Here’s what we knew about Apple’s stock: It fell because everyone was selling it.Here’s what we aren’t 100 per cent clear about: Why everyone sold it.
Tom Marsico, of Marsico Capital Management, explained why he sold Apple shares last year in an interview with Bloomberg BusinessWeek.
Basically, he thinks Apple peaked last year:
The penetration level for the iPhone is approaching a limit, the company’s profit margins have probably reached a peak, and when we looked at the major new products they could introduce, we didn’t think anything could be as substantial as the iPhone. The main driver of Apple’s profit is the phone. I’ve been following the cellular telephone industry ever since the spectrum was created and divided among the Bell systems. We saw the penetration of the iPhone had reached a level that you knew the growth rate would have to slow. The competition also has improved. Samsung has really come on with very competitive products.
We looked at what further opportunities are there for the iPad. We’ve never seen a product being adopted as fast as the iPad, but the profit margins are not at the same level as the iPhone. We also started looking at other market opportunities for Apple, such as what an iTV market would look like. We came away thinking the market wasn’t as large as the cellular phone market and would not have the same profit margins.
He says he bought into Apple six years ago and made a billion dollar profit on his Apple investment.