Bruce Greenwald: Apple is Risky Business

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Apple (NASDAQ:AAPL) is a huge profit machine and not at all overvalued, but the time for it to start misfiring will come, investing specialist Bruce Greenwald has said.

“The problem is that this profit machine, we know is going away,” Greenwald told The Motley Fool in an interview. “It happened to Sony (NYSE:SNE) in this area, it happened to [now Google (NASDAQ:GOOG) unit] Motorola in this area, it happened to Nokia (NYSE:NOK) in this area, and we just don’t know when it’s going to happen.”

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And while there may not be an immediate danger, when the fall happens, it’ll be quick, the Columbia School of Business professor added: “It’s going to happen very quickly when it happens — you only have to look at what happened to Nokia … Now, if you think that it’s going to happen in the next five years, that’s a probability of close to 20 percent a year.”

And despite returns of approximately 25 percent, the 20 percent fade rate means the stock is fairly risky.

“There’s a real business and real profits,” Greenwald said. “It’s just, I think that it’s a very risky choice to make, given that we know that the lifetime of companies like Apple, with products like Apple — and it may be that Apple can avoid this for a longer time because they’re so superb at what they do — but the lifetimes of these kinds of companies with this kind of profitability is not long.”

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