While I agree this company has a premium valuation, I laid out part of the case of why I think we are still underestimating Apple here.
(all blog entries relating to Apple can be found here)
Let me reiterate, Nike (NKE) was able to sell 'stuff' for XX% more than competitors for many years just because it was the cool brand; in fact UnderArmour (UA) is experiencing a very similar phenomenon today. Go ask any 7 to 22 year old which of those 2 brands he/she prefers. I'd argue Apple (AAPL) is approaching this same culture status. Over and beyond the product - its styling, its cache, its forward thinking, its "making our life simpler"... all important points. Does this make the stock cheap? Heck no. I think Zach makes some great points and if we have an outside event that drops stocks, Apple (AAPL) sure will not be immune. But the case he laid out (in my opinion) could be laid out to short many stocks, many of which with far worst backdrops than Apple itself.
I reiterate lost in the fog of the iPhone price drop is the revenue (at high margins) driven into the company from the subscriptions - does that all come at the front end like selling the actual device? No. So less pop in the near term. But I doubt the analyst models have this baked in, year over year, over year - think (a sliver of) Comcast's (or any subscription model of a major cable/phone carrier) reoccuring revenue overlaid on top of Apple's hardware revenue - and this is the future. Will it all be smooth? Heck no. But directionally, the moves and making tech EASY on Americans (and the world) is the key driver here. When your 60 year old mom or grandmom can figure out Apple products - that's invaluable.
I continue to think iPod Touch is going to blow people away as well in next 2 quarters; and yes iPod Classic will get cannibalized but compare the price points (although we don't know the gross margin differentials). Add in iMacs, and entire swaths of teenagers heading to college with Macbooks.... don't underestimate this demographic and their influence and wield.
Extrapolate this Apple love story to hundreds of thousands of households.... there is nothing parents want more than to make Johnny and Suzie happy. What does Johnny and Suzie want? What's cool. That's Apple. A brand is being built to an entirely new generation who could care less about the 80s/90s struggles of Apple. They only know the cool brand (Microsoft Zune anyone?)
Note: I'd be loving a drop to $120 in Apple (AAPL) if Zach is correct, to load up - a cheaper Apple would be a good thing to load up on in the portfolio.
Long Apple in fund; no personal position
