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Professor Greenwald Thinks Apple Can Go Sony's or Nokia's Way

January 06, 2013 | About:
Dheeraj Grover

Dheeraj Grover

18 followers
Well-known value investing authority Professor Greenwald discusses his views on Apple (AAPL) and Amazon (AMZN). He thinks Apple can go the way of Sony or Nokia even if it is a profit leader at this point. He thinks Amazon is trading on vapor.

SUMMARY:

-- Apple is clearly, at the a moment, a huge profit-generating machine and is not overvalued.

-- The problem is that this profit machine is not going to last.

-- We don't know when it is going to happen, but whenever it happens it is going to happen very fast.

-- Look at what has happened to Nokia and Sony.

-- Discount the multiple to take into account the risk of obsolesense and Apple will not look that attractive.

Credit and Source: Motley Fool, Youtube

Here is the video of Greenwald on Apple:



Here is his video of Greenwald on Amazon:



About the author:

Dheeraj Grover
I am an individual investor with deep interest in the field of value investing. My ideas and thinking is inspired by highly respected value investors like Ben Graham, Warren Buffett, Walter Schloss, Bill Ruane and Tweedy Browne

Rating: 3.5/5 (8 votes)

Comments

manhattanlad
Manhattanlad - 1 year ago
"_-- The problem is that this profit machine is not going to last. " based on what? that you just doubt a company can continue to innovate? Anyone can say that about any company - but, as a reminder, it has been said nearly every year since the iPod and before. In fact, there was talk that if Apple didn't adopt the netbook it was doomed and that the Zune and now the surface would put it under. It's easy to say this, but without facts or analysis that goes beyond sentiment, it's worthless commentary.
sapporosteve
Sapporosteve premium member - 1 year ago
I think the point he is making is that Apple has no competitive advantage that keeps the competition out. Look at smartphones, iPads etc. Apple does not have barriers to entry (discussed in Greenwald's book Competition Demystified) or any supply or demand advantages. Because of the outsized profit, other company will enter the market and drive the overall profit lower. This is the point he is making. Why? Because Apple does not have any way of keeping out the competition. It not Coke with brand loyalty or Wal-Mart with a solid distribution network. There are at least 20 types of smartphones that I know of.

Contrary to what Einhorn thinks, it is tough turn a $600 billion company into a $1 trillion company. Greenwald is simply highlighting probabilities.

I think I read where Samsung is coming out with a bendable screen smartphone soon. This does not mean that Apple will lose, but it means that Apple has competition.

Greenwald in 2006 actually stated that Apple would be better if it used Intel processors and supported Microsoft windows. And it did change and it did better.

batbeer2
Batbeer2 premium member - 1 year ago
>> based on what? that you just doubt a company can continue to innovate?

Precisely! Apple is not a company an idiot could run.

SIAL, KO, PMD, PG and for that matter CSCO won't come crashing because this years product fails to outsell last years product.

Apple is great because it has been managed well. Some would prefer companies that are great as well as well-managed. There is a difference.
vgm
Vgm - 1 year ago
Greenwald was advising against buying AAPL in June 2010 when the stock was around $250 and people of the caliber of Steve Mandel had it as a top holding:

http://www.morningstar.com/Cover/videoCenter.aspx?id=339575
batbeer2
Batbeer2 premium member - 1 year ago
Yup, I too was bearish on the stock as far back as 2008....

I have much respect for Steve Mandel but I still think AAPL is a busines that needs a brilliant manager. Anyone less than brilliant will lead the company into trouble in months.

vgm
Vgm - 1 year ago
"Yup, I too was bearish on the stock as far back as 2008...."

People like Mandel (and Julian Robertson who has also long been very bullish on AAPL) are able to analyze and judge companies on a far superior level than us mere mortals.

batbeer2
Batbeer2 premium member - 1 year ago
are able to analyze and judge companies on a far superior level than us mere mortals.

That's true but us mortals only need to get one or two right out of 10 000.

Last time I checked, DJCO beat the h@# out of Apple in 2012, not to mention USG.

Those are stocks that this particular mortal does understand.
vgm
Vgm - 1 year ago
"DJCO beat the h@# out of Apple in 2012, not to mention USG."

Ha! Not so fast. Beware choosing a convenient (short) comparison to favor your argument. If we look out over the past 10 years AAPL is up some 8,000% and USG is barely positive. And over 5 years, USG is in negative territory and AAPL is up 200-300%. And DJCO similarly dramatically underperformed AAPL over these timeframes.

We all have our circle-of-competence, however limited.
batbeer2
Batbeer2 premium member - 1 year ago
Yes, the 10 year record of AAPL is a pretty strong argument.

My record is not long enough for me to go back and point at a stock I liked at prices that were 1/10th of what they are today. In fact, my record may never become that long ;-).
sapporosteve
Sapporosteve premium member - 1 year ago
From Today's Sydney Morning Herald......this is the point that Greenwald is making.

The clash of the tech-titans is showing no signs of letting up, with Samsung, selling close to 500 phones per minute, reporting a record profit for the final quarter of 2012, despite the debut of Apple's iPhone 5.

Operating profit rose 89 per cent to 8.8 trillion won ($7.9 billion) in the three months ended December, Samsung said in a preliminary earnings statement today. That compares with the 8.5 trillion won average of 35 analyst estimates compiled by Bloomberg. The Suwon, South Korea-based company didn’t give net income or divisional figures.

Samsung benefited the most from slower iPhone 5 sales combined with brisk sales of its own smartphones.
Earnings at Samsung’s mobile business probably doubled from a year earlier, according to a survey of five analysts, helped by demand for Galaxy Note II and Galaxy S III phones. That contrasted with slower than expected sales of the iPhone 5, which entered the market in September, following glitches with mapping software.

Read more: http://www.smh.com.au/business/samsung-rakes-in-79b-quarterly-profit-20130108-2cdrz.html#ixzz2HM3DEanx

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