Wednesday, July 25, 2012

Will Facebook Rule The World? Sell Apple?

Uhm no to Facebook. Maybe for Apple.

I was looking at the Fortune 500 because Apple's earnings disappointed. They only had a 20% earnings increase. With quarterly profits ONLY double Facebook's 2011 Revenues! Do you know how long it would take Facebook to get to have even as much revenues as Apple has in profits?!!! Years. 

And I remembered when big bad Microsoft everyone was freaking out. They were taking over the world. Well they were once the most valuable company in the world. Now they rank 37th in the US. They are worth $241bil as of today. They were once worth almost $500bil. In 1999. Apple is $537bil today. In today's dollars Microsoft was worth $650 billion back then!

So Facebook if they are lucky will rule the moment or the year. But they will fall just like everyone else. Very few companies have staying power. Not hundreds we are talking tens. Tens world wide. So don't get caught in the hype. In late 1999 someone bought Microsoft at $58 a share. Today they can be bought for $28 a share.

Time spent has been dropping. All sorts of metrics point to Facebook having peaked in terms of user activity. Yet they only corner 11 minutes of our day. Out of a 24 hour day. And they might of peaked........tells me there are other time sucks waiting to be invented.

Do you sell Apple? Have they peaked? Will they become like Microsoft a cash cow behemoth? We don't know. But stock price is based on future earnings and earning growth. Not past performance. All I can say is careful when you buy. Careful when you sell.

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