A dissatisfied reader, but a big fan of Apple
.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} Dear Mr. Berko:
In October 2009, you roundly criticized Apple’s iPod as useless and suggested that the stock should not be bought. I sent you a long letter telling you why you were wrong, but you did not answer me. The stock is now $225, so let’s see if you have the guts to publicly admit your stupidity. I think Apple is one of the finest stocks one can buy, and that in the next few years it will trade over $450 a share, and I will not ever read your stupid column again.
H.E., Fort Walton Beach, Fla.
Dear H.E.:
I’m not goof-proof, and if I had “goof insurance” it would have paid off, because I goofed big time on the iPod and pooh-poohed Apple at $184 last October. I’m a neo-Luddite, and my DNA lacks appreciation for digital gimcrack, gizmos and contrivances like Twitter, YouTube, Facebook, iPods, iPhones, iPads and sundry honey traps that control the cognitive functions of folks under 50.
I’m astonished that so many Americans are psychologically and emotionally addicted to Facebook, cell phones, texting, Xboxes and iPods. They develop trance-like characteristics when they disconnect from their wireless gadgets for six minutes, and exhibit serious withdrawal symptoms when the disconnect exceeds 12 minutes.
This is their umbilical cord to the world, and the 24/7 connectivity is a soothing anodyne to millions of addicted wimps who probably don’t like their own company. When I see people using a cell phone or an iPod, texting while riding an exercise machine, waiting in line at the grocery store or watching TV, I know those folks are uncomfortable in their own skin.
Well, I didn’t like Apple Inc. (AAPL) last October at $185, and at the risk of being wrong twice, I don’t like AAPL today at $225. My four grandkids, each of whom bought 16 shares of AAPL at $85 in January 2009, think I’m an ogre. Well, this ogre expects AAPL to earn $11.50 a share in 2010, so the stock price is a rather rich 20 times earnings. The Street’s consensus indicates earnings of $12.45 per share for 2011 and a target price of $300. So hold AAPL, providing you’re a long-term investor.
Many of AAPL’s products are basically entertainment and feel-good appliances that cost between a knight’s bounty and duke’s ransom. Now, consider that the consumers are in hock up to their hairline, wages are declining and the cost of groceries, fuel, utilities, property and health insurance is rising. Well, who is left to fork out $500 or $600 for an updated version of a year-old product that still works like a fine Swiss watch?
AAPL’s innovation is like adding 10 horsepower to a 400-horsepower engine.
This $46 billion revenue company has zero debt, net profit margins of 16.5 percent and doesn’t pay a dividend … yet.
I don’t think that AAPL has the significant upside that you do, at least not this year and certainly not until our unemployment numbers and home prices begin to improve.
However, I believe AAPL is a good long-term hold, because when the economy gets cracking again, the shares have the ability to double in the coming five years.
By the way, my grandmother doesn’t read this column either, so you’re in good company.
Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net. © Copley News Service
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