It’s hard to deny that Apple will likely lead the way into the developing world if the company can hurry up and manufacture the affordable iPhone before Sprint Nextel Corporation (NYSE:S) or Samsung make dents in the market — and Apple may need to expand fast. While investors have average growth expectations for Apple, I think the company has hit its peak. Market share is dwindling, and Apple hasn’t released anything groundbreaking since Steve Jobs was at the helm. The PE ratio is 10.3, which is under the computer hardware industry average of 16.8. Furthermore, the firm looks overvalued with an above-average price to book ratio of 3.0 in the computer hardware sector. I’d stay away form buying Apple, but keep an eye on its emerging world development. The release of an affordable iPhone could allow the company to access that trillion-dollar market.
Tech titan fast approaching the market
Samsung and Apple are looking in their rear view mirrors at fast-approaching Google Inc (NASDAQ:GOOG), which is an object that might be “closer than it appears.” If Google Inc (NASDAQ:GOOG)’s Moto X, which the CEO of Motorola said will be released by October, is more affordable than the Mini S4, then Google Inc (NASDAQ:GOOG) could be the go-to smartphone provider around the world. I suspect that, now that Motorola is owned by Google Inc (NASDAQ:GOOG), it will have the financial backing to gain a smaller profit margin but a higher volume of sales. The device could be a breakthrough, not only in the developing world, but in developed nations where many people will choose a more affordable device if it has the functionality to which they’ve become accustomed with the Galaxy or iPhone.
I’m gaga over Google Inc (NASDAQ:GOOG). The company seems to be the only firm on the verge of making major hardware advancements. Through its Google Inc (NASDAQ:GOOG) X division, the firm is working to develop Google Glass, a self-driving car, and hundreds of thousands of balloons that float in the stratosphere and provide a worldwide Internet connection, even to mountaintops. If any of these projects catches on, it could be even more groundbreaking than the iPhone, and we know what that release did for Apple’s shares.
The company’s fundamentals are going to be very optimistic and cause many investors to be misled. This is because many people, like me, think Google is the coolest thing going. The price to book ratio of 3.8 makes the company look overvalued due to the fact it is above the industry average. It’s also around 13% higher than last year. However, the company’s return on equity is attractive and it is the highest in the entire computer services industry. Furthermore, the profit margin is a tidy 21%, which is stellar.
Getting back to the Galaxy S4
So, will decreased sales of the Galaxy S4, and the “volume-over-profits” scheme that Samsung is accused of playing, hurt the company’s bottom line? I highly doubt it. In fact, the Mini S4 will likely catch some steam in the developing world, and could put Samsung ahead of the competition in this growing market. But, Apple’s announcement of entering the market — and Sprints recent affordable release — means Samsung needs to hurry up and get sales flowing in the emerging market. It’s one thing to be able to make an affordable smartphone, and it’s another to get that into the hands of the growing global middle class.
The article Samsung’s Mini S4 Is Unjustly Lambasted originally appeared on Fool.com.
Phillip Woolgar has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Phillip is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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