Apple today reported blow out earnings on the sale of more Macs, iPods, and Iphones. But is this sustainable? I don't think so.
Submitted: Oct 22, 2007
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Apple today reported blow out earnings on the sale of more Macs, iPods, and Iphones. Amongst the companies highlights:
It sold more than 2 milion Macs, the first time it has done this in a quarter.
Sales of 1.12 million iPhones.
Sales of 10.2 million iPods.
This resulted in earnings of $904 million or $1.01 per share versus analysts expectations of $.86 per share. Apples profit is almost double what it earned in the same quarter last year - $546 million.
The stock is at a nearly 40 PE which is high for a consumer electronics company.
Can Apple sustain its growth? I say no. Companies like Sony and Dell were once thought to have impregnable business models and both have fallen on hard times. The problem with consumer electronics is that every two years you have to reinvent your product line. That gives competitors an opportunity to catch up and surpass. Look at the video below if you don't think this is already happening:
Apple will have to battle on multiple front against well-healed companies to defend its lead.
Apple is a once-in-a-lifetime company at this point. They have reinvented everything now, and they are going to reinvent the lifecycle of the consumer electronics company. The truth is that there products are so much better designed than anything else and they just keep putting more and more distance between them and their closest competitor. It has run a lot very quickly but there is still room to grow.
I made a real mistake by dumping this thing at 150. They have done what they have done by only barely penetrating any market other than the US. In an environment where tech growth is coming from outside the US, this still has a lot of room to grow.
Apple's products have always been to quirky for European markets. Americans may be naive enough to shell out money for a phone with no access to the battery, but Europeans will not. I predict the Iphone flops in Europe, and Apple's growth trajectory turns a little sour.
Posted: Oct 22, 2007
jeremybean (Unregistered)
Interesting article right on point from today's NY Times:
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