Apple is missing out on a large portion of the market who prefer larger screens. It's not just larger screens. It's smaller screens, customization, removable/non battery choice, memory slot or not, and so on. iOS, absent color and on board memory, comes in one flavor of hardware.
Apple has paid out $10B to App Store developers, $5B in the last year. This is another area where, while doing well, they are losing momentum. Apple users spend more time, money, including on apps. But that trend is shifting and developers are reacting.
They would have to make a lot of bad acquisitions, like buying ten Motorolas for $12B each... True. Would be tough to blow even half their wad on acquisitions, though companies losing market share are most prone to do this (and often fail). However, Apple could accelerate their decline in earnings by ramping up expenses to fight the same. Take a look at Facebook. Booming revenues, but they are increasing spending as much as revenue growth and profits are nowhere in sight. Apple could move in this direction playing catch-up and soon find themselves no longer cash-flow-positive.
Can you please justify this statement? I'm having a very hard time reconciling it with my own observation that Apple's PE is less than ten (net of cash), which implies market expectation of low growth, and the fact that the smartphone and tablet markets are growing 5-100 times faster, depending on who you ask. Low PE net of cash doesn't necessarily imply low growth. It could also be because earnings estimates are unrealistically high, perhaps because expenses will be greater or margins will be lower than expected. Also, PE based upon the forward year is quite short-sighted when it comes to a company like Apple. All it would take is 25% margins 2 years from now to dramatically change the profit picture and therefore that PE. |
