Apple’s weak attempt to drive away its competition has consisted of eliminating Google Inc (NASDAQ:GOOG)’s services from iPhone and other iDevices, and replacing them with Apple’s own services. This, however, has backfired, as apps like YouTube and Google Maps have been turned off or eliminated by default. This has not made Apple Inc. (NASDAQ:AAPL) customers happy campers. As Google Inc (NASDAQ:GOOG) continues to give away Android for free, Apple will continue losing market share to the former. Google is also introducing Nexus smartphones that cost half the price of iPhone and deliver a similar performance on a widely accepted ecosystem.
Comparing some similar stories
Investors who are still considering the purchase of Apple’s shares (or in some cases, more of Apple’s shares) are not being comforted when comparing Apple’s current situation with similar companies in the past.
Take, for example, Microsoft Corporation (NASDAQ:MSFT). The shares of Bill Gates’ baby soared to tremendous heights during the 1990s — only to fall into a much lower range for the next 15 years. This leaves potential investors questioning whether a similar situation will take place with Apple. Microsoft Corporation (NASDAQ:MSFT) is expected to show flat earnings this fiscal year and trades at 17 times that earnings. If Apple is growing slower than Microsoft, then the former’s P/E value of 11 is justified. Sufficient to say, Google with its earnings growth still in the high-teens deserves a much higher multiple than both Apple and Microsoft.
One thing that seems to have kept Microsoft Corporation (NASDAQ:MSFT) afloat, though, is its well diversified product portfolio, as well as its position in several different sectors — including the highly popular Xbox gaming system. A recent move by ValueAct to take a $2 billion stake in the company, backing Microsoft as the next cloud giant, only elaborates the importance of the technology going forward, the technology in which Google is currently way ahead of Apple.
Unfortunately for Apple Inc. (NASDAQ:AAPL), the lion’s share of its past products have been primarily dependent on its iPhone sales. And, with the competition from Android continuing to surge ahead, Apple’s iPhone market share is most likely to continue in its downward spiral.
The iPhone’s Market Share Is Dead In The Water.
The final word — Don’t buy raw Apples
Although Apple’s share price is currently estimated by analysts to rise into the mid-500s over the next 12 months, it may still be best for investors to steer clear of this stock — at least for the near-term or until the fruit is ripe enough to be bought at a cheaper price. One reason for this is that the forward looking estimate is just simply that — an estimate — and is based upon the future, not yesterday’s performance of the company.
The article Don’t Invest in Apple Before You Read This originally appeared on Fool.com and is written by Nauman Aly.
Nauman Aly has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Nauman 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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