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The Analysts are Wrong: Apple Inc. (AAPL) Will Be Fine

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.

Apple Inc. (NASDAQ:AAPL)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.

The real issue here is one that most analysts don’t talk about. They don’t discuss it because it makes them seem crass.

Steve Jobs is dead. He was an actual icon and visionary and genius and he’s dead. Nothing can change that. The man is dead. And Tim Cook is not Steve Jobs.

That’s not Cook’s fault, of course. But, in my opinion, a lot of the hype surrounding Apple Inc. (NASDAQ:AAPL)‘s so-called downfall comes from the talking heads, analysts and (yes) market blogger’s hype surrounding the fact that Job’s death created a vacuum at Apple Inc. (NASDAQ:AAPL), even if it didn’t. That creating a lack of confidence in investors and analysts that is wholly unjustified.

Apple Inc. (NASDAQ:AAPL) is more than Steve Jobs’ legacy. Apple Inc. (NASDAQ:AAPL) was always more than Steve Jobs. Apple Inc. (NASDAQ:AAPL) is a lot of people, innovating and working hard to provide great consumer products and creating a sense of style and attraction in the market-space for those products. Jobs being gone doesn’t take that away. All it takes away is a charismatic leader that the media could focus on, interview, talk about his black turtleneck and eventually make movies about.

But that’s just hype. The company is the company. The man is the man. To punish Apple Inc. (NASDAQ:AAPL) shares because Jobs is dead is to rob yourself (and the people who listen to you) of profit and value. Apple Inc. (NASDAQ:AAPL) still has a great value story. It still has great products. It still innovates. Rumors speak of iTunes streaming, the wearable wrist-computers and more. Hell, it’s still beating the pants off rival Samsung in patent courts all over the world. There’s a lot of value in the company and for a buy-and-hold investor now is the time to get Apple Inc. (NASDAQ:AAPL) and keep it for the next 20 years. But it, take the dividend, and smile quietly every time you see someone fiddling with an iPhone on the subway.

Also, note, even if the pessimistic analysts are wrong and Apple Inc. (NASDAQ:AAPL) only goes to $480 … that’s a gain of $50 per share of where it is now. Just a thought.

Good luck!

The article The Analysts are Wrong: Apple Will Be Fine originally appeared on Fool.com and is written by Nate Wooley.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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