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3 Apple iPhone Killers

By Harry Long:

The problem with most analyses of Apple (AAPL) is the tendency for investors to get caught up in high level ratio analysis or complex discounted cash flow models. Analysts fail to appreciate that most valuation models of Apple have the arrogance of quantitative methods paired with the weaknesses of totally qualitative high-level assumptions--also known as guesswork.

To deeply understand Apple's prospects, one must accept that Apple, at its core, is a product company subject to discontinuous innovation. Traditional value investors have made this mistake over and over again with companies such as Dell (DELL), Hewlett-Packard (HPQ), Nokia (NOK), and BlackBerry (BBRY). They simply do not understand or accept that technology companies are totally susceptible to discontinuous strategic moves on the part of their competitors, which drastically change the relationship between variables at a rate far greater than that in any other industry. Literally, cash flow can change on a dime


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