My shiny new iPhone and why I bought Apple
I recently bought $16,000 worth of Apple stock, which I covered in a post two days ago. The way the post was written, and based on some of the comments I got on it, may have led to the impression that it was a speculative or uninformed buy. It definitely wasn't. Firstly, I would not invest that amount of money without doing some real research, following the stock for a while and be comfortable with the company's outlook. Secondly, I have a medium to long term outlook for the stock and believe it offers the best risk/return in the technology sector, along with Google - another one of my investments. My overreaction in the post was more due to the sudden price drop a few hours after I bought the stock. Luckily two day's later, the stock is above my purchase price.
What was my reason behind buying the stock? Well, apart from researching the stock (fundamentals and technicals), I recently got an Apple iPhone as a birthday gift. I have been using this new generation smart phone for about 2 months and overall am very impressed with it. I have used BlackBerry's and Treo's before as well and this smart phone really stood out. Here is a quick review:
Pro's
- Very user friendly in terms of navigation and usability
- Easy synchronisation of music and MS Outlook mail/calender through itunes
- Quick WiFi connection that is easy to use and automatically picks up nearby wireless networks
- Browser navigation by smart phone standards is quite good and screen rotation and zoom in/out are cool features. Definitely has the best browser for smart phones and competitors are scrambling to catch up
- Camera and email functionality have great integration. You can take a photo and email it in 2 clicks
- Even though keypad maybe a bit small, its intellitext feature of completing words for you is quite good
Con's
- Can't copy lines of text. So have to retype everything
- Battery life is not that great, so need to recharge daily. Some reports say the next iPhone model is going to incorporate solar power
- Limited external applications relative to Window or Palm OS based devices. This will change with the release for their full software development kit
- Current iPhone is restricted to AT&T network, though there are various ways to get around this limitation
- Not yet ready for business usage due to limited exchange server integration and other technical limitations. When it is (next model), it is going to be a real threat for competitors RIMM and Palm
Final verdict: 7/10. A great phone, but needs a few improvements.
So why did the current iPhone make me buy Apple (AAPL) stock? Well, because I believe their next model (2.0), which Apple CEO Steve Job's is announcing/launching at next week's developers conference, is going to be awesome. I believe Apple will fix a number of the common user complaints (some of which are on my cons list), upgrade the Operating System (OS) and add key new functionality which will make it relevant for both the business and broader consumer market. More importantly, Apple is launching this new 3G capable model in international markets (across multiple wireless carriers) which should be a huge boost for sales; based on most analyst projections.
So there you have it, the main catalyst for why I decided to buy this stock. My target price for this stock is $225 by the end of summer and $250 by year end. From my research and first hand use of the first iPhone model, I think this stock is going to rock.
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June 8, 2008 3:28 PM
I saw a sign right out there on the street in Chinatown while on a break from doing my civic duty in the court system a couple of weeks ago: WE UNLOCK iPHONE.
I remember reading that iPhones have a tendency to stop working after being unlocked. If that happens, Apple doesn't want to know; as a result, you're out a couple of hundred dollars. Hopefully the V2 version will, as you indicated, eliminate that problem.
June 9, 2008 11:14 AM
You spent $16,000 in stocks that are over $180 a share? You suck at investing and you _will_ lose a _ton_ of money if you don't get out of it soon.
Another fool parts with his money...
June 9, 2008 11:16 AM
Apple's stock have always been HIGHLY volatile. I have much doubt in your "research". Last time it was this high it went down to near $111 a share even with the iPhone.
But what do I care. It wasn't my money :)
June 10, 2008 12:49 PM
Obviously you care "anonymous," because you left back-to-back comments. But it's obvious from your idiotic ranting that you are knowledgeable about neither tech nor investing. Just another Apple-hater trolling the internet...don't you people have lives?
June 10, 2008 1:04 PM
@ FZ - Actually my iPhone is unlocked, since I need to use it on a GSM network. No problems so far, the key is not to update the OS software via iTunes. Don't recommend this option though as better to stick within guidelines for company warranty. This won't be an issue with the next 3G phones as they are all unlocked and you are not tied to AT&T.
James - Agree with your cooments re the anonymous commentators. I wish they would leave a name to back up what they say.
Apple has recovered nicely today. There was a great article on their outlook at CNBC.com today, some of which I highlighted below:
" Investors understand that Apple is perched atop of a digital entertainment revolution and is now offering up an electronic Trojan Horse that could do for enterprise customers what it's already done for consumers: Change the way we think about technology, and more importantly, change the way these dyed-in-the-wool PC owners think of Apple.
There were concerns that a price cut to $199 for the 8 gig model would erode Apple's revenue growth. Even though just about everyone I talked to said the price-point was absolutely key to iPhone's far broader consumer -- and enterprise -- appeal. And let's be honest: for $100 more, don't you suspect most customers will opt for the 16 Gig model anyway? So the revenue erosion likely won't be nearly as dramatic as some feared; and I'd argue that increased sales volume because of that lower price will more than offset it.
Then there's market penetration: Apple's internal goal to have iPhone in 25 international markets by the end of this year has been met. In spades. The company confirms that iPhone now sells in 70 countries, and Steve Jobs, for the first time, told me yesterday that he suspects a deal with China Mobile to be announced "later this year." Same goes with Russia. These are key developments for the company. And its investors.
But what a difference a day makes, as investors -- and those traders -- start to appreciate the bigger picture here: iPhone is a platform, like the Mac and iPod before it. It is a phone. But as we learned yesterday, it's not some watered down computer in your pocket. It's your desktop in your pocket. It's a game-player, with some awesome titles on the horizon. A camera. It's a GPS device. It's secure. It's good for consumers. Good for businesses. Now far more affordable. Super-fast. In less than a year, iPhone has become the "about-time" device mobile users have been clamoring for. Yeah, it's about time. And this is all about the next generation for Apple.
Investors have known all this for a long time. I gotta think traders are now beginning to grasp all this as well.
June 10, 2008 1:11 PM
This post has been removed by the author.
June 12, 2008 4:37 PM
Just wanted to chime in to tell you I was right. You have lost roughly $13 a share or roughly $1,200.
I really hope no one comes to this blog for money advice.
Like I said, Apple's stock is volatile. It _will_ go back up but not until it continues to go down to probably $120 - $150 a share just like it _always_ does. Then it will climb back up to near $200 and drop off again.
So, unless Apple really fucks up, you'll at least get your money back in about a year but you won't make any substantial profit if any as it will go right back down (it gets high near their events then down because the rumors are always far more hype than they can deliver).
June 14, 2008 9:39 AM
anonymous - firstly, it is dissapointing you have to use obscene language in your comments. It is fine to disagree with me, but your overall comment crossed the line. I still Apple hits $200 by August, either way I am a long term holder (3 yrs +) of this stock so I am not too worried by short term falls when the company overall is going great.
If you don't like this blog don't read it. Let my readers make up their own mind. I also hope that everyone who reads finance or money blogs does their own research and not make investment decisions solely based on what they read. All opnions here are my own views.
July 9, 2008 11:10 PM
Anonymous reveals his ignorance when he questions why someone would buy a stock thats $180, as if only stocks that are in the $1-30 range is worth buying. Anonymous likely does day trading and thinks that is called investing. BTW, Berkshire Hathaway is priced at $119,400 and many people still think that's a value.
In any case, I bought a truckload of AAPL at 119.50 back on Mar 3. With the surge in Mac sales and Vista blues, and iPhone 3G, App Store and international sales coming, it seemed that investors and analysts were not pricing in the Apple's well-strategized and well-protected growth in multiple markets. When this growth becomes obvious over the next 24 months, AAPL will get priced in the $200s, or even $300.
AAPL is volatile, so it will go up and down at about 2.5-3x the rate of the overall market. But fundamentals always win out, so if you have a multi-year time frame to ride it out, AAPL is the place to be.
July 11, 2008 5:16 PM
Thanks Mark - I agree with you. Though this week has been brutal.
July 30, 2008 8:58 PM
you are not a real investor just a fool with money... any real LONG TERM investor wouldn't be concerned with "oh no it went down by several points since i bought it yesterday"
the market is volatile that should be obvious if you even did a hint o studying. Secondly if you are in it for long term you should have done enough research to have faith not in what they are doing today or tomorrow or this year; but where they will be in 5,10,15,20 years from now. 3 years is a not a long term investment; it just isn't day trading.
the fact that the iphone made you buy the stock is in itself a large demonstration of your stupidity. leave the investing stories and advice to people who: A. disclose ALL of their holdings. B. disclose who paid them for the article. C. are licensed. or D. at least know what they are talking about.
better idea ignore this go and read motley fool, or anything warren buffett has written or said.
as he wisely said "it's not what's out now, or what's in the pipeline to come out next. It's THE pipeline; that there will always be a radical next.
July 31, 2008 9:04 AM
Anonymous. Thanks for you opnion. You may think I am a "fool" but Apple was a considered long term investment. My definition of long term is 3+ years, espically in the highly dynamic IT sector. If you read Apple detailed earnings and listened to their earnings call (both of which I did), their pipeline is very strong. Sure I could have bought later and got a cheaper entry price, but I don't believe in market timing. I pulled the trigger based on what I thought was the right time. If you read my posts on this topic, the iPhone was one of the catalysts to buy this stock, not the only reason. The are going to be able to extract a number of synergies from their entire Mac platform.
My post title was dramatized a bit to get some attention and I did expect volatility, so even though the stock is aroun $160 now, I am still very confident about its propsects, otherwise I would have sold even if it meant a loss.
I was going to delete your comment because of it's personal attack and verbage, but instead I am leaving it and responding to it. I hope you check back regulalry and we can discuss the stocks propspects when the price is above $200 in Q4 this year.
October 6, 2008 5:43 PM
Andy. oops. aapl closed at 98 today. guess that one "investment" didn't pan out. The p/e was/is too high on this pig, plus no one needs their products that bad.. AND the gPhone is going to clean up on iPhone. Sell while you can... having said that we're all loosing today... Heaven help us.
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