Thursday, August 5, 2010

Apple Update

I have previously blogged about AAPL as one of the few stocks I like here for the long haul. Given receding concern about the iPhone 4's reception, one of the other many issues is the rise of Android software in various phones from various manufacturers. Will Android surpass iPhone's operating system?

My response as an AAPL investor is, is that the most important question? Is it winner take all, or Coke/Pepsi? Already the race is narrowing, per (among many writeups) Mobile apps now a "two-horse race" between Apple and Google, which begins:

Apple and Google combined will have almost complete dominance of mobile apps this year, ABI estimated today. It saw the field as now just a "two-horse race" between Android and iOS that would give the two 78 percent of all app downloads this year. Apple will still have the clear majority with over half, 52 percent, reaching iPads, iPhones and iPods.

Meanwhile, I believe that Google is giving away Android software, with all sorts of competitive implications, whereas AAPL is making lots of money today from iPhones and related mobile devices.

The entire field is booming. Here is a article about Japan, the elderly, and iPods titled This Is Your Grandfather’s IPad as Japan Elderly Embrace Apple. The beginning is engaging:

Hikosaburo Yasuda says he knows a trend when he sees one and plans to buy Apple Inc.’s iPad to keep up with junior members in his computer club. Yasuda is 95.

“It’s important to always try new things, otherwise you get left behind,” Yasuda said. “All these books in just one place, and so many familiar, classic titles that I’ve never had a chance to read. I want to buy the iPad just for that.”

The world is changing as the above article demonstrates. Apple is a prime mover in driving the change. The stock is trading at perhaps 16X calendar 2010 earnings with rapid secular growth occurring. There is no debt and to my knowledge little likelihood of a BP-type or AIG-type disaster scenario that could implode things. Whether the stock will prove to be better than cash or a bond is of course unknowable, but I own it as part of a diversified portfolio that has proportionally very little exposed to stocks other than ETFs that own physical precious metals.

Despite the worries over the iPhone, AAPL has a classic chart for a stock that could prove to have much more to run. I would be worried if it were anything like Cisco 10-11 years ago, selling at a ridiculous multiple in a hyped sector. As always, time will tell and readers must know that I am not an investment advisor and thus am offering no investment advice to anyone, and also may change my views at any time for any reason.

Copyright (C) Long Lake LLC 2010

1 comment:

  1. Sorry for the late comment but I just found your blog after reading your cross post on JH's Daily Capitalist. Great stuff here DOCTORX.

    Back to AAPL. The only AIG-type or BP-type disaster scenario I see for AAPL is mass suicides at Foxx Conn in China where the iPads and iPods are being made or the death of Mr. Jobs.

    Carry on. ;)