

Is Android responsible for Apple’s deep market discount? - bjonathan
http://www.asymco.com/2011/04/21/is-android-responsible-for-apples-deep-market-discount/

======
trotsky
I find asymco's analysis truly fascinating at times. First he casually, almost
forgetfully offers the opinion that the US's second largest company in market
cap should be trading at a 32 P/E. Then accepting this opinion as fact, he
presents a "common argument" against it which I've never actually heard
discussed before and proceeds to deconstruct it as not being significant
enough to provide the downward pressure on AAPL that he suggests is a simple
fact of nature.

The purpose of all of this, the best I can tell, is to worm the idea that AAPL
is undervalued by 50% into the subconscious of the reader, and not actually
about the effect of google's products on apple's stock value.

Quite a fascinating to see it done so well. I'd assume it's quite effective -
I found myself feeling like I agreed with some of his premises simply because
of how they were presented.

~~~
nextparadigms
I've seen many misleading charts from him that seemed very believable and
indeed many people believed him. He's very good at twisting the data to show
what he wants and "make sense".

The most infamous one I remember is when he used LG, Samsung and a few other
companies profit and revenue data to show that they are losing or not making
much money from Android, when he never actually showed the profit and revenue
data for the phones themselves.

He took the whole profit of the companies, and even though it was still early
2010, when these companies didn't even start using Android on a very big
scale, he managed to make it look like the companies are doing so poorly
because of Android, when in fact Android had nothing to do with it and it
couldn't since it wasn't used much by them at the time. Many, many people
bought his "analysis" and took for granted that when manufacturers use Android
their phone business performance is bad, which is completely false.

Of course, he conveniently omitted HTC who at the time was selling mainly
Android phones and they were doing very well because of it.

~~~
cooldeal
A cursory glance at his articles shows that he's a completely biased Apple
fanboy. Not really going to expect any objectivity from him. All he does is
praise Apple and poke fun at Android and other competitors. Like Gruber, he
has cultivated an audience and tells them what they want to hear to drive page
hits and revenue. It seems to be a highly successful business model, atleast
for Gruber. That's the real reason they write what they write, regardless of
what they actually think.

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kenjackson
A big reason for the P/E is Apple's market segment is consumer goods that get
rev'ved every year. Consumer electronics are a fickle market. Ask Sony and
Nintendo about it. One of the nice things about Samsung and LG is that they
can smooth their earnings with component sales.

Apple needs to continue this great string of great products. If they do one
rev of a subpar product they can see profits drop 50% in one cycle -- and this
is in part due to Android. Android is close enough now to eat up share if
Apple slips. And WP7, post-Mango, will be there too.

So the discounting is really some healthy skepticism that Apple will be able
to keep on this roll. One thing history tells us is that the companies that
are great today, will tomorrow be a HBS case study for how their greatness
caused them to have a blindspot.

------
yardie
Android has nothing to do with it. It's just investors see where they are in
relationship to other companies and think this can't be sustainable. So they
keep discounting it's stock. I'm sure when it was trading at $60 no one
thought it would get to $80, when it got to $100 no one believed it could get
to $150, when it got to $200 it was inconceivable it would go any higher than
that but here we are today and it's sitting around $350. Its P/E ratio is
being intentionally depressed because analysts are hoping the chair gets
kicked out from under them.

Why is that? Because to Wall Street they are unpredictable. Instead of chasing
profits they chase customers. When others are firing employees in a down
market they are vacuuming the good ones up. And they don't like to share
information. Other OEMs announce products months in advance, Apple you get 1
day to 1 month of a heads up. This creates a lot of disruption for analysts.
They hate disruptions. And they have a charismatic leader that a lot of people
believe is going to kick the bucket any day now. Disruption.

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hnsmurf
"Apple has not “lost sales” to Android as it has been selling all it can
produce. "

I'm not sure that's a useful way of looking at it. If Android were never born
Apple may have doubled production capacity and still be selling out for lack
of a viable competitor.

And even if it's been benign so far, it won't be soon. It's hard to spot the
effects of competition in a rapidly growing market like consumer smart phones
or tablets. It'll be a lot easier once everyone already has one, and how far
away is that? Phones are almost there and tablets probably will be in 2-3
years.

~~~
cooldeal
>"Apple has not “lost sales” to Android as it has been selling all it can
produce. "

Is that really true of the iPhone? Thought the Verizon iPhone was not doing so
well because of all the flagship Android phones that run on Verizon.

Even if it were, it does not take into account the price pressure, if there
were no competition, the prices, margin and hence profit could be much higher.

~~~
Anechoic
> _Thought the Verizon iPhone was not doing so well because of all the
> flagship Android phones that run on Verizon._

The speculation I've seen (and it's just that since Apple/Verizon never
released forecast numbers) was that sales are running below expectations but
the reasoning for that isn't settled. It could be because of the Android
flagship phones, or (as Marco has speculated) it could be because of contract
cycles and folks are waiting for their contracts to expire before switching
rather than breaking their contracts.

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cageface
_Capital markets are notoriously incompetent in spotting disruptions and often
reward those who are failing right up until the bitter end._

I wish market evangelists would acknowledge this more often. The market is a
useful mechanism but it's far from omniscient.

------
bad_user

        If Apple bought Google (it already has a third 
        of its value in cash) and it shut down Android, 
        it could create $300 billion in value
    

Can Apple really buy Google?

Even if it had all the cash needed, isn't the board of directors supposed to
agree? Would shareholders themselves agree knowing that (a) Apple is buying
Google to dismember it, (b) Apple is putting itself in serious debt without
having a guaranteed ROI and (c) Google is still ridding the wave and its best
days may have yet to come ?

Why do people feel the need to make such statements anyway?

------
Duff
I think the fear of Android eroding Apple's dominating market position, the
mid-term fate of Steve Jobs and the dependence on consumer hardware sales
makes some investors hesitant.

Apple carries this aura that is amazing, and the stock is way undervalued IMO.

Apple disrespects and makes it difficult for big companies to do business with
them in a way they are accustomed to -- yet probably 30% of the "enterprise"
salespeople I run into are carrying iPhones and about 20% are ditching laptops
for iPads. That's market power nobody on the market has right now.

------
cooldeal
Another content-free idle speculating navel-gazing post from the armchair
analyst Asymco aimed squarely at Apple fans.

>If Apple bought Google (it already has a third of its value in cash) and it
shut down Android, it could create $300 billion in value. If could even throw
away all of Google and still walk out with a profit.

If that happens, Motorola, HTC, Samsung et al. are not going to go 'Oops, we
lost' and then shutdown. They are going to move to a new OS, most probably
Windows Phone which already has Nokia in the bag, and then the battle lines
would be drawn up like in the late 80s and early 90s, Apple with it's single
line of devices mantra and Microsoft with the OEMs competing to drive down
price.

And not to mention Android is open source, so 'shutting down Android' doesn't
make much sense. The OEMs would probably gang up to continue development which
Apple can't do anything about.

What if Microsoft buys Mac OS X from Apple for forty billion dollars in cash
and then quadruples the cost of Windows? Obviously it can make the money back
because of the monopoly!

~~~
dailyrorschach
Ad hominem much? We can argue about his conclusions and methods, but to say
that he's some armchair analyst to me implies that his track-record is poor
and that he should not be considered trustworthy on analyzing Apple's
financials.

That's simply not the case at all:
[http://tech.fortune.cnn.com/2011/01/19/apples-blow-out-
quart...](http://tech.fortune.cnn.com/2011/01/19/apples-blow-out-quarter-the-
bloggers-called-it-the-street-blew-it-2/)

~~~
recoiledsnake
Predicting numbers is one thing(luck can play a very big role) and deep
analysis without being clouded by one's biases is another. Asymco seems to
fail in this regard in most of the posts(including this one) which come
through as abject fanboyism not tempered by reality.

How is it ad hominem? The poster clearly described why he thought so later on
in the post. You can't take a line of someone's post to call ad hominem on it.
Strawman?

~~~
dailyrorschach
I still think beginning your argument in that way is unhelpful to the
discussion. He said nothing of value by calling him a navel-gazing armchair
analyst. The comment would have been more valuable simply taking issue with
the one line he quoted and then discussed. But now, I'm starting to be guilty
of the same, so I'm going to stop.

Edit: That being said, certainly open to evidence that proves your points
w/r/t his ability, and a later poster in the thread did just that.

