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Tags: Apple | obsolete | iphones | technology

Hedge Fund Manager: Apple 'Might Be Obsolete in Three Years'

By    |   Thursday, 24 July 2014 03:30 PM EDT

Most investors were impressed with Apple's earnings report Tuesday, sending the stock to a 52-week high Wednesday. Net income jumped 12 percent to $7.75 billion in the quarter ended June 28 from $6.9 billion a year earlier.

But Pedro de Noronha, managing partner at hedge fund manager Noster Capital, wasn't too impressed.

"I need to know where a company is going to be in five to 10 years. I mean look at Apple, a company we all admire. . . . I don't know where they are going to be in three years," he told CNBC.

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

"It's a very competitive landscape. They might become obsolete in two-to-three years, as we've seen with dozens of technology companies."

Noronha said he is worried about valuations of Apple and other technology companies.

Apple has a trailing price-earnings (P-E) ratio of 16.3, compared to an industry average of 17 and 18.6 for the S&P 500 index, according to Morningstar. Apple's forward P-E ratio is 13.8, compared to 17.4 for the S&P 500.

Morningstar analyst Brian Colello offers praise for the company. "We think future smartphone and tablet competition will stem from software and services, as hardware is already approaching commoditization," he writes on Morningstar.com.

"We view Apple as well positioned to develop and expand enough services to enhance the user experience, in order to build switching costs that will help the firm retain customers and generate significant repeat purchases [that] will be critical for future iPhone growth in the years ahead."

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

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InvestingAnalysis
Most investors were impressed with Apple's earnings report Tuesday, sending the stock to a 52-week high Wednesday. Net income jumped 12 percent to $7.75 billion in the quarter ended June 28 from $6.9 billion a year earlier.
Apple, obsolete, iphones, technology
267
2014-30-24
Thursday, 24 July 2014 03:30 PM
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