Monday, September 15, 2008

Apple Sucks less than Lehman and AIG

Apple was spanked yesterday (140.36 -8.58 (-5.76%) Sep 15 4:00pm ET) during a 500 point market sell off triggered by Lehman Brothers filing for Chapter 11 protection from creditors.   Fannie Mae and Freddie Mac two companies that together hold HALF of all home mortgages in the country were taken over by the government.  These are not good times.  And for those of you blissfully unaware of what is transpiring in financial markets know this.  If AIG, one of the worlds largest insurers, is forced out of business we will all be worse off.  Things are not good in the economy, this week has been one of the bleakest in the financial markets in the last hundred years (1929)

On the other hand
Apple has between 21-25 Billion dollars in the bank.  Mac sales growing 25-50%.   iPhone sales off the charts (as many as 12 million to date), and plans to buy a Mac hit an all time high.

 Apple is just fine selling overpriced, proprietary computers,  overpriced proprietary music players, and overpriced proprietary cell phones.  Be a believer in sustainable margins, sustainable market advantage, and remember cash is king.

Lost in the news today aside from half of Ohio not having electricity,  Citibank reiterated a buy on  Apple with a price target of $287!  You go Richard!  No one knows where stock prices are going but given Apples actual earnings and projected growth for the next year.  It would seem that the performance of Apple stock should suck less than the market at large for the next year.

If you buy this stock you must have money, can you share?  I make all this up.  Really.  If you take the word of anonymous, but deceivingly erudite bloggers including this one. You deserve what you get.  Do real research this is just fun.


Unknown said...

You're crazy if you think a catastrophically weak economy is not going to tank Apple's stock price. I mean clinically, dangerously crazy. Seriously, seek help. Now.

At this point Apple is selling to people that already own a computer. If things go as far south as it could (like if AIG goes under) people are going to start holding off on new luxury purposes. And a computer to replace the one they already own is going to be at the very top of that list.

BnVested said...

Your Right Apple Stock may tank but it is not likely to tank as much as Lehmans 99% or AIG's 50% (so far) and will remain as a going concern.

Your clearly an intellegent reader. When consumers hold off on their Luxury "Purposes" the market could be negatively impacted.

Anonymous said...

'Overpriced' was probably not the adjective to use to describe Apple's computers, music players, and cell phones, if the purpose of the article is to persuade us that Apple will outperform the market in an economic downturn. In tight financial times people look at discretionary spending and the total return from their investment much more closely than when money is more readily available.

Apple's products are value priced. The proposition to the consumer is 'you could buy a PC/Zune/Windows Mobile device for less up front, but the cost of ownership is higher and the value received over time is less.' This, not overpriced products, should be the argument for Apple outperforming not only Lehman Brothers :-) but also other computer, music player, and smartphone makers.

BnVested said...

You are correct. It is a poor choice of words that I did use intentionally to magnify the singular point that Apple is the ONLY PC manufacturer with significant gross margins.

Anonymous said...

Apple's $23.0B worth more AIG, Lehman & Merril Lynch combined!