Doug Kass: Say No To Apple

Well-known Apple (NASDAQ:AAPL) bear Doug Kass wants to repeat his advice that, despite the low price, the iPhone maker is not a good investment idea at the moment. According to Barron’s, the SeaBreeze Partners president writes in a note that Apple faces several risks, including the much-mentioned loss of its leadership as an innovator, the slow erosion of its ecosystem, and the domestic saturation of its famous retail stores.

Kass adds that while he bought some Apple stock at the start of this week on Monday, he sold it on Tuesday at a profit because he continues to be of the view that the company’s profits and revenue will fail to meet consensus expectations. According to the hedge fund manager, Apple will turn in $181.71 billion in revenue this year at earnings per share of $41.92 and a gross margin of 38 percent — all figures below current Wall Street consensus levels.

Apple’s is under threat from its rivals, Kass says, and is set to lose its advantage of having a sticky, isolated, and valuable ecosystem.

“The gap is narrowing between Apple products and competitors such as Google (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT),” Kass writes. “For example, the processor speeds, battery life, and weight of the products are becoming indistinguishable and will no longer provide Apple with an advantage. Eventually, third-party software will allow convergence between Apple products and Google’s Android system and/or Microsoft Windows 8. One of Apple’s key competitive advantages will be eliminated when this eventually occurs.”