I'll have to think more about your argument regarding user metrics. To me referring to people owning a device as "users" is a bit silly since the vast majority of their sales come from hardware and not services. I do not see them ever creating a services franchise since they would be trying to create a tiny network in a world where much larger, more powerful networks exist. Like Apple, the key to their success is to make the platform open, and I think they are doing that somewhat. So the proper metric is annual device sales, and perhaps upgrades/ replacements vs new customers, although you won't be able to get that granular with the disclosures.
As to the replacement period, I think 6 years is too long. I have an iPhone that is 4 years old and essentially useless since the software updates are no longer compatible with the hardware. Ironically, the OS is the hardware manufacturer's best weapon in controlling replacement time.
I didn't quite follow your valuation multiples for the different cases. If sales level off or decline somewhat, 0.5 EV/ Rev ought to be a reasonable multiple for good-to-modest margins. P/ TB at 1 would be ideal, but 1.8 ain't bad.
I thought the Fool article was typical of the garbage on their site, but like you I read everything when evaluating a stock.
I sold my stock at a 5% loss the day after I bought it. I usually have a rule not to buy into a death slide but I decided to violate the rule since the valuation seemed so compelling. It would seem that the market is not done yet, so I will reinstate my rule sheepishly and wait for some kind of meaningful support before I reenter. Buffett typically averaged into a trade, which I do not do, and hence I am more sensitive about a good entry. I'd like to see it move sideways for 3-6 months before I consider getting back in. |
