“Morrisey got it right, of course, when he sang: ‘We hate it when our friends become successful,’ and that’s certainly the case when it comes to market reaction to Apple [AAPL] and its record first quarter,” Jonny Evans writes for Computerworld. “You see, while the company says the only way is up, gloom-laden analysts can’t see any way but down.”
“Reading Apple’s announcement release last night I could tell the company knows it’s sailing into stormy waters. The announcement had just a little too much emotion buried between its lines. It mentioned the difference in the length of the quarters, it threw a positive spin, but something inside seemed hurt, cold, angry,” Evans writes. “Cupertino is upset. It’s annoyed with the competition (who it still believes ripped-off its ideas, an opinion I share but many don’t); it’s upset with the analysts; it’s distressed at the lack of faith being shown by investors on strength of a simple leadership change; it’s infuriated that it can’t yet shake off the ‘Steve Jobs is the Messiah’ myth.”
Evans writes, “While you panic, it might be worth pondering just what kind of thermonuclear business an imaginative firm equipped with $137 billion in cash and investments can explore in a patent-driven mobile devices age? After all, that’s more actual cash in hand than most banks are worth.”
Read more in the full article here.
MacDailyNews Take: At 1:00pm EST, shares of Apple Inc. [AAPL] are trading down $57.86, or 11.26%, at $456.14.
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It might be a nice time to put some of that cash to work. Perhaps spend some of it to ensure that your production can match the next product refresh. Just saying.
They already did. At the tune of 9 billion dollars. plus 1 for new retail stores (see Capex report).
Saw that. Let’s hope that is enough.
two things…
1. AT&T Earnings Miss by a Penny; Shares Rise
2. AT&T boasts $3.9 billion profit in Q4 2012, $7.2 billion profit for the year
Apple did that in their last 4th quarter.
best quarter ever
and they go down 63.51(12.35%)
Money doesn’t always fix things. For example, if Apple holds off sending production specs to the factories as long as possible in an attempt to limit damage from leaks or industrial espionage, and/or if those factories have unexpected QA issues during ramp-up. The limiting factors there are time and capacity, not money.
It would also be a cost that offsets revenue so actual increase in profit wouldn’t be as high as you’d think.
You’re right money does not fix everything. But security leaks has nothing to do with spending more money on equipment. Nothing. They are completely separate issues. Same goes for QA issues. Those should be addressed and they have nothing to do with having more capacity. Nothing. In fact if the limiting factor is time then having more capacity available when you do start production will help you immensely. Obviously. And yes, it does affect profit as it is an expense. But lack of product affects more than a decrease in revenue it also affects the reputation of the company. And you have to spend money to make money. So it’s simply a cost of doing business.
You obviously misunderstand me.
You can have all the capacity in the world, but if you don’t start production early enough, any unexpected, significant QA issues mean some or all of the first production batches are held up as they’re fixed, with possible delays to further production while they determine and fix the issue.
Capacity also can most definitely affect QA. Not all factories are equal, even when run by the same company. Some will produce better yields than others. Those get ironed out eventually, but can take time, and again money won’t help speed that process up very much. Apple has been stuck with Samsung for years longer than they’d like because others just hadn’t been able to produce enough components, fast enough, that also pass inspection consistently. Apparently this is finally not an issue anymore, but comments in the past accusing Tim Cook of taking too long to get away from Samsung are ridiculously naive.
More money spent on more factories/production equals more capacity for a late start. Thus spending money on production does matter. Simple enough.
What does he mean, myth? He was the messiah, mum.
Tall poppy syndrome.
This is a good article. Well written and to-the-point.
Tim Cook:
“I like our strategy, I Like it a lot.”
Larry Page
“For as long as it takes.”
Not rooting for or predicting, but it comes to mind.
Only $55 to go.
Um, except that Apple is making money hand over fist with their strategy and showing 18% growth, whereas Microsoft, not so much. Meanwhile, Google is not doubling its revenue every 3 years, and in fact, per click rates are tanking thanks to mobile search bypassing Google’s data mining efforts. It’s only a matter of time for Google. Motorola is sinking fast. How’s that $12B investment looking now, Larry?
Even at the time we both knew that Motorola acquisition was a losing proposition, little more than a feint, a hedge, and a prayer.
The Google story reminds of “Three Men and a Message”, a pamphlet put out by Enron just before they went belly up. It talked about the “vision” these three guys had for the company, and how it had an unlimited future. I give Google 3 years at the outside before it collapses.
If you actually believe that, THEN SHORT THE STOCK. Otherwise, you’re just blowing hot air.
They still have BY FAR the best search engine, and I don’t see that changing anytime soon.
(BTW, I don’t work there.)
BTW, the PC industry is declining by double digits. Google’s model doesn’t work very well on small mobile screens. Advertisers are paying less and less for mobile ads in general, and specifically for ads on Android devices, whose users are loath to spend any money for anything they might somehow snag for free. Apple mobile devices are by passing Google’s search and ad model more and more, and before long Google will be dropped as the default search application in OS X. There’s no good news out there for Google. Every Android device sold takes another user away from Google’s revenue stream, as does every Apple device sold.
“After all, that’s more actual cash in hand than most banks are worth.”
Try again, how about “more money them a lot countries are worth”. Or even better, “more then X of the top 10 tech companies combined are worth”.
Banks? Phew, they not only suck but most aren’t worth $hit and don’t have that kind of cash on the books. Most are still swimming in a pile of debt and still trying to unload and hide it as fast as possible. Have you seen how long it takes for someone to actually foreclose now days and all the people who just stopped paying their bills because no one gives a $hit.
It’s the new American way and it’s not just people but our wonderful government as well.
We know Apple will be around for many years, even IF ‘Apple Bear’ BS ever comes true. What would be bad would be if Apple actually believed ‘The Street’ and went all insecure over their HATE and DOOM mongering. ‘The Street’ is currently insane and well worth ignoring.
As for our fracked up US government: Blame the entire system. I loathe both of the big ‘parties’ and blame them both for ruining our otherwise very kewl country. I’d enjoy seeing them both FAIL into obscurity alongside the rise of We The People centric third parties that kick our Corporate Oligarchy to the gutter where it belongs. If you want a real source of US catastrophe, its our Corporate Oligarchy and their biznizz bozocity above all else. /rant 😛
Apple is a maturing company. With that much cash on hand they’ll be around well into my unborn grand children’s lifetime.
*snap* You beat me to it.
its all made up bullshit anyways…
The wrong sort of people own Apple.
They had the same bee up their ass when Jobs was around.
Perhaps some can recall that after Jobs died, there were feelers out that maybe Apple could be bought. Nope….hm.
The answer is staring at you right in the face.
I’ve owned aapl since it was 19 (since split two times.) I’ve seen it all. Apple should be aware of what it’s up against. And it isn’t sales, product, technology…You guess what.
Actually they are pissed at Wall Street not competitors. The stock is getting hammered for absolutely no reason and they are pissed about it.They give guidance and Wall Street makes up their own and when Apple doesn’t hit the number that Wall Street wants they hammer them even though Apple beats it’s own numbers. That is why they are pissed.
Anyone else think this is nuts. I believe that when you look at this, Apple stock value is 1/3 cash.
Soon, if Apple could loan it’s self cash, they could go private now. But, for now, Apple will have to just hold off until their cash matches the stock value. However, someone else could use Apple’s cash to buy Apple. Often, that is how companies are taken over and broken up and the parts are sold off.
So, anyone else think this is nuts yet!
How could someone else use Apple’s cash to buy Apple? That sounds nuts. If not, I’d be happy to use Apple’s cash to buy Apple; I’ve always wanted to own my own multi-billion dollar corporation.
What does it take to be seen as successful these days?
On the BBC News website there is an article entitled “Apple hit by disappointing sales” where analysts “said the company was in danger of its own success” and “with Apple no longer seen as the market leader in innovation”, with a single caveat tucked right at the bottom saying “Others, however, argue that investors’ expectations are wholly unrealistic, and the company remains hugely successful”.
That last line should have been the real headline, it puts everything into context but this would have rendered the entire article pointless and there wouldn’t have been any “news” so lets make this into something that is downright idiotic!
How can a company, making more in quarterly profits than most companies can turn over in an entire year, be seen by anyone as either in decline or needing to change its strategy?
The world has gone bonkers and I do not understand it. Microsoft should have these problems, they would think things were looking up at last – Dell would think all their Christmases had come at once.
Rant over, for now.
I understand it this way: Apple became an industrial powerhouse, a juggernaut, in a short enough time to take the establishment by surprise.
With no answers, the opposition reached for the dirty-tricks bag, and campaigned to discredit Apple in every way, hoping the blemishes would reduce its products’ popularity.
That hasn’t really worked, but they can claim it has, keep their fingers crossed and hope that the giant will panic at some point, stumble and die from the fall.
I like that! Good way of explaining it.
WS is pissed because Apple Corporation doesn’t “need” WS to be successful. WS is a bunch of cockroaches that are running into to the corners of it’s own roach motel in the light provided by Apple.
WS needs to shut up or praise success, instead of acting like crabs in a a boiling pot, pulling down those who want out of it. Apple has escaped the boiling pot.
You said it best!
And how! 😀
As of calendar Q4, investments in Apple’s shares are twice more profitable than into Google’s.
This means that Apple can cost even $1 trilliion, but still this will only match the level of “bubbleness” that Google has.
If some think that Google’s net profits are priced higher — if you translate them into share price — because of net profits growth perspective, think again. Google’s net profits are almost the same as in prior year, the same is as with Apple. And Motorola’s losses only go wider in the coming future, not otherwise. And core business growth perspective of Google is more limited than that of Apple, since Apple can start new goods business, and Google can only grow with the overall advertisement raise. And there is no reasons that Apple’s share in smartphones or tablets is going to any way significantly lower in the coming years than now or prior to that.
So AAPL is trading at 3.1 times CASH and about 2 time book.
As I’ve said before, this kind of treatment is usually reserved for companies that are considered to be going nowhere, have a high possibility of collapse, or are a takeover target due to one of the first two. Apple is none of these. Thus there is no reasonable explanation an analyst can give for their continually downrating AAPL.
Sure there is. Their firm either has a short position or wants to drive it down before buying long.
When only a few powerful people are in control of how stocks/bonds – the price of metals/commodities – etc – react to world events – then these inexplicable realities bare their heads. Our world needs a new monetary system and the stock market (world of lies) boarded up.
What about profit share? If Apple has taken even more of the profit share pie despite the flat profit year-over-year, it is a sign that there isn’t much more profit to be had in this market.
If a television (or television service) is not in the near future, Apple needs to go after the emerging markets somehow without diluting their caché of “luxury brand.” A Nano-sized phone with some basic functionality, apps etc. could go a long way to hurting the competition.
And let’s not forget web services. Apple must show that it can compete in areas like cloud, search, etc.
The startling thing is if you take into account the 2012 13 week quarter v the 2011 14 week quarter Apple had similar results to Google with a large increase in revenue but a slight increase in profit. Yet no one is saying Google has peaked, has run out of innovation etc. Their stock went up when they increased profit by 6% when Apple increased its profit by around 8% the stock tanked.
One should remember that a corporation’s share price fluctuations mean nothing to a corporation unless it needs to go to the market to raise cash, or wants to use its stock in an acquisition. Individual directors may be affected if they plan to sell their stock or if their remuneration is linked to the share price, but the corporation itself is unaffected. Since Apple has more cash than they know what to do with, they won’t be going to the market to raise funds any time soon. In fact, should they wish to do so, the current “correction” provides an opportunity to buy back stock.
If you look at the share price over a few years you will see that the recent fall just realigns the stock price to the long term upward trend. The reason for the blip? The market got carried away with the success of the iPhone and then the iPad, and reality set in following the success of Samsung and Apple’s problems enforcing its patents.
But Apple plays a long game, and the iPhone continues to lay down solid market gains while iPad dominates the tablet market iPod-style and Mac continues its slow and steady gains against Wintel in a declining market.
One should also not discount the combined influence of Google and Microsoft, and perhaps Intel, and the impact of behind-the-scenes lobbying of financial analysts. Apple doesn’t “play the game” with the finance industry and doesn’t provide much in the way of lucrative income for M&A activities, so Wall Street is frustrated by being unable to profit from Apple’s success, except by stock manipulation. Analysts don’t like Apple either, because Apple doesn’t wine and dine them or feed them inside information.
As for the supply constraint issues, at least some of this must reflect the priority given by Apple to reducing their dependence on Samsung and a general realignment of their supply chain to reduce dependence on China, which leaks like a sieve.
In the US we can see that iPhone market share continues its upward trajectory – Samsung’s growth came at the expense of everyone else, but as the market consolidates Apple is chipping away at Samsung’s share. Samsung has other problems – namely Android and Google, but the loss of Apple’s business is hitting them harder, and faster, than they expected.
As always, Apple has the potential to surprise. Ignore the hysterical chatter from the “analysts” and look at the fundamentals – Apple is continuing to grow in every sector in which they play and will do the same in any new sector they decide to enter.
+1
Well done!
Interesting insight on many levels — from share price concerns, hidden influence Street players to manufacturing constraints.
Google stock up almost $40 yesterday and minutes later in after-hours trading Apple quickly nose-dived on mostly record numbers. Analysts sneer and the media cheers!
Two events months back: Apple briefly passed Google for top stock (share price) and the record court judgment for Apple against Samsung. Not sure of the timing, but sometime later both stocks headed steadily in opposite directions.
Many MDN readers commented on the noticeable increase in negative analyst/media reports, some with suspect attribution. Earlier today a radio announcer mentioned possible payback, but who knows?
We do know on their own terms, Apple grew the world’s largest company in a relatively short amount of time outside the typical Wall Street guidance. Traitors, oops sorry, traders — “Think Different.” 😉
Duke, it’s simple. You use the company’s cash as collateral on the loan (if you are crooked enough you can get loan for 3X to 10X the cash + (inflated) asset value). Then you use that cash to buy the stock (after cratering it using naked shorting).