Right, so the dogpile on Apple Inc. (NASDAQ:AAPL) continues. Earlier this week an analyst for a major bank reduced expectations for the electronics giant from a price target of $500 to $480. Fine. He joins a series of other analysts in downgrading Apple Inc. (NASDAQ:AAPL)’s stock. Apple Inc. (NASDAQ:AAPL) shares dropped on the announcement.
I’m taking the contrarian position, here. Apple Inc. (NASDAQ:AAPL) is and will continue to be a fine long-term investment regardless of what the analysts say. In fact, that the analysts are saying it shows that the shares are still worthy of interest and being discussed and invested in. No one talks much about companies that have passed the tipping point. Apple Inc. (NASDAQ:AAPL) is an interesting company that faces interesting challenges but can overcome them.
Yes, the stock has dropped precipitously in recent months, falling from over $700 in September to as low as $419. It’s dropped, yet the firm still shows an operating margin of $35% for 2012. It’s net margin last year was 26%. Those numbers aren’t anything an investor should turn away from unless they’re paying attention to the wrong people.
There are two main causes for this, one Apple Inc. (NASDAQ:AAPL) can deal with and one out of its control.
The first is increased competition. The consumer electronics market, for tablets, smartphones and such is getting crowded. Google Inc (NASDAQ:GOOG)’s competing Android phones are taking market share away from the once-dominant iPhone, sure. But even Google’s power hasn’t knocked Apple Inc. (NASDAQ:AAPL) off. No one can argue that point. However, even new competition from Research In Motion Ltd (NASDAQ:BBRY) and the new Z10 won’t tear down the iPhone.
Tablet’s are a source of competition, too. Microsoft Corporation (NASDAQ:MSFT)’s Surface looks, to my tech-savvy eyes, like a winner. Microsoft is trying to compete in the tablet market by targeting the sort-of-ignored business user by putting its MS-Office suite onboard the Surface. That’s a good idea and, combined with the firm’s partnership with Nokia Corporation (ADR) (NYSE:NOK) on smartphones allows the company to do what it did in the past: try to be dominant in the workspace.
But, does anyone out there really think that Apple Inc. (NASDAQ:AAPL) doesn’t know how to compete in the electronics market? If anyone actually says that, their readers will know they’re just blowing hot air to fill time or space. Feh, it would be pointless to make that argument. Apple Inc. (NASDAQ:AAPL) is one of the most competitive firms around and it will adapt.