. bahaha. how much of a tard came up with that idea? This is the second dummy to toss that around.. behind the bam investor douche. I guess we can expect to see a parade of idiots start to copy cat that drivel as a talking point in future fud campaigns.. only to become more and more dire as their war chest grows more and more. lolz.

  6. “• Increased regulatory scrutiny threatens to undermine Apple’s powerful iOS ecosystem.”

    — This prediction ignores Apple’s very strong case against Flash. As for anything else, if the government forces Apple to open anything up, that would only have a positive effect on Apple’s bottom line.

    “• Sustained growth in iPhones will inevitably lead to margin pressure.”

    — Apple has a very strong leadership with Steve Jobs. He’s too smart (and powerful) to give into pressure from the outside to do ANYTHING that does not contribute to his ultimate goal, quality products.

    “• Near-term expectations for iPhone and iPad units are getting heady, risking disappointment.”

    — Just wait till the iPhone is on other carriers. (and for manufacturing to catch up to demand)

    “• Apple insistence on retaining cash points to a risk of the company squandering it on a flawed acquisition.”

    — Pleeeeeease. If the last ten years has shown anything, it’s that Apple does not have an urge to spend money just because they have it.
    The past acquisitions did make have payed off – big time.

  7. @Obama failure: already? Three posts in?

    Do you have any knowledge of history, or just a willful insistence on starting one of these crazy flame wars? This current administration did not cause the collapse of the global economy, it began in 2002 with the end of the dot com bubble and rise of an unregulated mortgage industry which had been very well maintained for 70 years until the congress at the time (controlled by the GOP from 1994-2007) got rid of the regulatory infastructure around lending. They also placed no rules on Cd swaps or derivatives and got rid of the uptick rule, glass steigel, and every other banking regulation by 2005. The downturn then started in January of 2007, but the credit bubble burst during the summer of ’08 causing massive panic and sell offs. No one could borrow any more money and therefore couldn’t meet payroll or maintain obligations.

    The only solution is to reinstate depression era rules and have an SEC that actually knows WTF it’s doing, instead of letting wall street get away with murder. And getting rid of anyone in congress who was complicit in this deregulatory effort from both sides of the isle.

    Then we public funding of elections so these people aren’t beholden to special interest money anymore.

    Okay I’m done. That wasn’t very reasonable, but for some reason your comment annoyed me today, when I would ordinarily ignore it.

  8. As much as I love Apple, I’m “relatively” bearish on AAPL myself. And by relatively bearish, I mean that I think AAPL may *only* double in the next year or two, and double again in the year or two after that.

    The author brings up some very valid points. As an AAPL investor, there are different things to be considering moving forward than there were in the past.

    Apple has way more to be concerned about in terms of the DOJ than competition from Microsoft, Google, etc… Congress whores have already been knocking on Apple’s door asking for $$$.

    Apple’s market share is about 1/4 trillion. It’s really starting to push the envelop and pressures not normally associated with doing business will start to significantly affect it.

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