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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: pyslent who wrote (128967)

3/23/2012 4:24:00 AM

From: XoFruitCake

Read Replies (1) | Respond to of 213173

It doesn't matter whether these are new customers, 1 year replacements or 2 or 3 year replacements, though right?

From an investment perspective, stock are rewarded for growth. It will be great for the company if Apple can make money year in and year out. But if they are not showing any earning growth, the PE that the market will award to Apple is going to suffer.

Apple shipped about 93 million Iphone in 2011 and the overall smart phone market is 488 million. The smart phone market grow 75% in 2010 and 50% in 2011.

Let say 2012, the smart phone market grow at 35% imply that the base market is growing form 488 million units to 658 million unit. Let say Apple double the Iphone sales because of Iphone 5. Apple sales number will move from 93 million units in 2011 to 186 million unit is 2012. Apple will have 28% of the market by year end 2012.

Let say the smart phone market grow at 20% in 2013 and Apple double their phone sales again. The would have to sell 372 million unit in a smart phone market that is about 789 million unit. A whopping 47% of the smart phone market... So the question is can Apple gain so much market share without the need to cut price? The would have to have a really good set of "must have" features in Iphone 6 and 7 to pull the feat off.

The key assumption here is that smart phone market growth is slowing down and there is a limit of folks willing to pay for high end phone. The OP was asking if there is a long term bear case for Apple and I think that will be it. Unless someone believe the smart phone market double every years and same percentage of new user are willing to pay for high end phone year in/year out, Apple simply cannot double their phone sales every year. They have to slow down in the next couple years.

allaboutwindowsphone.com

Global Smartphone Vendor Shipments (Millions of Units)	Q4 '10	Whole of 2010	Q4 '11	Whole of 2011
Samsung	10.7	23.9	36.5	97.4
Apple	16.2	47.5	37.0	93.0
Nokia	28.3	100.1	19.6	77.3
Others	45.6	128.0	61.9	220.8
Total	100.7	299.5	155.0	488.5

I am very long on Apple July 550, 565, 600 and 630 call, so I like the near term prospect of the company. But if and when Apple achieve 30+% smart phone market share, they will have a much harder time to grow their earning and the stock price will stagnate and that is my bear case for 2013/2014..