Apple – the company that has it all

Looking back, Apple has come a long way in eight years, and continues to blow up the market, writes William Meyer.

In August 2011, I wrote an article for The Meander Chronicle entitled: “For Apple, the party is just getting started”. I have decided, for the benefit of readers, to reprint this article in full and add some comments.

“The iPhone 5 will be launched in October 2011. Details of the iPhone 5 are so secret (if you find out they will have to kill you) that no one really knows what the new drop-dead features will be. This has not, however, stopped intense internet speculation. Market commentators think the new iPhone will use the faster A5 processor that is found in the new iPad 2. There may also be an eight-mega-pixel rear camera. So what do you think? Do you think the new iPhone 5 will be a success? I am sure it will – you can bet your last dollar on it!”

Apple, a company with a proud heritage of innovation and a determination to build the best products in their field.

Pent-up demand

“According to investment banking firm Piper Jaffray, there is significant pent-up demand for the next iPhone – particularly among Verizon customers (Verizon is one of the largest cellphone suppliers). Among Verizon subscribers who do not already have an iPhone, 55% expect their next phone to be an iPhone.

“The investment bank also believes Apple will more than double its market share with the next iPhone release, even gaining users from the competing Android platform. And, can you believe it, 94% of iPhone owners expect to buy another iPhone in the future. Only 47% of android users feel the same loyalty to android and 42% of these said they were going to switch to the iPhone.

“Allow me to wax lyrical. I can’t help it. This company is unbelievable. In the last quarter, Apple sold 20.3 million iPhones (a most incredible feat) and has shot way past Samsung and Nokia to become the world’s biggest smartphone maker. Apple also sold 9.2 million iPads, double the sales in the previous quarter.

Most valuable

“The Apple share price recently saw the company become the world’s most valuable technology entity. The innovation continues… a new US$999 Macbook Air and US$599 Mac Mini is about to be released.

“Apple will soon become the most valuable company in the world, exceeding the market capitalisation of Exxon Mobil. Sales in China grew by a factor of six times. There is a huge opportunity to monetise the technology in this country. Few companies ever succeed in China, but Apple is shooting the lights out – and management says it is just scratching the surface. JP Morgan says: ‘For Apple, the party is just getting started’.

By the same author: In the sweet spot (Apple and Booking Holdings)

“A most interesting statistic emerges on a perusal of Apple’s financials. Apple is sitting on a cash pile of US$76 billion. Recently, before America raised its borrowing facilities, the Treasury warned that it could only spend another US$73 billion before funds run out. Obviously we are not comparing Apples with Apples (excuse the pun) and I don’t know if it is just me, but I find this absolutely fascinating.

“On a more serious note, the current market turmoil has most investors transfixed in the headlights. Don’t forget that volatility and panic does create opportunities. Don’t just sit there! Get out and do something!”

Okay. So there you have it… Fast-forward to 2019.

The Apple share price has increased from $50 to $265, an increase of 430%! And the company now has more than $200 billion in cash.

Apple CEO Tim Cook.

On top of this Apple today has considerable political influence. On November 21, US president Donald Trump said he asked Apple’s CEO, Tim Cook, to help build 5G infrastructure in the US. Trump tweeted in praise of Apple: “They have it all – Money, Technology, Vision and Cook!” Trump and Cook met recently at Apple’s upcoming campus in Texas. It’s not bad to have Trump as a friend.

Apple shares are still compelling value today and they have much further to run.

If you are not happy with your portfolio performance or would like a second opinion, please do not hesitate to contact Fenestra for a free review of your portfolio. ● Cell: 079 624 4031 ● Email: fam@mweb.co.za

**William Meyer is a qualified Chartered Accountant (SA) and Chartered Financial Analyst (USA). He has been CEO of Fenestra Asset Management since 1990. He lives in Mooi River with his wife Claire and their four children. He commutes to his head office in Cape Town.