Apple on a Roll, But Will It Last

Apple today reported blow out earnings on the sale of more Macs, iPods, and Iphones. But is this sustainable? I don't think so.

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. 

Sol Nasisi
Sol Nasisi: Sol Nasisi is the co-founder and a past president of BestCashCow, an online resource for comprehensive bank rate information. In this capacity, he closely followed rate trends for all savings-related and loan products and the impact of rate fluctuations on the economy. He specifically focused on how rates impact consumers' ability to borrow and save. He also has authored a wee

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Comments

  • cyrus

    October 23, 2007

    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.

  • AronLiv

    October 23, 2007

    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.

  • JRodgers

    October 23, 2007

    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.

  • jeremybean

    October 24, 2007

    Interesting article right on point from today's NY Times:

    http://www.bestcashcow.com/stocks_-_options_-_mutual_funds/article/mass_market_tech/apple-on-a-roll-but-will-it-last

    I bet Jobs can figure this conundrum out this time.

  • Jim

    October 26, 2007

    The post ignores recurrent phone royalties from ATT and so much more that it's almost ridiculous to attempt to respond to this dolt.

    The person clearly cannot grasp the gestalt of everything Apple is doing.

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