Apple Inc. (AAPL): Slide May Continue, Leave the Sinking Boat!

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Stressed market share

According to a recent report, 86% of smartphones shipped to China in Q4, were equipped with Google’s Android, while only 12% of the devices had iOS. Another report showed that Apple’s global market share has decreased from 51.7% in Q4FY11 to 43.6% in Q4FY12. According to Nielsen estimates, Windows Phone’s market share has risen by 54% QoQ (sequentially) in the US, and is currently the fastest growing mobile OS. In the UK, the market share of Windows Phone has almost tripled over the last quarter. Moreover, the global launch of Windows 8 smartphones this month, would further strain Apple’s market share.

Conclusion

I believe that Apple should be more focused on innovation and it needs to reduce its refreshment cycle. Until that happens, Apple’s market share could continue to tumble. Microsoft’s WP 8 devices might be received well by the market, but its sluggish Windows 8 (PC) sales could present problems for the company.

In my opinion, investors should look to invest in Google, as a major chunk of its earnings are derived from advertising. More Android devices means higher advertising revenues, despite its falling cost/click (CPC). The company has been reporting stellar financials, and its Q4FY12 revenues rose by 36% YoY. Its shares have risen by 51% over the last 5 years, yet it still trades at a trailing P/E of 14.30x. Google gets my Foolish buy rating.

The article Slide May Continue, Leave the Sinking Boat! originally appeared on Fool.com and is written by Piyush Arora.

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