For those of you who skipped the above, you might want to read this....
http://www.fool.com/investing/genera...d-go-bust.aspx
Why Apple Investors Could Go Bust...
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Not only is the company sitting on two blockbuster and still fast-growing products -- the iPhone and iPad -- but it also has $75 billion it can use to develop another blockbuster product, make a game-changing acquisition, or both!
Given those attributes, paying 10 times EBITDA for one of the world's largest and fastest-growing technology companies seems like a bargain. Heck, assume that Apple can continue retaining 100% of earnings and earning a 40% on equity, as it has over the past 12 months, and the math -- demanding a 10% return -- says it's worth approximately $900 per share.
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The problem with that
Apple, however, has never sustainably earned a 40% return on equity or even a 20% return on equity. Go back 20 years, and what you'll find in Apple is actually a (gasp!) cyclical business. A boom from 1990 to 1992 was followed by a bust from 1993 to 1997, followed by a boom from 1998 to 2000, a bust from 2001 to 2004, and a boom from 2005 to the present.
With it now being almost 2012, either this time it's different (and I use that phrase intentionally) or this boom is starting to get a bit long in the tooth.
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The global view
To buy Apple today, an investor has to believe one of two things:
1. The iPhone and iPad will not become commoditized.
2. If the iPhone and iPad become commoditized, Apple will innovate, develop, and launch a new product to overcome the resulting revenue declines.
Neither scenario is, of course, impossible, but I do not believe that Apple is as cheap as it looks. Not only will it have to move downmarket to compete with Android and the new Kindle Fire, but the fact remains that only so much of the world can afford $600 gadgets -- with the rest not being able to afford them anytime soon.