“This week, you can bet the true believers around Apple’s Cupertino headquarters are thinking back to 2001, while loading up on some suddenly discounted shares. Talk about an after-Christmas bargain: Apple stock is trading at about $140, 30 percent off its December 28 high of $202.96. That’s about the same place where Wall Street valued the stock six months ago, before it became clear that the new iPhone would sell nearly 4 million units in 200 days,” Jon Fortt writes for Fortune.
“The most recent ding to Apple stock came Wednesday, after the company turned in the best quarter in its history. The stock dropped nearly 11 percent. Depending on whom you ask, the stock got hammered because of soft iPod growth, tepid revenue guidance, or plain old investor fear,” Fortt writes.
“But there’s also plenty of reason to believe Apple can innovate through this downturn like it did the last. First is stability. Apple has stockpiled more than $18 billion in cash, giving it more than enough cushion to think big, take risks, and make mistakes,” Fortt writes.
“Second is the iPhone. Like the iPod before, it’s a hit — even though it is solely distributed through AT&T in the U.S. and through other exclusive carrier arrangements abroad, it seems to be gaining traction… Apple sold about 300,000 iPhones in just the first two weeks of 2008. If that pace keeps up — and it easily could as Apple expands the iPhone’s availability in Europe and Asia — then Apple could sell as many iPhones this quarter as it did during the holidays, an impressive feat,” Fortt writes.
“Last is the iPod touch. Largely glossed over in Apple’s earnings announcement was the executive team’s emphasis on the fact that the company doesn’t view this thing as just an iPod — it’s a wireless computer. And the iPod touch will fully come into its own at the end of February, when Apple opens the door for outside developers to build software for it. What the iPod touch becomes then is an open question,” Fortt writes. “Will Apple invent a way for it to become a viable gaming platform? Will clever engineers come up with cooking programs, GPS attachments, video recorders, or other ideas to spark demand for the gadget?”
“If so, watch out. Sales of the iPod touch and iPhone might just push the stock price higher again — and if so, Apple executives will relish the chance to tell the story of how investors, once again, underestimated Apple,” Fortt writes.
Full article here.