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Whitney Tilson: I Have Nightmares About Apple

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that was ambitious with its accounting. let’s talk about apple.one of the most successful trade this is recent memory, thoughyesterday we did see the stock make a sharp reswrers al. lower yet again today. you’re not in apple. you’ve called it one of thebiggest misseses in your career and you’re shaking your head.i know. i just went back and i read an article i wrote in october of2000 called cisco, apple and probabilities. it’s still tormenting me. at the time apple had a $7 billion market cap and minus the cash had a $3 billion enterprise value and it’s now at $461billion. so it’s 66 bagger and i missed all of it. so it’s easy.mathematically, hard to see how anything could have been abigger miss. given that i wrote an article about you who cheap it was and but who investors should prefer a beaten down company like apple because at the time it was really beaten down as opposed to paying 150 times earnings for cisco. so you’ve made some of your short plays based on valuation from a valuation standpoint even though apple is at $500 a share or thereabouts. so why not buy it now then? we’re trying to remove the emotion of it’s easy to say i missed it and those are threevery dangerous words. anytime you say that, go back and do your work again with a fresh perspective. the reason we haven’t pulled the trigger is because at have to t that will double in the next five yearses to get a 15% compounded return. that’s a trade for us. so it’s hard to see from this enormous market cap, they act as an anchor. and so am he will — i also reading the steve jobs book, which is a fabulous book, i gained an even greater admiration and appreciation for what an incredible genius steve jobs was. and he actually warned and usedmicrosoft as an example of what happens when product drivencompanies become run by sales guys. but look who his successor is. steve jobs says in the book he’s an operations guy. tim cook is an operating guy. so for apple to continue itsrun, they have to come out with more and more hit products overthe next few years and without steve jobs, that will be hard todo. so i’d be long. but i just can’t quite get there. sounds like you’re making an excuse to make yourself feel better for not owning — i hear you. it’s way too early of course to know. but i don’t doubt he’s been a superb operating guy. i love my ipad 2. i upgraded from my ipad 1. but is the ipad 3, am i really going to throw at — i just bought this a few months ago. will i really throw this out and buy the ipad 3 for a few extra features? because apple to continue to grow like it has as as mostly a hardware business has to persuade people to continuously upgrade.would you look at maybe going down stream maybe the broadcomes, the sirius logics that provide apple or even look at some of apple’s competitor, a rimm, and say sold? we have gone downstream with one stock, sandisk, and flash

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