Apple Tag

Apple’s Moat Just Got a Lot Wider

in Analysis

I have to admit I was not able to get anything done on Tuesday when Apple released its new iPhone, Apple Pay and Apple Watch — absolutely nothing. Like millions of others, I was glued to my iPad watching Tim Cook do a two-hour Apple infomercial. (And unlike any other infomercial, I watched it twice.) The interest must have been greater than even Apple expected, as its website simply could not handle the traffic and kept crashing. A lot of viewers must have been sleep-deprived Chinese; it was 1:00 am in China, and Cook’s keynote was simultaneously dubbed in Mandarin. Apple’s emphasis on China makes a lot of sense, of course: The country is Apple’s biggest growth driver, with 4G just being rolled out there. The release of the new iPhones was important for Apple in the short run — it desperately needed to introduce larger phones to battle Android handsets. Both the 4.7- and 5.5-inch phones looked terrific. However, the fact that Apple introduced two sizes may have an interesting consequence: Consumers will need to hold the actual phones to figure out which one fits them best. Online orders will likely be lower than usual, while traffic to Apple Stores...

Why Investors Hate Apple — and Are Dead Wrong

in Analysis

In this article I don’t discuss Apple’s valuation, balance sheet, or financials.  I covered these topics in great detail in these articles a few months ago (Part 1: Psychology and Part 2: Value of Ecosystem).  Nothing has really changed since, except that Apple announced an enormous share buyback.  This article focuses on Apple’s products, innovation, emerging markets … and Syrian rebels. It is easy to understand why Apple’s stock is hated so much (despite this morning’s early rise in its share price). The pain inflicted on investors by Nokia and BlackBerry is still too fresh. Both were spectacular successes that dominated their space, and then they burned out and went from high-growth stocks to disasters. Apple’s growth has slowed, and in the minds of investors the company has gone from a growth stock to a value trap. But though it’s easy to draw parallels, Apple is neither Nokia nor BlackBerry; it is still the same innovative company that growth investors could not get enough at $700 a share a year ago. Investors were not swept off their feet when Apple introduced its two latest iPhones during a media event at its Cupertino, California, headquarters on September 10. There were no surprises, no Steve Jobs’s “one more thing” — no...

Understanding Apple Requires an Analysis of Fundamentals and Psychology

in Analysis

So many articles have been written recently about Apple — defending it or explaining why this glorious fruit will turn into a shriveling pumpkin by midnight (with Samsung’s help) — that I really haven’t felt the need to contribute to the unending debate. But then Apple’s stock crashed to $450 last month, and we bought a little for our clients. After receiving an outraged e-mail from one of them calling the purchase “irresponsible” and proclaiming that everyone (including his neighbor) knows that Apple is going down to $300, I decided it was time to join the discourse. Clients rarely (almost never) contact us about stocks we own in their accounts. More important, this is far from the most “radioactive” stock we own or have owned. Here, in the first of two columns on Apple, I have no intention of defending or prosecuting the company, but I would like to share some thoughts about it that many pundits have either overlooked or ignored. What makes Apple stock difficult to own is psychology. The company’s success since 2000 is a black swan. We tend to think of Nassim Nicholas Taleb’s black swans as significant random negative events, but Apple is a positive one. When co-founder Steve Jobs came back to the...

How Much Would You Pay for the Apple Ecosystem?

in Analysis

Earlier this week I wrote about the psychological challenges that Apple shareholders face. I also discussed the evolution of Apple’s “i” gadgets — the iPod, iPhone and iPad — and how they have created an ecosystem unlike those of other technology companies. Apple’s ecosystem is an important and durable competitive advantage; it creates a tangible switching cost (or, an inconvenience) after Apple has locked you into the i-ecosystem. It takes time to build an ecosystem that consists of speakers and accessories that will connect only via Apple systems: Apple TV, which easily recreates an iPhone or iPad screen on a TV set; the music collection on iTunes (competition from Spotify and Google Play lessens this advantage); a multitude of great apps (in all honesty, gaming apps have a half-life of only a few weeks, but productivity apps and my $60 TomTom GPS have a much longer half-life); and, last, the underrated Photo Stream, a feature in iOS 6 that allows you to share photos with your close friends and relatives with incredible ease. My family and friends share pictures from our daily lives (kids growing up, ski trips, get-togethers), but that, of course, only works when we’re all on Apple products.(This is why Facebook...

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(Chapter 4 from Vitaliy Katsenelson`s 
Little Book of Sideways Markets)

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