Apple Inc. (AAPL): Is the Market Crazy For Valuing It at Less Than $400 a Share?

In addition, Apple faces too much fierce competition. Although Apple’s iOS has been increasing each year since its release, iOS adoption has been dwarfed by Google Inc (NASDAQ:GOOG)‘s Android  adoption rate, as reflected in the chart below.  And why not?  Android is free for phone makers (like Samsung), and those hardware companies can customize versions for their devices.

This is how smartphone companies die. Remember Nokia? BlackBerry users were loyal, too, but they have slowly jumped ship. There are a lot of similarities between Blackberry of ’08/’09 and Apple today.

Furthermore, the carriers are getting kind of tired of losing money on iPhones. Other phones don’t force them to lose as much money, and telecom companies (and their shareholders) generally prefer to make money.

Finally, the iPhone is by far Apple’s biggest product, representing over 50% of its revenue. If that declines significantly, so does Apple. The company has seemed unwilling to do a major overhaul of one of its popular operating systems (its OS X for desktops and laptops), even when users clamor for something better. Will that change with the next version of iOS?  The gap between Android and iOS is widening, and Apple needs something revolutionary.

Final Thoughts
I think we can all agree that Apple’s secrecy does investors no favors. If we knew what was coming down the pipeline, we could make educated decisions for our portfolio.  But . . . if they tell us what is coming down the pipeline and a basic timeframe, it’ll give Apple’s competitors information that could be valuable.  Plus, we wouldn’t let them be one day late on that timeline without killing the stock. Which may explain why Apple is so secretive in the first place.

Personally, I believe Apple has the ability to revolutionize another industry or two.  The cash on hand is the biggest reason I think the current valuation is crazy.  Still, I’ve heard arguments from The Motley Fool’s own Joe Magyer that make me question my position.  What are your thoughts?

The article Is the Market Crazy For Valuing Apple at Less Than $400 a Share? originally appeared on Fool.com and is written by Robbie Laney.

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