I realize challenging TechCrunch on an opinion regarding a tech stock is not exactly allowed by their perception, but they are WRONG on AAPL.
Look at the five year chart:
A correction is called for on a technical basis. Many people will play the correction, brought on by moderately bad news. Yes, they finally missed some projections. That is the first time in years. Still they are premarket at or above $400. We all know the numbers they missed will be easily made up for in recent iPhone 4S sales through then end of the year.
Look at volume. Of course it is easy to say that as the price goes up the share volume would slip slightly due to the price of the shares alone. While that is true and the dollar volume is at or near all time highs most of the time, there are absolute slips in volume. Let it slip some more, and you will have a significant correction. That is the quickie technical analysis. Anyone can see that.
The bigger issue for me is fundamental. It is even personal choice.
The Big Question: Why do iPhone users who do make the switch to an Android device go on and actually make that change?
I have both devices. I have an iPhone 4G from AT&T. I have an HTC EVO (the original) through Sprint. I am planning on using Line 2 or Google Voice to move one of the lines over to a single phone and use that in the real world. I would have done this with the “iPhone 5” had it hit this Fall. I might have even waited had it been put out there as coming soon. I was very much disappointed by the 4S. While I appreciate Siri, I fine a few shares of SIRI more appealing. Seriously, I would rarely use a voice application.
I will say this: The Android – in my opinion – only gained massive acceptance because of the iPhone’s lock-out of apps that people really wanted for the longest time. I tried to stay with iPhone, as I was there from the beginning. I have spent more time in line buying one that I would like to admit. That said, to do some basic things a user always had to “jailbreak” the device. Why is that? I understand that Apple did not want the user experience compromised, but the ability early on to sync contacts with Gmail was not there! I am actually fine with the lack of Flash, as I know that kills web pages and really is not all that wonderful on a smaller device. There were other things I had to get in the Cydia marketplace. Like the ability to multitask. Again – I know they were protecting the user experience, but using the device efficiently meant moving back and forth between programs. Yes, they really opened the door for a more “open device” and operating system.
I got the Evo about 13 months ago as an extra phone to use because – excuse the complaint – I had too many dropped calls on the AT&T network. I needed a way to make sure I was able to use a smart phone in metro areas, even to just make calls. Places like New York, Las Vegas and Los Angeles were drop call zones for me. I could not stand it. I picked up the Evo and instantly my dropped call problem was gone. I do remember the first time traveling with the Evo. I had to go to a Sprint store to pick up an extra battery. I now have a total of five eve batteries and a wall charger. The battery issue is now of far less concern due to that.
That is another thing about the iPhone that I do not like. While the battery and the power savings are infinitely better on an iPhone, when you travel you have to plan for places to plug-in. I had a couple of Mophie Juice Packs and such. They were okay, but not like popping a battery out. My thought was give us an alternate iPhone. One that has a much bigger battery built in for those of us who have to latch on a Mophie Juice Pack or something similar.
These are the reasons iPhone users like me made the switch to Android.
Back to the value story here:
While I think AAPL is the greatest innovator of the last ten years when it comes to tech stocks, the market cap has also increased proportionately to that revenue stream generated. This is a testament to the greatness of Steve Jobs. I am sure he left in place the right staff to continue. I am also sure that product development will not be significantly altered by the loss of Steve Jobs as they are said to have a four year backlog of planned products.
The current market cap is $355 billion. The revenue is strong, but does it really support a market cap that high? I think there is a good argument to say that no. I think they are not justified at this current market cap. While earnings have been very strong, the iPhone 4S is only moderately different on the inside. On the outside, it looks the same. Beside that, it is a piece of software on the phone they are using to hype the current version with. That is Siri as we mentioned earlier. This operating system can be downloaded to your existing iPhone 4G, so why make the switch? No, you cannot get Siri, but is that really such a big deal?
Let’s get back to personal experience for a few more points and products:
The iPad. I pre-ordered the Amazon Kindle Fire the first day. I have the iPad 1. I always considered the size to be a bit too big. I really did not like the lack of Flash on it, as I had hoped to use it for business more. In managing web sites, some of the content management systems rely upon Flash. I have seen that dropping off lately, as most are now avoiding Flash for this very reason. I watch a video of the Kindle. I went online and pre-ordered it immediately. I am certain that Amazon would not put their name to a bad product. It is only WIFI, but that is okay. I can live with that. Had the iPad had a “mini” version, I would have opted for that immediately. I may still get a “mini” version if they put it out, and then pass the Kindle on to my sons.
I am deciding between the upcoming Google Galaxy Nexus Phone just announced and the Samsung Galaxy S2 recently released. One of these is the phone I am now going to get to combine both of my current phones as mentioned above. Had iPhone put out a larger phone, like the iPhone 5 so many predicted, I would have gone in that direction. They did not. I am fully comfortable with Android. Additionally, I like the replacement insurance that you can get on most android phones in the event of loss or damage. This has not been historically available with the iPhone, although I think I heard it may be possible when you buy directly from the carrier now.
I am not an Apple hater at all. I am dedicated to Macs in all other areas of my computer life. I have a Mac Air, which I love. It is the 13 inch purchased in the Spring before the new line, and I am still very happy with it. I have the larger of the SSDs on it. It is an amazing device. I carry only that when I travel. I use a Mac Pro with four screens at my office. I purchased it last year, and I even maxed it out with the 32 gigs of memory. Also my wife has a 15 inch Mac Book Pro, and she loves it. We keep it hooked up to an external monitor, keyboard and mouse. So we are believers in the Apple. Also have garaged another three Macs we cannot part with. I also have four of the original Apple TV units in a cabinet below one of our televisions. Not a winner of a product, but I have not thrown them out yet. We have an activated latest version of the Apple TV, and I do not think we ever downloaded a single movie on it. We have three earlier iPhones in a drawer. You get the idea, we are part of the reason for the market cap of the stock. Apple is part of the reason our personal market cap is not as high as we would like.
If I am now looking beyond Apple, others are as well. I would never go to a Windows computer or anything of the sort when it comes to a desktop, however, Android has won me over. If we are talking mobile or alternates to an iPad, I am not only fine with Android, I really like it. I am really excited about the openness said to be in the Google Galaxy Nexus Phone coming soon. Likely that is what I will get.
I think investors who see this happening will likely shave about 20% or more off the current price.
On top of that, when that happens I likely will be back in for more Apple. While they missed a quarter, I know they will hit the number this year and likely even meet analysts projections as currently estimate for next year. It is really the uncertainty that will pull the stock down. Let Apple release smaller iPad and a bigger iPhone in 2012 (early on), and it all goes back in Apples favor.
Look for a dip to below $335. Catch that dip and ride it. Be careful though. If they do not announce these products, things will turn further down.