How Much Bigger Can Apple Get?

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The following video is part of our "Motley Fool Conversations" series, in which senior technology analyst Eric Bleeker and Chief Technology Officer Jeremy Phillips discuss topics across the investing world.

In today's edition, Eric and Jeremy look at the common belief that Apple has become "too big to grow." As Eric points out, the question of whether Apple can sustain heady triple-digit growth rates has become irrelevant, as it now trades for less than 13 times earnings and no longer needs huge growth to justify its earnings multiple.

As Eric looks at Apple's future, growth rates in the United States will have to drastically slow down by necessity; Apple was 80% of AT&T's smartphones sales last quarter, and smartphones are reaching saturation in the United States, though more growth could be available on Verizon and Sprint. Then there's Apple TV. While Eric's very bullish on its prospects to succeed if launched, the bottom line is that the iPhone drives 53% of Apple sales and a greater percent of profits. Given how often consumers replace phones and the iPhone's high selling prices, the television opportunity is just much smaller even if Apple succeeds. So as Apple investors look forward to strong year-over-year growth this quarter and beyond, focusing on Apple's iPhone growth in emerging markets with huge populations becomes critical.

While Eric and Jeremy praised Apple for its opportunity in China in the video above, there are other companies dominating China that investors must not overlook. The Motley Fool has just released a free report on mobile named "The Next Trillion Dollar Revolution" that details a hidden component play inside mobile phones that's also absolutely dominating the exploding tech market in China. Inside the report, we not only describe why the mobile revolution will dwarf any other technology revolution seen before it, but we also name the company at the forefront of the trend. Hundreds of thousands have requested access to previous reports, but you can be among the first to access this just-released report by clicking here -- it's free.

At the time this article was published Eric Bleeker and Jeremy Phillips have no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Intel, and Microsoft.Motley Fool newsletter services recommendApple, Intel, and Microsoft. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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