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Sean Hyman: 'The Apple Story Is Still Alive'

Thursday, 12 Sep 2013 06:34 PM

By Dan Weil and David Nelson

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While Apple shares have run into selling this week amid disappointment with its latest iPhone models, Sean Hyman hasn't lost faith in the company. He's a Moneynews Insider and editor of the "Ultimate Wealth Report."

"The Apple story is still alive," Hyman told Newsmax TV in an exclusive interview. "You go through points where investors are a little more thrilled with it and when they're not. But, really, Apple has turned a corner back to the upside, and the future is really a lot brighter than most investors believe."

Apple shares fell a total of 6.7 percent Tuesday and Wednesday, and gained back 1.1 percent Thursday to end at $472.69.

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NTT DoCoMo, Japan's largest cell-phone carrier just agreed to sell iPhones. "There's a
population of about 60 million cellphone subscribers there that could potentially be users of the iPhone," Hyman said.

And eventually Apple will reach an agreement with China Mobile, the world's biggest mobile carrier, bringing 700 million potential iPhone users, he says.

"There's a lot of potential growth still to be had at Apple, and the savviest investors like Carl Icahn do realize it," Hyman said. The activist investor said he added to his Apple stake Wednesday.

Editor’s Note: Obama Blunder Spawns Massive Profit Opportunity

But will the company's new phones be too expensive for consumers in emerging markets?

"It's probably not too expensive with contract," Hyman said. "Without contract, it is still a bit pricey, but the bulk of their business is going to be with what's been their bread and butter the whole time."

Apple caters to an upscale clientele, Hyman says. "They're really more like the Tiffany's of cellphones than the Wal-Mart of cellphones."

That's how Apple keeps its profit margins so big, he says. "I expect that to continue."

At some point, the commoditization of cell phones may force Apple to lower its prices.

But, "they still have better profit margins than most cellphone companies out there, so that's their forte," Hyman said.

Apple now has a profit margin of 22 percent and an operating margin over 29 percent, he
says. "So they can afford to drop them over time if they need to and still do quite well." Android phone makers don't have that luxury, Hyman says.

"They [Apple] really want to keep their profit margin, and they kind of worship that more than even taking market share."

Hyman sees Apple CEO Tim Cook as a worthy successor to the deceased Steve Jobs, who
co-founded the company. Just as Wal-Mart soared to new heights after founder Sam Walton died, "that's what Tim Cook is going to do," Hyman predicted.

"I don't think you have to have quite the capability or the vision that the guy did who took it from ground zero up to where it's at to carry to its next stages. And Tim has the know-how to carry it to its next stages."

A good return on equity is 15 to 20 percent, Hyman says. Apple's is 32.11 percent. "It shows they're still on their game when it comes to allocating capital and growing their business," he said.

Editor’s Note: Obama Blunder Spawns Massive Profit Opportunity

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