The power of the market
September 21st, 2012 at 7:00 am by David FarrarThe Herald reports that in August 2008 the share price for RIM was $132.40 and for Apple $176.03. Fairly close.
Today the price for Apple is $701.91 and RIM is $7.25.
So four years ago $100,000 would get you 568 Apple shares or 755 RIM shares.
If you had invested in RIM you would now have $5,475 left – you would have lost 95% of your $100,000.
If you had invested in Apple you would now have $398,744 and would have 299% of your $100,000.
Now it is very sad for all the RIM staff who have lost their jobs, and all the RIM investors who have lost 95% of their investment.
But this is how the market works. Some companies succeed, and some fail. Some people get rich, and some become poorer. Yes, you have massive income and asset inequality.
I’m not surprised by the fall off in value for RIM. Three years ago almost everyone in business had a Blackberry. Now I see one about as often as Haley’s comet. Quite simply Apple produced a much better product, and customers voted with their feet.
Tags: Apple, Blackberry, iPhone
September 21st, 2012 at 7:14 am
Better product or better marketing?
Vote:September 21st, 2012 at 7:27 am
Meanwhile the NZ Labour Party has called on the Canadian government to step in and save RIM. “The skills which will be lost are irreplaceable and smartphones are strategically important to the economy” said a spokesperson.
Vote:September 21st, 2012 at 7:42 am
Don’t forget Nokia. A USD $100,000 investment in Sept 2007 would now be worth $8100.
http://finance.yahoo.com/q/bc?s=NOK&t=5y&l=on&z=l&q=l&c=
Vote:September 21st, 2012 at 7:48 am
The only thing the market may not decide is what banks should fail!
Vote:September 21st, 2012 at 7:52 am
MT_Tinman: Better product or better marketing?
I spend less than 1 minute per year watching the MSM, and I surf with adblock. Haven’t seen an Apple ad in years. So is Apple marketing very prevalent? I knew that when I saw an ipod 5, I wanted one. Also when I saw an Asus Eee Pad Transformer, I wanted one too.
So does Apple do much marketing? I think most people bought an iphone because they saw one. Not because they saw an ad.
Vote:September 21st, 2012 at 7:55 am
Berend, television advertising is but one form of marketing.
Apple are very good at getting their products into public vision.
The question however was legitimate.
Vote:September 21st, 2012 at 8:02 am
I’m not an Apple fan boy, so from a technical perspective I can assure you that at least certain Apple products are superior to their competitors in many ways. I don’t like Apple, because they’re a closed system, but they deliver a very high quality product.
Vote:September 21st, 2012 at 8:03 am
berend
advertising does not equal marketing
Vote:September 21st, 2012 at 8:05 am
“So does Apple do much marketing? I think most people bought an iphone because they saw one. ”
You may have answered your own question
Vote:September 21st, 2012 at 8:12 am
Apple are very good at marketing, advertising AND product.
It really comes down to what you want, as all phones are an exercise in trade-offs. Personally, I place high value on interfaces, less on technical specifications I will never use. If some phone can do spec XYZ better than Apple, and I’m sure there are, then that is fine, put to me the Apple package just works very well.
I haven’t seen any other phone that does what the iPhone does near as well. For me.
Vote:September 21st, 2012 at 8:41 am
I await the bill to give blackberrys equal status with iPhones before the law – equality and all that you know!
Vote:September 21st, 2012 at 9:00 am
If Labour were in charge, Apple would have been forced to hire RIM’s employees.
Vote:September 21st, 2012 at 9:27 am
Of course, that’s discounting the fact that apple’s share price is probably derived from crazy speculation, rather than the NPV of expected earnings and growth. i.e. Apple’s share price is overvalued compared to it’s performance, but so long as the fashion keeps going, it will be OK..
Vote:September 21st, 2012 at 10:20 am
I had a strong belief a few years back that RIM were destined for failure. They ran a very closed system with high backend costs for the organisations that used them. They were profitable at the time, but push e-mail (Apple and others) killed them.
On how good Apple are, the thing that makes the difference for me is that it just works all the time. There are features missing (the missus has an Android device, it has more functions), but the iPhone does 90% of what I need, and does it seamlessly. I upgrade it when new updates come out, it’s never broken. iTunes, however, is a piece of crap, but you don’t need to use that much any more.
On Nokia – that one would have caught me out, they were doing really well for a while. Although again it was blatantly obvious that Symbian was a dead duck.
On whether Apple are overvalued. In my opinion, yes. I’d never buy their shares at the current prices, they must crash (and yes, it may take a couple of years, but I think it will definitely happen, basically the price includes an assumption that they make no mistakes in the next few years)
Vote:September 21st, 2012 at 10:22 am
Its not just marketing, they had Steve Jobs behind them who was an enigma – when he said stuff and released products, a lot of people listened in awe. Add that on to the fact that they release products with so much more flair and style than their competitors and you can see why they have been so successful.
Vote:September 21st, 2012 at 10:36 am
As some one who has both, I can unreservedly confirm that “better product” is the answer. In every single respect – from typing, scrolling, browsing, to reading pdf files (and looking at porn
).
Vote:September 21st, 2012 at 10:50 am
Apple’s P/E is 16, it trades at 11x LTM EBITDA, it’s certainly a little ritzy but not a lot given its market position and growth history. For a diversified portfolio its a little hard not to hold it given its size.
Vote:September 21st, 2012 at 11:21 am
Apple make very good products but i don’t like their penchant for litigation. Their actions have now led to retaliation from Google via their Motorola Mobility subsidiary. Motorola Mobility hold a large collection of serious patents on Mobile tech (unlike bullshit such as rectangle with rounded corners).
http://arstechnica.com/apple/2012/09/motorola-asks-itc-to-ban-every-mac-ipad-and-most-iphones/
None of this stuff does any good for the consumer or the tech co’s themselves. Lawyers are happy though.
Vote:September 21st, 2012 at 1:22 pm
You’d have 399% as your original $100,000 would still be there too!
Vote:September 21st, 2012 at 1:33 pm
“but i don’t like their penchant for litigation”
You dont think they should (succesfully) defend their intellectual property?
Vote:September 21st, 2012 at 4:25 pm
Business failure is the most important ingredient for business success.
Vote:September 21st, 2012 at 4:58 pm
apple stock is still quite cheap actually socialist.
bed rater, yearning for a govt owned company who produce one type of cellphone. the model never changes and barely works but goddam no scumbag is investing money in the company and pulling a profit.
Vote:September 21st, 2012 at 6:26 pm
When Apple shares reached $50 for the first time, I wrote long-winded posts on online message boards that passionately argued why they were over-valued.
Now that the shares have reached $700 I feel pretty dumb.
Vote:September 21st, 2012 at 8:40 pm
I’ve got a Samsung SIII
Vote:Conclusion – dump the Apple shares quick.
Take your profit and run.