by - October 7th, 2004
I always enjoy The Motley Fool's Fool vs. Fool debates over a stock, especially when it's Apple they're talking about. The Motley Fool's stable of writers usually make a good argument on whatever topic they are writing, and when it comes to Apple, it's not hard to get strong opinions no matter what you think of the company. Such is the case today with a new debate on the maker of our favorite computing platform.
On the pro side of the argument, we find a cogent piece titled "In Defense of the iEmpire," written by Tim Beyers. Mr. Beyers makes the argument that Apple is a good buy at US$40 a share, with a P/E of 73, because the company is a "Rule Breaker." Rule Breakers are companies loosely defined as ones that defy conventional investment wisdom.
He lists as examples of rule breaking the fact that AAPL has continued to rise despite having a P/E higher than conventional wisdom for the last two years; that Apple can make money charging a premium in a commodity market because of the strength of the brand; that iTunes will make money for Apple; and that Apple's retail success is proof the company can sell Macs in a retail environment.
A quote from Mr. Beyers' piece on another rule breaking reason that Apple is a solid buy:
Windows is just as good as the Mac; there's no reason to get one anymore.
Sorry, wrong again. But this time I need only five words to prove it: no Mac OS X viruses. (Even the virus that hit my PowerBook was never able to execute. The damage created by deleting my e-mail in-box wasn't due to the bug but instead to an overzealous cleaning job performed by Symantec's.
There's a lot more in the full article, which I recommend as a good read.
I also recommend the con article -- "Apple is Rotten," which was penned by Seth Jayson -- but for different reasons. It's an entertaining, yet vitriolic rant that relies on half-truths, untruths, and really bizarre logic to slam Macs, Mac users, the iPod, and everything else about Apple. Mr. Jayson attempts to couch his contention that Apple's stock is "ready for a mighty big fall" in investment tradition, but really it's just one big attack on everything about Apple. He dresses it up in attempts to be extra snide, cynical, biting, and witty, but that just came off to me as somewhat pedantic and artificial devices.
How could that not be entertaining?
For instance:
Think different, like me!
"Think different?" I've always found this key slogan in Apple's marketing to be troubling, and not just because it shows that CEO Steve Jobs needs to brush up on his fifth-grade grammar. (Hey Stev-o, buy yourself an adverb!) It's creepy and ironic because Mac fans -- especially the ones who write me -- are about as freethinking as the lovely ladies of Stepford. They're like a pack of Moonies telling a congregation of Snakehandlers, "You're brainwashed. Join us to free your mind."Americans have always preferred their rebellion in commercialized and socially acceptable packages -- witness GM's Hummer H2, Harley Davidson motorcycles, or the Mullet -- but wake up, people! Leaving a $300 billion monopoly to support a $15 billion one does not constitute intellectual daring.
In fact, it simply means you've got less consumer freedom, not more. Think I'm making this up? Ha! Count the PC vs. Mac software packages at your neighborhood Best Buy. Try using your iPod with competing software. Try using any non-Apple MP3 player with iTunes. This is more than a question of tech theology: Mac's legendary insularity has always been a huge anchor on growth.
Dude, take a valium. Maybe Prozac. At least get some therapy, because it's OK. You don't have to be a Mac user, and you don't have to be part of the iPod crowd. It's OK, do what you want.
Buried in that verbal sewage are a couple of legit points. Mac zealots can be annoying, and you won't find much Mac software at Best Buy. Wait, you won't find any Mac software at Best Buy because they don't carry Macs or Mac software. That's like saying that it's obvious that sports documentaries are in decline because you can't find any at XXX SUPAR PR0N SHOPPE!!!!11!
It's just not relevant.
The underlying message of that passage, though, is an attack on those who make an argument not to be a Windows lemming. That's extra funny because his wording makes it clear that he feels he is missing out. I find that very amusing.
Something else I find amusing is his assertion that a Wal-Mart computer was better suited at heavy duty publishing duties. From the article:
Every year I get to play with brand new Mac gear -- direct from Apple -- as the "tech guy" at a well-known photojournalism workshop. This year, as usual, I wasted entire days trying to coax the new Mac OS to make nice with a variety of printers. Plug and play? Try plug and pray. Color fidelity, WYSWYG? Not with top-of-the-line Power Macs and cinema displays, I guess. This year, incredibly, I ended up relying on a no-name Windows laptop purchased at Wal-Mart's Sam's Club to do the heavy lifting.
OK, take less of the valium, because that's just whacked. Windows better at color management? Windows being better at plug and play? In other news, black is white, the world is flat, and life began on in the asteroid belt.
In the full article, Mr. Jayson makes a better go at saying that Apple is overvalued, and he may well be right from a technical standpoint. Apple's P/E is sky high, and the company's huge cash reserves no longer support most of that P/E like they did when people like Mr. Jayson first started attacking the company's valuation. That's usually a recipe for a fall in the stock price, especially if anything close to bad news comes out.
It's just hard to see the nuts and bolts financial analysis through the attack on Apple's fan base, and all the other bizarre stuff he throws in with it. So instead, I chuckle in wry amusement.
One last thing: A few people wrote in to suggest that this was an Apple Death Knell. Mr. Jayson's pronouncement of doom strictly concern Apple's stock, and not the company itself or the Mac platform, making it not relevant to the Apple Death Knell Counter.