Apple and My Education in the Markets

As anyone who knows me is aware of, I’m an advanced Mac user. I’ve been using them since my high school computer courses with Gord Devito at Sentinel Secondary School in West Vancouver (warning: web ugliness ahead). I fell into the category of one of the MacEvangelists (a la the inimitable Guy Kawasaki, who ran the Apple Mac EvangeList for a couple of years) for several years — from about 1995-1999. I suffered through the “Dark Days” of Apple, as asshats like Michael Spindler and Gil Amelio drove Apple to the brink of bankruptcy. A side note: I can’t believe that no one bought out Apple in 1998. It was like seeing a gold nugget lying in a mound of horse droppings, and not wanting to get dirty in order to take it home.
Tangents aside, what I did learn as a result of my rapt attention to the (mis)fortunes of Apple during that period, was how the market economy works. No more blank looks at the concepts of P/E ratios, market capitalization, EPS and EBITDA.
The realization that this was how my education in economics began was today, when I was checking my portfolio (which includes stock in Apple, bought at 17 9/16, thank you very much) and breezed through some analyst opinions, and saw that Bear Stearns downgraded Apple today because of inflated valuation concerns — and I understood exactly why, since Apple’s stock has taken a fairly meteroric climb in the last 4-5 months, based partially on the success of the iTunes Music Store, but also the success of the iPod.
My concern with Apple’s stock is that the iTunes Music Store is now about to deal with a significant competitor, and that the iPod, as cool as it is (I’m trying to figure out how I can afford a new one, so I can, um, “give” the old one to Frances), is a positioning product for future product diversification (home media/wireless entertainment), not one to base the company’s future on at the expense of their traditional products. Although, from what it sounds like the profit margins are comparatively on the eMac and the iPod, they’re better off selling the latter.

Category: Tech Bytes
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