Michael Saylor: If you sell Apple stock now, you must be a moron (with video)

“Michael Saylor, CEO and founder of Microstrategy and author of The Mobile Wave, sits down with Motley Fool technology analyst Eric Bleeker to discuss tech, business, and social trends as they relate to investors today,” Eric Bleeker writes for The Motley Fool. “Understanding paradigm shifts like those discussed here are a cornerstone of Motley Fool superinvestor David Gardner’s own investing strategy and are critical to his market-thrashing returns.”

Bleeker reports, “Saylor [said], ‘Look, Apple Computer was worth $3 billion 12 years ago, and then it went to $600 billion. If you ask me, Apple Computer is going to $2,000 a share. I’d be very, very long on that company. Whoever is selling that stock must be a moron.'”

 
Transcript in the full article here.

42 Comments

    1. Exactly. The Wall Street dumbfscks don’t understand that electronics have become personal as much as utilitarian, not unlike the suit many of them wear or the Mercedes many of them drive to work every day.

      They completely miss that form, design, and quality all play a bigger role than price for many in determining the products they choose.

      Many of the so-called “analysts” also don’t understand that Apple has mastered this idea of the whole being greater than the sum of the parts or that Apple is capitalizing on it while leaving their competitors dumbfounded.

      A person either recognizes and appreciates certain less-tangible qualities like design and material quality, or he doesn’t. Many do not. Just as in the automotive market, there is room in the marketplace for many kinds of products for many kids of customers. Apple will continue catering to those who recognize value, while Samsung, HTC, and most of the rest of the industry will continue to cater to those who value “cheap”.

    2. And that’s based on a paradigm where IT managers bought Microsoft software and Dell equipment for employees who were forced to use it. Since form and function were thus made irrelevant, what became important was market share. The hardware and software became commodities because the buyers did not care about ease of use or style. Margins began to shrink, and the race to the bottom commenced.

      That’s the world Wall Street is used to. It’s not used to people buying for themselves and putting value on style and ease of use. It doesn’t believe that people, when buying for their own use, will pay a premium for premium, well engineered devices and software. It sees Android’s world wide market share and assumes that Apple’s margins have to collapse to the levels of Android products. It sees Microsoft’s market share and assumes that nothing is wrong in Redmond.

      When I was in college in the 60’s, those who were the brightest and best aspired to be engineers and scientists. Those who couldn’t compete with them aspired to middle tier careers as teachers or lawyers. Those who were unsuited to do any of those things became business majors. They weren’t generally the brightest bulbs on the string.

      It wasn’t until the 80’s that the business types became anointed as pseudo-royalty. I remember being astonished at an airline commercial for “business flyers” where the knight was sent of to battle (briefcase in hand) by his princess (secretary) and his king (CEO). I’ve been nauseated at the American idiocy of treating business people as some kind of royalty ever since. Time and time again, in my industry, I saw CEOs with engineering backgrounds replaced by CEOs with MBAs and banking experience. The almost immediate outcome in every case was disaster. Why? Because all they know is what they were taught in business school and what the most recent buzz words are. Their grand plans for reorganization are always based on fantasy, and textbook examples. There’s not an entrepreneur nor an innovator among them.

      These are the same people who now run Wall Street. The “common wisdom” rules. There’s not an original thought to be found. Hence, Apple needs to dominate market share numbers to be successful. Apple needs to do a stock buy back in order to raise the stock price. Apple needs a cheap version of the iPhone, presumably so that we can start a race to the bottom in smart phones. Not just ignorance, but real stupidity reigns. If you don’t believe me, just watch CNBC for 5 minutes.

      1. Zeke, it sounds like Michael Saylor has been channeling you. By the way, his point about purses is spot on—men don’t usually get this—there are different categories of consumption, and smartphones belong in a whole other bin than Wintel boxes.

        1. @hannahjs regarding: “his point about purses is spot on—men don’t usually get this”

          I agree, as a man, I didn’t understand it before my daughter exposed me to Hermes purses years ago. This past Christmas I accompanied her to the Hermes store in Houston and she bought a $4,000 Hermes purse. This is her 2nd Hermes and less expensive than another one she bought for $8,500 (which was previously owned).

      2. I can attest to this. I did an internship in eLearning at a major medical device company last summer. The MBA interns were feted much more energetically than even the engineering interns. They were treated to special luncheons with executives to which the rest of us were not invited. I found this hilarious, like a farmer spending more time watering the weeds than the cash crops.

      3. More media outlets out there far more shallow than CNBC.

        I can handle MSNBC for as long as it takes to reach for the remote to change the channel. Or, all you need is a New York minute for the New York Times. The media has changed and not for the better.

        Brilliant analysis, Zeke.

        Kudos also to Ansel and ecrabb.

      4. Zeke, overall, I agree with you.

        But “Hence, Apple needs to dominate market share numbers to be successful. ” I disagree with you here. Yes, in the short term this would push stock prices. Look at Amazon. They lose money and the price of the stock goes up. ??????

        But long term (you know, longer than a couple of months LOL) the stock will go up. Take a look at the price over the last 3 years. And it will experience major dips and rises. If you want to make money, get 10 shares and just trade on the ups and downs. In a year or two, you can double your money. But long term, I think it will rise quite well. And if Apple ever starts to sell either 25% share of computers or if they start adding tablets to the computer prices for comparison… I think Apple will soar. Just tell people that Apple sells more computer/tablets than anyone in the world and after the shock and doubt leaves them…. they just might get the picture.

        Just a thought.
        en

        1. eldernorm, I think you may have misinterpreted Zeke’s last paragraph. He was saying (I thought) that because Wall Street has no imagination, [they think] Apple needs to dominate market share, etc.

      5. “The almost immediate outcome in every case was disaster.”

        The key words are ‘Almost Immediate’ — invariably they seem to squeak out one ‘good’ quarter, or one ‘good’ year.

        An MBA can always find a way to meet a short-term goal.

        1. Exactly! It takes time for the results of some of these hair-brained schemes to come home to roost. I worked for a large public utility and the new MBA/lawyer CEO made the books look spectacular by selling off all of our generating facilities, thereby reducing operating expenses by half. Five years later the company entered Chapter 11 due to the high cost of buying wholesale power.

  1. Mike Saylor just makes a great deal of sense. He has a great perspective of what the future holds. Why people listen to these other idiots is unbelievable. Maybe we have too many morons in our society.

  2. If ever anyone spoke perfect sense on this subject, then Zeke is that person. As succinct summation of the problems in the commercial world as I’ve seen anywhere. Chapeau, sir!

  3. what he is trying to say is that we join tribes when we choose a product BMWs ,charioll watch , tiffany keychain . when you see those white headphones you know which tribe that person is in and you want to be in it or not on a gut level. conversely the ford tribe will have a sour grapes attitude to the beemer tribe. once you identify with a tribe you don’t leave it . Just try to get your abacrombe kid to wear old navy. no lexis owner or audi owner is going to feel right in a ford he will be a disgrace at the country club even if the ford works fine and is utilitarian as can be . Tiffany’s style of jewelry can be bought for 1/3 the price , but your girl will not know that you threw away your money with both hands to give her that silver item with the 18 karat accent in the blue box . apple will not bust its price because cheaper has no cashe only a clawing for the lowest common denominator . this is the essence of luxury branding .busting price destroys all that work and impeccable reputation

  4. PS i have not made sense of the concept that android devices market share actually means anything correct me if I’m wrong but android is a free os used by devices by multiple manufacturers chosen precisely because it it’s free

    that means the 25% of the profits in the market left on the table by apple are being split up with god knows how many players wheres the investment in this idiocy ? ( if i give away 6 million phones ill be the biggest in the world i might make a buck or 2 ) i’m sticking with apple stock al;l the way

    1. For some odd reason, Wall Street thinks that everyone in China and Africa will have an Android smartphone once Android smartphones become cheap enough. That may be true. However, didn’t these analysts and investors already see what happened to Nokia by selling low-cost featurephones to third-world countries. It practically bankrupted the company. Nokia couldn’t sell enough high-end smartphones to balance the losses. I don’t get how these people could have such short memories. Losing profits to gain market share is just plain foolish. Over a long period of time, no company can be successful doing such a thing. With Apple’s cash reserve, they should be able to hold out against any other company attempting that low-balling price tactic.

      All I can say is that these so-called hedge fund managers are either stupid or just plain crooks. It doesn’t matter how much market share those dozens of small Android device-selling companies have if they don’t make any money. This Wall Street hang-up with market share is absolutely ridiculous and I don’t see why they think Apple will lose all their profits in the future. It’s like saying Mercedes-Benz and BMW have no future because everyone will be buying Toyotas and Kias. It absolutely won’t happen that way.

      Apple’s profit margins haven’t dropped enough to warrant Apple to lose 20% of its value in just a few months, so I’m hoping it has to be the tax thing. I just don’t know what to believe any more. There is just too much conflicting information to make any sense out of. Currently valuating a company on future performance isn’t justifiable. There’s just no basis for such an action. It’s like Wimpy saying, “I’ll gladly pay you Tuesday for a hamburger today.” Who’s stupid enough to take that offer? Obviously, hedge fund managers do for some companies but not for others.

      I noticed investors again pouring money into Netflix. Even after it tanked hugely in 2011. I don’t get it. Now it even has competition with Amazon. If Apple just hinted at content subscription, Netflix would probably tank again. I don’t hear anyone saying Netflix is in a bubble region with a P/E of 130. It’s definitely a one-trick pony but the stock is climbing like no tomorrow. Investors are throwing caution to the wind. It obviously must have a brighter future than Apple, but then again what company doesn’t as far as Wall Street is concerned.

    1. Amazon’s day will come. They can’t keep shipping $100 woth of product to me with free shipping at a cost of $40, when the itmes I bought were already half off list..

    2. Zeke, overall, I agree with you.

      But “Hence, Apple needs to dominate market share numbers to be successful. ” I disagree with you here. Yes, in the short term this would push stock prices. Look at Amazon. They lose money and the price of the stock goes up. ??????

      But long term (you know, longer than a couple of months LOL) the stock will go up. Take a look at the price over the last 3 years. And it will experience major dips and rises. If you want to make money, get 10 shares and just trade on the ups and downs. In a year or two, you can double your money. But long term, I think it will rise quite well. And if Apple ever starts to sell either 25% share of computers or if they start adding tablets to the computer prices for comparison… I think Apple will soar. Just tell people that Apple sells more computer/tablets than anyone in the world and after the shock and doubt leaves them…. they just might get the picture.

      Just a thought.
      en

    3. The difference here Thepug is speculating vs investing. You need to speculate on Apple stock or Amazon and buy and sell on highs and lows.

      Many of us are too busy to keep watching the market bounce so we just invest long term in Apple. Bought my first share at 80. Boy do I wish I had bought more back then. 🙁

      Just a thought.

  5. I just wish he was right. He’s like everyone else who can’t explain what has happened to Apple. Where he is wrong is believing the mass market is any more interested in the quality of the phone or the pad than they are in the quality of the pc. They are not. All the fickle consumers – most of them a bunch of kids – care about is the pop culture of the latest gizmo. They could not care any less whether it’s inside a piece of cheap plastic or some really high tech aluminum and gorilla glass container. That’s what Wall Street has seen as the reality and that’s why you won’t see $700 AAPL again in the Tim Cook era.

    1. What you say is definitely food for thought. I don’t think that way because I’m a loyal brand sort of consumer. That’s how my parents were, too. If what you say is true, then Apple could definitely be in trouble. However, I still want to believe that there are at least 25% of the consumers out there willing to pay more for quality goods. That, of course, is only my opinion. I never considered buying a Windows PC at half the price of an Apple product. That’s just me so it’s hard for me to think in your terms.

      I just think that Wall Street needs to see this change of consumers willing to buy any product without loyalty before projecting it in the future. They’ve been wrong before. Just two years ago they did say the $300 Windows netbook was the future and it wasn’t. I’m just saying. Personally, I don’t like disposable tech. I like my products to last. Still, I see your point. I’m only hoping you’re wrong.

      1. Pete does make very many good points. Especially concerning the analyst. Doesn’t take a genius to figure out that at nearly $200 less than it was in September, Apple might be a good candidate to make money now. Doh! He’s also correct about many of the consumers out there. And let’s face it, everyone isn’t over 40 years of age. Younger consumers are purchasing Android phones. That’s just a fact. That does affect the opinion of Wall Street. I have an 18 year old grandson going to USC, he uses a MacBook Pro and an iPod but has an Android phone. Part of it is because he’s young and wants to be different (that’s part of being young), he likes the Android open operating system and most of his friends have Android phones. You can’t force people to like something. And something that a lot of people here don’t understand, there are a lot of folks out there who can’t afford an expensive iPhone. They just don’t have that much money. They’re happy to have an Android phone. Are those phones low-margin products? Yes of course they are. But Apple still needs to fight for a decent portion of the market. That affects Wall Street’s opinion also. But I think Apple will hit $700 again. So I think Pete is wrong there. It just may not be anytime soon. I believe AAPL may dip below 500 before earnings. In any case, I’ll be dipping my toe in early this week. But this isn’t the Apple of the past. So I’ll be much more cautious going forward. It won’t grow by leaps and bounds in the future. But I think it would be a steady climber nonetheless. I took my profit at $700 so I’m sitting pretty now. If you didn’t take advantage of that high price last time don’t make that mistake again. Don’t be greedy. Learn to take profit off the table when you are ahead. Have a plan. Buy and hold is not a plan. And I think Pete is also wrong about Tim Cook. Tim is doing just fine all things considered. He’s a big part of the reason that Apple reached $705. Apple is in good hands.

          1. Thank you. I’m buying them back $200 cheaper. Although I may hold off just a little longer. It seems that iPhone five parts orders have been reduced going forward. So I may buy them $250 or $300 per share cheaper Neil. Thanks again.

  6. What happened? It’s easy. The public’s concern that Apple would slide into a slow decay after Steve Jobs died slowly came to fruition, as announcement after announcement lacked any signs of innovation. Now, we all sit here with arm-fulls of stock in a company that only does incremental upgrades. Whether this is true or not is irrelevant: Stocks are generated by public perception, they are not made by Apple’s graphics department. Enough perception, after time, creates reality.

      1. People forget that. The iMac has been based on the same general form-factor for 5 or 6 (or 7?) generations now. Each one better than the last, but none throwing away the good stuff.

        We’ve had three iPhones based on this form-factor, and some people are screaming it’s over for innovation.

  7. Wish Michael Saylor would give a talk to all Wall Street investors and analysts.

    He’s right. I went shopping with a friend last week who bought TWO $395 purses. I kept saying “But…but…you could have bought an iPad or an iPhone instead!! (She has NO cell phone of any kind at all but at least she has an iMac.)

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