VC Guru Gene Munster: Apple Is Still a Buy, Despite All the Bad News

December 11, 2018

By Carlo Versano

Gene Munster isn't worried about Apple. The managing partner of Loup Ventures and venture capitalist told Cheddar Tuesday that the tit-for-tat with Qualcomm ($QCOM) over iPhone sales in China is insignificant for Apple's ($AAPL) long-term value.

The actual legal process of getting older iPhone models blocked from sale in China is difficult and long. "Our belief is that by the time that is sorted out, we'll be on to the iPhone 15 or 16," Munster said.

Apple is in the midst of some stomach-turning, late-year stock volatility that started with its Nov. 1 earnings call. But to Munster, the waves of negative news ー from Qualcomm, to iPhone sales concerns, to the trade war ー make a compelling case to buy the stock on the dip.

Munster's bullishness on Apple stems from his view that the company is in the midst of a transition into a reliable services provider. While the days of skyrocketing smartphone growth may be over ー and not just for Apple ー the iPhone's price point and its users' dependence on the Apple ecosystem will deliver steady revenue and earnings growth, in Munster's estimation.

"As investors embrace this view of Apple-as-a-service ... the multiple should rise," he said.

Additionally, investors benefit from Apple's historically huge stock buyback, which essentially manufactures higher earnings per share by taking shares off the market.

"Every dollar that Apple spends buying back stock at these depressed levels has a more significant impact on earnings," Munster said.

A strong buyback and stability in the iPhone, even without gangbusters growth, is enough to keep Apple a buy for Munster. He thinks the six- to 12-month outlook is strong.

"This storm too shall pass," he said.

For full interview click here.