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FreeMarkets (97.20)

Why Apple is Overvalued

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November 10, 2011 – Comments (4)

Forget the current numbers - the future earnings of Apple will not match the $300+ billion market cap.

It's not about competition, which is getting better at making smart phones and tablets.

It's all about salesmanship!  The death of Steve Jobs is the end of the great Apple product rollouts.  The excitment of the iPhone 5 and iPad 3 will only be created by telling the masses "This was Steve Jobs next visionary product, which he detailed to our team before he passed away."  Mark these words, that's all they've got.

Maybe, just maybe, with a digitally engraved Steve Jobs signature the Apple marketing team can charge $25 extra for limited edition products, but that gravy train will only last another 12 months and that's assuming they capitalize on my idea (which they won't pay me).

In my head, I've got the next great product, but I'm not giving it away for free.  However, when I see a company trying to mimic my idea (let's not fool ourselves and think we're the only one who can think of a great idea), I'll invest and write about company X.

Seriously, you may want a whole lot of numbers to show why Apple will fail, but the future does not yet exist.  They will do well as a company, I'm not saying they're going bankrupt, just that they are overvalued by at least 25%.

4 Comments – Post Your Own

#1) On November 10, 2011 at 10:38 AM, leohaas (34.99) wrote:

Really? A $360B company depending on the genius of one man?

Even if you are right about this one, doesn't the market know about this? I mean, the man died last month, and was terminally ill for quite awhile before that, so isn't this priced in by now?

I have no investment in AAPL, and have no intention of putting any money into the company. But overvalued (at a P/E of 14) it is definitely not.

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#2) On November 10, 2011 at 12:01 PM, FreeMarkets (97.20) wrote:

Wait for the earning miss in about 9 months.

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#3) On November 10, 2011 at 12:35 PM, TDRH (99.75) wrote:

No answer for Siri.   If this is opened for application programmers the I-Phone platform will continue to domeinate.  A killer for other Cell Phone lines and a could grow into a threat for Google's bottom line.  

 In addition, IMHO, I think you are overvalue the impact of one individual.  Apple may be overvauled, but not because of the loss of one visionary.

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#4) On November 10, 2011 at 3:13 PM, turdburglar (47.57) wrote:

Apple is price at around 10x earnings, so there isn't a whole lot of growth expected.  They have built a pretty good ecosystem of products and the users are very loyal to the brand.  I agree that Steve Jobs is a huge loss, but that has been priced in for a while.  If the stock was at 20x earnings I think you'd be right.

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