) may have reported a
great first quarter
, but this is no time for the company to get cocky.
The iPhone maker has remained silent about the
surrounding the firm's 2013 lineup. Meanwhile, Samsung, HTC and
other competitors are gradually stocking their portfolios with
dozens of competitive products.
Many analysts have expressed concerns about Apple's future,
particularly when the company failed to meet their lofty
Analysts are not the only ones who doubt Apple, however.
Investors do as well.
"It just looks like the wheels are falling off [at] Apple," Bob
Auer, the Senior Portfolio Manager of SBAuer Funds, LLC, told
Auer did not base his decision on rumors or product sales.
Before investing in any firm, he wants the company to meet three
"They had to have reported a quarter with 25 percent up earnings
year-over-year." "Sales had to be up 20 percent year-over-year."
"They had to be at below a 12 P/E."
SBAuer Funds has invested in Apple twice before. "We made a nice
profit on it both times," said Auer. "But we sold it at, I think it
was at $640 when it unqualified, and it was simply because the
quarter came in and it didn't have the 20 percent and the 25
percent. It was kind of a flattish quarter and it was a big
disappointment in the stock."
Auer said that he is not a "techie geek," but he "had a
smartphone before anybody had a smartphone."
"I had a Motorola smartphone that was a generation one
smartphone where you could get stock quotes and different things,"
he said. "What I see with Apple is just the same thing that has
happened with [other smartphone makers]. They make wonderful
products. But when you look at the history… Motorola came out with
the RAZR and that was just so hot. Then Nokia (NYSE:
) was just so hot. Then BlackBerry (NASDAQ:
) was so hot. Then Apple came and knocked BlackBerry off."
Now Auer believes that the Android ecosystem -- which supports
different sizes and different form factors to meet the needs of
multiple users -- is the way of the future.
"It's kind of like the board game Risk," Auer explained. "If
everyone is against you, even if you're the strongest, you will
fail. They have different tablet sizes -- why not have a bigger
screen like the Samsung Galaxy Note II? Why not one with a cute
keypad for people that like the tactical keyboard like BlackBerry
had? Why not have four different iPhones?"
Auer said that Apple's market share is "under attack" by
"Quite frankly, the 'gee-whiz' factor has kind of warn off," he
said of the iPhone. "I think we're about a year away from it being
un-cool to have an Apple [phone]."
may not be enough to offset any losses that may afflict Apple's
"I don't know if the TV can save them," said Auer. "The TV
business is more fraught with risk than the smartphone business.
The TV business is just absolutely brutal. Look at Sony (NYSE:
). They've just been decimated in the TV business. Sharp is
bankrupt and has been decimated in the TV business. Now Apple wants
to go into that business."
That said, Apple could still make a comeback with some
incredible, unexpected item.
"They are gonna need a 'gee-whiz' product," said Auer. "If they
come up with that, that will just help them tread water and keep
even, because with the other stuff fallen off -- it is almost like
a big drug company where all of their main drugs have gone off
Auer also took issue with Apple's
use of the patent system
"Apple has resorted to defending the patents and trying to get
Samsung all tied up in court," he said. "When all that happened,
that was the beginning of the end of the stock.
"When you've got such a hot product, and you let the consumer
decide, and the consumer is picking it up off the shelf so fast,
you don't care about patent protection because the consumer and
that person's pocket book are deciding. But what Apple was really
telegraphing to the market -- which I don't believe people picked
up on -- was that when all that litigation started, they were
really saying that they can't depend on the glamour of their
products and strength of its product line. They now have to
intellectually defend their property. I was glad we were getting
out of the stock."
Despite his attitude toward Apple as an investment opportunity,
Auer has still purchased several of the company's products.
"I have three iPod Touches and two iPads," said Auer. "My wife
and both of my sons have iPhones. But I have Android. I think [the
iPhone] is a good product, but [not] as an investment."
"Now you have investors turning on them and wanting them to
cough up the cash," Auer concluded. "Who knows where that's gonna
go. I would actually say they better keep that cash -- they're
gonna need it."
Louis Bedigian is the Senior Tech Analyst and Features Writer of
Benzinga. You can reach him at 248-636-1322 or
firstname.lastname@example.org. Follow him
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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