Carriers moving away from all you can eat data plans will crimp Apple sales of iPhones and iPads. When it becomes expensive to surf crap on your device, your device either gets turned off or sits collecting dust.

You can create the sexiest wireless product in the world but if you are dependent on someone else to deliver content to it you become immediately constrained.

This stock reminds me of QCOM from the late 90’s until to dot com bust.

The only AYCE firm left is Sprint. All others are metered in one form or another.

Gen - I was thinking more along the lines of broadband providers.

Genesis wrote..

The only AYCE firm left is Sprint.

Why is that? Do they have more/better infrastructure than the others, or is it just that their subscriber base is so small that they don't come close to stretching the limits of their system?

I keep hearing that Sprint may not be able to survive as a company, but it seems incongruous that they are AYCE and the others are not.

They appear to have the capacity at present to maintain it. We'll see.

Biggest risk for them is rollover on their debt. They've made some BIG strides forward on getting through that but it's not over yet. One fly in the ointment is that their "commitment" to Apple on the iPhone comes with the crazy subsidy costs -- I think it was a bad move but I don't have their internal numbers. They might butt**** themselves as a company with this, especially if they wind up violating a covenant in one of the debt deals.

They are a nice gadget company- when free money printing press ends cut em half from here minimum- Devil will always take the hindmost

$100 is roughly their net cash position which has been building $15-30 per year for the past several years.

Uh huh. Net cash eh? What's it being held in?

They have a huge net cash position. I don't remember how much but its a large sum. Large enough that I wouldn't short this bitch unless its a day trade.

Kypackrat wrote..

It worked for Saturn

OMG

Huge "cash" positions are an albatross.

You have one because you don't have a good place to deploy the money to grow the business. That looks like price support to the stock but it means you're not actually reinvesting -- over the intermediate and longer term it's BAD, not good.

So RCA in 1929 appears to be Apple, 2012. Hmmm.

The Ipads are nice, but how can people continue to pay $500-$900 every 6-12 months for a new one? Have you looked at the people in line - these are not millionaires - most of them look like they make less than that a week, let alone a month. I noticed Best Buy and others offering financing with "no interest" (oh, EXCEPT if you don't pay it in full in a given time (18 months I think) and if you DON'T tack on 25-35% interest retroactive to day 1). Also, how many student loans are paying for these?

Personally I love the Ipad (don't own one), but my $200 Kindle Fire does 85% of what I would use the Ipad for, but costs 60-80% less. Google will have a $200 tablet soon..anyone that argues that Apple has the corner on the market is wrong and the numbers eventually will show it.

Regardless, the expectations are simply not realistic - especially for the LONG TERM. $1000? I don't see it making it, and IF it does, holding it.

The problem is trend following. The other problem is Apple is a fad. Most people don't have an iphone, yet the world is advertising as if they do. Android outsells them at an escalating rate. A phone guy told me AAPL was behind android. I don't know enough to know, but he does.

The question is profits and cash flow. I can see what Karl is saying and I agree, that we are looking at a profit bubble. I don't know what margins for hardware are supposed to be, but I would guess KD makes it his business to know. I do know people, especially rich people, get tired of throwing money down a hole and a cell phone and all the rest of this stuff is money down a hole. Unless these gadgets morph into an emergency place to take a crap, there is going to be a reasonable wall as to what they will do. I know you can access your bank account with them, something I hope I never use, because I carry cash. Plus, I don't want someone stealing my phone to raid my account.

Someone wrote AAPL might hit 1% of world GDP. It is already there. But, 1% of GDP in sales is $600 billion or so. That would take awhile. I have never bought into any of these tech outfits taking over the world. I didn't buy CSCO, the last one they put on the magazine covers. MSFT was going to last as long as the PC trend and anti-trust kept them intact and a competitor didn't show up on the scene. IBM was the last stock that went up on and on and that ended in the 1980's. I recall it was the first $100 billion market cap. In the meantime, MSFT has finally risen above half its peak and INTC and CSCO are about 1/3 theirs. This, despite tens of billions in stock liquidations.

The question then becomes, when does the AAPL profit bubble break?

This whole issue with Apple makes me wonder how half the companies in the tech business that actually has some sort of diversication model are getting knocked in the teeth by the ratings agencies.

Quote:

They have a huge net cash position. I don't remember how much but its a large sum. Large enough that I wouldn't short this bitch unless its a day trade.

Their net position last i looked was ~$50bn if you exclude receivables along with their liabilities (which i do at least, receivables are ~$17bn which shows the extent of the carrier subsidies). The way they tout a "$100bn cash" position is just complete bull****; you may as well call yourself a millionaire if you have bought a million-dollar property with a large mortgage behind it.

They have over $70bn invested in 'securities' and about $10bn in actual cash. This sucker is procyclical and when the top blows off the markets AAPL's balance sheet will start to deteriorate real fast.

The real growth issue for me though is the carrier subsidies; if i am a carrier and I have access to Android handsets at lesser cost i am going to push the Android handsets, and/or have a greater cost attached to iPhone plans. This is a large part of Android's success and will continue to curtail the iPhone's market share and drive margin compression in the future. Carriers will need to protect their margins as much as possible as well; they need to continually upgrade their networks as more and more people use wireless networking infrastructure.

One of AAPL's big concerns is that when they lose someone from the iOS sphere they dont come back (one of their lawyers let this one out of the bag during one of their legal disputes with Samsung in Australia).

Basically i see a whole lot of risk that isnt even being considered by those touting AAPL. But i agree with Dan, i wouldnt be long or short right now unless it was a day trading position.

The carrier subsidy is what will eventually decimate them. That's their "magic sauce" that allows them to put up the sort of numbers they do for a hardware company.

10% gross margins on hardware are damn good. Mid to upper single-digits are more common. 30% is three times rich to reality, and they're getting it through their subsidy games.

Those will not last and when it ends the stock gets cut in half and maybe more, depending on how much overhead they've built in being able to afford because of the subsidy -- that turns into an instant millstone around their neck and if they can't shed it fast enough their alleged "cash" will disappear faster than a $3 hooker when the cops show up.

Apple Will Become First Trillion-Dollar Company by 2014: Analyst

http://www.cnbc.com/id/46943201

Bull Market to Continue Rest of Year: Byron Wien

http://www.cnbc.com/id/46943203

I agree with Karl in regards to the carrier subsidies, but that only applies to the iPhone. Although I'm sure the iPhone is a large part of their proifit, the rest of their product portfolio is sold without carrier subsidy. Then there is the matter of profits coming from their software, app store, etc.

With the iPad (non subsidized) having a stranglehold on the tablet market, and the growth projections of that market, I don't think that Apple is in that precarious of a position as it pertains to their reliance on carrier subsidies.

That said, the term "irrational exhuberance" comes to mind when I see their current stock price and calls for $1,000 per share. I think Apple is a very strong company, and is positioned to continue doing well over the next 2-5 years. I just don't see their stock price going up for that much longer. My long term bet is that it eventually hit's a peak, crashes, and settles in somehwere in the $300-$500 range. Complete speculation on my part.

I've been saying for 2 years that apple should buy sprint and own the whole ****.

Brig: as i posted above AAPL's view is that once people replace their iPhone with another device they will generally leave the iOS ecosystem. iPhone revenue is greater than all other AAPL products combined (Q1 2012):

iPhone: ~$24.5bn
iPad: `$9bn
Notebooks: ~$4.5bn
iPod: ~$2.5bn
Music: ~$2bn
Desktops: ~$2bn
Software, services, peripherals ~$1.6bn

iPad's share of new tablet sales is around 55% now, steadily dropping. It faces significant margin compression with Google getting serious about tablets and Windows 8 due for release (could be a game changer if it is as good as it promises to be).

Not saying they will suddenly go under, but there is significant risk in running with a high margin business in the face of stiff competition from industry heavyweights. Its a story of significant downside risk.

@86 - I think the same thing, but I think they will wait until precisely the right moment to pounce on Sprint.

Just my op but with the divi announcement there will be new fund buyers getting into this name on a flash drop like that one last month.
There was only a 2- 3 day window to buy-in at the lower price, then one is chasing it again.
In addition , the next iphone is getting released possibly in May.

Doesn't matter. AAPL has cash in the bank, great products and users that spooge all over themselves to get the latest release. Stock price doesn't matter - it could be at $100,000... They're just a great company that everyone hates...

{/sarc}

First, while you can technically virtualize OS X 10.6 in VirtualBox, it violates Apple's EULA; they only allow virtualization of OS X Server.

Second, who is going to topple Apple? Don't you think every tech company out there is already trying? They've been trying to beat Apple in the tablet market since the iPad's release, and no one has been able to beat them.

Third, developers make a lot more money in Apple's App Store than in the Google Apps Marketplace, and the number of iOS developers is only increasing as more and more of them see this. How is Android, with its malware and lack of curation going to beat Apple's App Store?

Microsoft's mobile offering looks good, but so did the Palm Pre, and we saw that if you can't get developers to write software for your platform, you're not going to survive.

I wish the iPhone had multitasking, but based on its popularity, I'm in the minority. The last I checked, Android's share of the market was shrinking, and Apple's was growing. Apple is still something like 10% behind Android in total smartphone marketshare.

What I'm saying is this: if you believe that Apple is going to get bested, then HOW is that going to occur? Nobody here has mentioned a single company which can compete with them. Even Mac sales have been outpacing the PC industry's sales for dozens of quarters now.

Apple's next quarterly announcement is in three weeks. We'll know then whether the new iPad sold well, or if it was a dud. How many people here have been consistently claiming that AAPL couldn't go any higher? I read that at $200, $300, $500...