This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Kass: Apple's Cycle of Abuse

If there is no larger screen and it's just better hardware features (it will run faster or the camera is a bit better), well, then in addition to being generally unexciting, more importantly, this is, again, a radical change in the investment hypothesis.

In essence, Apple will have gone from a disruptive innovator and category creator with unique and different products to a company competing on the basis of run-of-the-mill hardware features. This is not much different than the low-margin handset industry before Apple entered it and disrupted it.

Another issue I would raise is how unfriendly Apple's suppliers have been to their employees. The problems at Foxconn and other companies have been well-chronicled (labor walkouts, worker suicides, etc.). These stringent working conditions lower the cost of goods to Apple and thereby increase Apple's profit margins. In fact, I suspect Apple continues to bid suppliers aggressively based on price, as opposed to reforming their labor practices. By continuing to use suppliers with these policies in place, Apple can be viewed as directly guilty of these practices as well, in my opinion.

Let's compare Apple to another high-profile company: Wal-Mart (WMT - Get Report).

Suppose a Wal-Mart supplier was accused of these conditions. Many Wal-Mart customers would protest Wal-Mart for use of these suppliers, refuse to buy the products or even shop at Wal-Mart. And all sorts of scathing editorials would follow, the combination of which would force Wal-Mart to change its practices. Some Apple customers who would likely take these actions against Wal-Mart hypocritically line up days in advance to buy the latest Apple products. How does that make sense?

In my opinion, Apple is hypocritical -- the company is every bit the abusive monopolist that it once accused Microsoft (MSFT - Get Report) of being (including the latest iteration of foisting a bundled inferior map product on its customers, which is ultimately what got Microsoft in trouble for being a monopolist, when it started bundling Internet Explorer with Windows as Netscape was gaining traction); it is also an incredibly greedy corporate entity, as opposed to the socially responsible company that it positions itself as (again, see what goes on at its suppliers with which it continues to do business).

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free

Markets

Chart of I:DJI
DOW 15,918.36 -286.61 -1.77%
S&P 500 1,840.69 -39.36 -2.09%
NASDAQ 4,258.8210 -104.3230 -2.39%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs