Apple could be ‘obsolete’ in 3 years: Analyst

Arjun Kharpal | @ArjunKharpal Thursday, 24 Jul 2014 | 7:38 AM ET
http://www.cnbc.com/id/101863259?__source=yahoo%7Cfinance%7Cheadline%7Cheadline%7Cstory&par=yahoo&doc=101863259

Apple could be "obsolete" in three years, due to increasing competition and "make-believe" valuations in the technology sector, one analyst told CNBC on Thursday.

The comments came after Apple reported second-quarter net profit of $7.75 billion on Tuesday, up 12 percent from $6.90 billion in the same period last year.
Quarterly revenue came in at $37.4 billion. For the third quarter of this year, the technology giant forecast it would post revenue of between $37 and $40 billion.
[url=http://www.cnbc.com/id/101853652][/url]


Michael Nagle/Bloomberg via Getty Images

The Apple logo is displayed at the Upper West Side Apple store in New York.

However, Pedro de Noronha, managing partner at hedge fund Noster Capital, said he was unsure about the Silicon Valley-based company's long-term potential.

"I need to know where a company is going to be in 5-to-10 years. I mean look at Apple, a company we all admire…I don't know where they are going to be in three years," Noronha told CNBC in a TV interview.

"It's a very competitive landscape. They might become obsolete in two-to-three years, as we've seen with dozens of technology companies."

Read MoreFund managers unconvinced by Apple rebound

Apple sold 35.2 million iPhones in the three months ended June 28, up 13 percent from the same time last year. Apple's iPad sales did disappoint however, falling for the second consecutive quarter amid fierce competition from other tablet players.
iPhone 6 'upside'

The company is banking on a strong product pipeline, particularly the iPhone 6 and wearable technology to drive further growth.

Success in the emerging markets is also a key growth driver for Apple, which reported a 28 percent rise in revenues in China for the quarter compared with the same period last year.

"We still think there is upside to this story, obviously from the product cycle, iPhone 6 coming through this second half of the year, and then obviously new product category potential which is not factored into our expectations at this point," Aaron Rakers, managing director at Stifel, told CNBC in a TV interview.

'Make-believe' valuations

Some analysts, including Noronha, have been worried by the valuations of technology companies, suggesting that they are not built on solid fundamentals. Earlier this year, high-growth technology and internet stocks such as Netflix and Facebook sold off as investors became nervous about high valuations.