Tuesday, January 29, 2013

Is Apple the New Microsoft? - Discussion Topic 1/28/2013



  1. Tim Shoji
    Sometimes I get sick of articles like these because I feel like they're written just for the sake of stirring up controversy by blowing things out of proportion. No, Apple is not the new Microsoft. It is foolish to make judgements about the fundamentals of the company/industry based on short-term stock price movements. If one pays attention to customer satisfaction surveys, one will see that Apple consistently beats out other competitors in customer satisfaction, both in the PC category as well as the mobile devices category.

    http://www.computerworld.com/s/article/9231399/Apple_keeps_top_spot_in_customer_satisfactionFor example

    To ignore this fact is to also miss the basic tenet of commerce and economics: people spend money to satisfy fulfill their needs. The better a company can meet a customer needs and the happier a customer is, the more likely that they will continue buying new products from the company.

  2. Kalyan Kanakamedala
    I agree with Tim. This comparison is pointless. I also strongly believe that, without Steve Jobs, Apple will not display the same innovation potential as before. Thus, it may represent a good short-selling opportunity. I will leave it to the more experienced traders on our team to either substantiate or refute this claim as I am not sure what kind of expectations of revenue growth are built into the stock price.

  3. Amine Bensaid
    Apple's recent (4-5 months) weak stock performance has been driven by the continuous flow of bad news concerning apple's revenues. Technically the stock is still oversold and has been so for a long time now, any real positive news will reverse this bearish trend.

    I don't think apple is the new Microsoft, the companies are way too different from each other. Like Tim said, this short-term performance will not make apple stock trade the same way as Microsoft's.

    I think traders and value investors are still trying to find a real bottom for apple's stock, when this happens we will see a clear reversal and all those rumors will disappear when the stock regains it's strength.

  4. Xiao Zhong
    I agree with Tim and Kalyan that it is unreasonable to make comparison between two distinctively different business models—Microsoft is a software service provider while Apple sells various portable devices like iPod, iPhone, iPad, etc.

    The stock price drop of Apple is estimated to have been caused by the declining demand for iPhone 5, pushing Apple to slow down on manufacturing orders for more devices. This is actually natural for such new products as cell phones—they are not FMCG that customers buy regularly; rather, the market will reach a saturation point where potential consumers all get their new iPhones and stop buying new ones. Every product has a life cycle and it is even shorter for high-tech gadgets. In this sense, it is not reasonable to make assertion of a company’s long-term trend just based on the short-term stock price fluctuations. Instead, investors may want to look at more convincing and fundamental facts such as the ability for ongoing innovation, management, corporate culture, etc.

    I am not sure whether Apple is able to constantly put forward innovative products but it is simply ridiculous for one to reach such conclusion as Apple being the next Microsoft.

  5. Glenn Alpert
    There is a saying that "trees do not grow to the sky". Eventually, Apple's growth has to slow down to more normal levels once the marketplace becomes more saturated with consumer electronics. Each company has a growth phase and maturity cycle, and Apple is really beginning to move from growth into maturity, just as microsoft already has.

    Once you have already produced your "flagship products", you then have to stick to updating and supporting them, rather than focusing 100% on new, innovative ideas. I'm sure that there are new ideas floating around out there for the next set of digital media devices, but apply cannot easily depart from what it has already established with iTunes (which is OK, but something else could be there that Apple ends up neglecting)

  6. Tian Tan
    Saying Apple is new Microsoft doesn't mean Apple is no longer a excellent company. Microsoft is still a money machine, with limited growth potential though. Stock price incorporates growth potential. I believe apple is or will be oversold after so many bad news this year, and its stock price will get back to a reasonable level. However, I will deem apple as a ten-bagger any more as its growth potential will be limited as its size became so big.

    Microsoft was a ten-bagger from less than $2 in 1988 to nearly $30 in 1999. After internet bumble was busted in 2001, its stock price slumped. By bringing forward two ground breaking products, xbox and windows XP, its stock price get back to about 30. However, if you invest at that point until now, you would get nearly no capital gain, although its dividend had been generous.

    Apple's price soared from about $90 to $700 since the first iphone was released. Now the price is about $450, and I believe apple is able to get to 600 or 700 after new excellent products. Apple still has the most elegant product design. However, is apple a good investment target over the next 10 years? I highly doubt it.