“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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