The Macalope doesn’t pretend to know how well Apple’s going to do in the future. Maybe sudden tragedy will befall our favorite fruit-themed company.
But to call Apple a “bad bet”, as Difu Wu does at Seeking Alpha (tip o’ the antlers to Randon Eliason), takes some serious… uh, actually, the Macalope’s not sure what. Drugs? Maybe it’s drugs.
Reason #1: Growth is unpredictable.
True, some things in life are unpredictable. Like the way certain particles behave, or rabid raccoons, or a relationship involving Katy Perry. But thinking that a company with a track record like Apple’s might continue to do well? That’s not exactly betting against the odds.
The first three of Wu’s reasons can basically be described as saying “Apple is so huge, there’s no way it’s going to get any bigger.” Well, you can believe that, but avoiding numbers so big that they scare you is not really a rational investment strategy.
Having exhausted his main point, Wu just tries to throw things against the wall to see if they stick.
Reason #4: Blue-collar workers are mistreated in Apple sweatshops.
Uh, sure, because no other company that exploited workers ever got anywhere.
Wu may enjoy being willfully ignorant, but the fact is that Apple’s way in front of its competition on this issue. Even if it’s only because a collection of liars, attention-seekers, and, yes, people legitimately trying to make workers’ lives better like to pretend that Apple’s the only company in the world that sources from Foxconn.
In 2011, Apple paid a total of $435 MM to its executives, of which $378 MM was paid to CEO Tim Cook alone. This is not only ridiculously high in absolute terms, but also totally out of line with what comparable companies pay for executive compensations.
There are no comparable companies.
Seriously.
And the reason Apple executives are making so much is because the company is doing so phenomenally. These compensation amounts only make sense when compared to Apple’s performance. But when evaluated thusly, they’re no more out of whack than at most major companies. Wu instead wants to evaluate their compensation against assets and revenue. Why? To prove his point, that’s why!
As executive compensations tend to only go up every year, Apple is a fabulous money printing machine for executives, at the expense of shareholders.
Yes, it sure seems shareholders are hurting, doesn’t it?
Given Apple’s business model in the highly competitive and rapidly evolving technology industry, its growth is too unpredictable for a long term investment.
The technology industry always seemed competitive until the iPhone came out. Now looking at Apple’s competitors—with the exception of Samsung—is like a day watching the Three Stooges. And not the classic Three Stooges, the new ones. In other words, painful, sad, and unfunny.
Well, OK, Wu’s a little down on Apple. What stocks does he like?
“After A Lost Decade And Now At 52-Week High, Microsoft Is Still A Buy”
Wait, what happened to growth? Where is Microsoft’s growth supposed to come from? Its ample mid-section?
Disclosure: I am long MSFT.
The Macalope used to own Apple stock, so far be it from him to suggest that someone holding a stock might be inclined to be biased toward it. Instead he’ll just say to Wu, good luck with that.
[Editors’ Note: In addition to being a mythical beast, the Macalope is not an employee of Macworld. As a result, the Macalope is always free to criticize any media organization. Even ours.]