Apple (NASDAQ:AAPL) share price is as hot. Recently it even once advanced above $700 mark. A few weeks ago, I met an auntie Apple fan. She has a whole collection of Apple products since early days from ipod, ipod touch, mac book, iphone 3G, 3GS, 4S, and going-to-be i-phone 5. What impressed me is she told me Apple share is going to go up and she wants to buy. Then Apple shares advanced above $700 a few days ago!
From profitability perspective:
2011 is so far the best year for Apple. Net profit was $25 billion, almost double of previous year. For year 2012, it shall be even higher, around $40 billion!
2011 is so far the best year for Apple. Net profit was $25 billion, almost double of previous year. For year 2012, it shall be even higher, around $40 billion!
In past 10 years, it was a perfect growth pattern for both revenue and profit. Every year and quarter we are seeing absolute strong growth. Cash remain rich with zero loans.
Interesting enough, looking at most recent quarterly earnings, for 3 quarters in a row, we are seeing $2-3 billion profit drop, $4-7 billion revenue drop QOQ. This is very unusual for Apple. Actual reasons are not sure.
To think positive it could be consumers holding back their orders to wait for iphone 5 launch. Other not so good reasons would be -
1. Android is growing at faster pace and more users switched from iOS to Android. Compare to 4 years ago Android was not really recognized. Now, Android market share is already 2x iOS in smart phone market.
2. People gradually start to perceive iphone differently, as it has lost it's "WOW" factor. The design does not evolve much in past 4 years. Consumer can switch taste quick, especially for tech gadgets. Recently we can see increasing number of people proudly flashing their Android based gadgets (especially Samsung phones).
Besides, some potential concerns for future:
1. Competition in tablet sector. More and more players entering. WINDOWS 8 might bring huge impact to tablet market. It shall be launching in 1-2 month's time.
2. Putting all eggs in one basket - over dependent on 2 products, iphone and ipad.
3. Competitiveness - it is still a question mark on the future innovation in the absence of Steve Jobs. When Jobs was fired, Apple ran into trouble, until Jobs came back to revive them with all the i-products. Now the captain has left the boat again.
4. Life Cycle - We learnt from history that life cycle for hot tech gadgets are even shorter an athlete's. We have witnessed the stories of Sony Walkman, Motorola Startec, Ericsson, Nokia, Motorola RAZR, Blackberry.
Despite all the theories above, good news for today are:
- technically the chart tells us the the uptrend remains, before it changes
- fundamentally, the PE ratio is 16, which is not high. Of course we have to know that PE ratio is inversely related to EPS. If EPS starts to shrink, it means PE ratio will increase.
- we are still seeing people queue over night for iphone 5 despite strong critics from analysts of "lacking of WOW factor"
To think positive it could be consumers holding back their orders to wait for iphone 5 launch. Other not so good reasons would be -
1. Android is growing at faster pace and more users switched from iOS to Android. Compare to 4 years ago Android was not really recognized. Now, Android market share is already 2x iOS in smart phone market.
2. People gradually start to perceive iphone differently, as it has lost it's "WOW" factor. The design does not evolve much in past 4 years. Consumer can switch taste quick, especially for tech gadgets. Recently we can see increasing number of people proudly flashing their Android based gadgets (especially Samsung phones).
Besides, some potential concerns for future:
1. Competition in tablet sector. More and more players entering. WINDOWS 8 might bring huge impact to tablet market. It shall be launching in 1-2 month's time.
2. Putting all eggs in one basket - over dependent on 2 products, iphone and ipad.
3. Competitiveness - it is still a question mark on the future innovation in the absence of Steve Jobs. When Jobs was fired, Apple ran into trouble, until Jobs came back to revive them with all the i-products. Now the captain has left the boat again.
4. Life Cycle - We learnt from history that life cycle for hot tech gadgets are even shorter an athlete's. We have witnessed the stories of Sony Walkman, Motorola Startec, Ericsson, Nokia, Motorola RAZR, Blackberry.
Despite all the theories above, good news for today are:
- technically the chart tells us the the uptrend remains, before it changes
- fundamentally, the PE ratio is 16, which is not high. Of course we have to know that PE ratio is inversely related to EPS. If EPS starts to shrink, it means PE ratio will increase.
- we are still seeing people queue over night for iphone 5 despite strong critics from analysts of "lacking of WOW factor"
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