The Risks Associated With Owning Apple Now

As Apple Inc.

prepares itself for the launch of Apple Watch, some analyst are concerned that the company's mainstay, the iPhone business, may start to decelerate. Colin Gillis from BGC Financial was on CNBC Monday to discuss the major risks associated with Apple. The Tricky Thing "Here's the key with Apple right, it's got a tremendous franchise with the iPhone, but it's highly dependent on both their revenue and the high margin that they receive from these smartphone users that they are selling and that market is slowing down," Gillis said. " And that dependency, it's a great company, they have a tremendous ability to generate cash, but will they be able to sustain that given that the dependency on this hardware unit in a market, where ASPs are declining and unit growth is declining, that's going to be a very tricky thing." He continued, "If you look at Apple's market-cap right, it's twice the size of the number two company. No company that has had market-cap exceed half a trillion dollars has ever been able to sustain that overtime." Risk Of Slower Unit Growth Gillis was asked if Apple's ASP can go even higher. He replied, "They can go up more, but they already, they run the risk of running behind the broader market unit growth, right and that means you are serving the high-end in the marketplace and that's fine right," "But if competitors are able to close the functionality gap while the price gap widens, you are going to see slower unit growth and that's the risk that happens particularly after this current upgrade cycle, where people have of a phone, you may see the longevity of those phones last longer than 2 years, doesn't that make some sense?," Gillis concluded.