Apple has an an identity crisis on Wall Street

“Apple Inc. [AAPL] is facing an identity crisis on Wall Street,” Jessica E. Lessin reports for The Wall Street Journal. “As Apple prepares to report what analysts project may be the company’s first year-over-year quarterly earnings decline in a decade on Tuesday, it is also grappling with jittery investors and a recent share-price plunge that has wiped about $280 billion off its market capitalization since its stock reached a high of $702.10 last September.”

“Much of the investor nervousness is rooted in how Wall Street is treating and valuing the Cupertino, Calif., company as a traditional hardware maker,” Lessin reports. “One camp of analysts and some investors said there is strong evidence that Apple should be viewed in a different light: as a software-hardware hybrid.”

Lessin reports, “The distinction matters. If it continues to be seen as a hardware business, Apple’s streak—driven by products like the iPhone and iPad—could run out quickly as smartphones and tablets get commoditized and consumer tastes change. It is a lesson learned by companies like BlackBerry-maker Research In Motion Ltd., whose tech hardware was quickly eclipsed by products from Apple itself. If Apple is classified as a software-hardware hybrid, the company could be valued more like Internet and software makers that have recurring revenue streams and that often trade at higher price-to-earnings ratios than hardware firms.”

Read more in the full article here.

MacDailyNews Take: This is extremely simple and crystal clear:

Apple views itself as a software company… Apple is fundamentally a software company. – Apple CEO Steve Jobs, May 31, 2007

It figures that Wall Street is confused about Apple’s identity six years after it was explicitly stated by the man who created the company.

[Thanks to MacDailyNews Reader “Brawndo Drinker” for the heads up.]

26 Comments

  1. The problem I have is that apple shot itself in the foot for releasing a work in progress without telling people an app called MAPS. THIS WOULD HAVE BEEN THE NEXT BEST THING HAD THEY STUCK TO THEY PEDIGREE OF IT JUST WORKS SOFTWARE. It would have been the next iTunes and that is just a consumer viewpoint.

    1. Randy, I agree. Apple is the ONLY COMPANY IN THE WORLD that has ever released a product that is not PERFECT!

      Apple tried to work with Google again and again, It finally had to resort to dropping Google maps to do its own. AND SURPRISE for you…. google released a much better map because of it.

      If Apple had not released its maps, Google would have NEVER released its better version.

      Just some food for thought to a starving man. /s

    2. Maps could never be ‘the next iTunes’. There’s no product to be obtained through Maps, you don’t buy music and video via Maps. It’s a useful utility, that’s all.
      It’s restricted by its very nature, it relies as does Google Maps, on having a strong network connection; lose that, and it’s very usefulness crumbles. I spend a lot of time away from urban areas, where phone network coverage is patchy, let alone data, so I always use mapping apps that have the maps native to the phone, and render the maps to 1:25k or even 1:10k, and as I’m never certain when I’m going to need those maps, I don’t rely on being able to cashé a section of map from a cloud source.

  2. Funny that the last 30 years doesn’t count for anything when it comes to “recurring revenue”. Apple is THE recurring revenue company.

    In the last 30 years Apple has proven they can keep innovating for us. And they don’t seem to have a problem selling an endless stream of new stuff to their customers. Even during the dark times (mid-90s) Apple was still hanging on to users. (Sure, they were becoming dwarfed by the Wintel block, but Apple sales weren’t exactly shrinking.) Once you go Apple, you never go back. And you always come back for more.

    1. The truth is that the pro community who stood by Apple during the dark times are now deserting them owing to lack of updates to the Mac Pro line and lack of transparency of Apple’s roadmap. Times change.

      1. J-Lo ? Sorry but shiny screens and slow change for the Mac Pro line is life. Maybe you should just buy a Dell! I hear its a good buy. /s

        Apple is growing sales to new people all the time and once you go Apple you don’t go back……. unless you write a blog and need hits. LOL

        Sorry but Apples long term road map seems just fine to me, even thou they do not choose to share it with me. I actually trust Tim Cook and Apple to do a great job. ANd even screw up a little now and then.
        JAT>

      1. Your right. When it comes to the print and graphic design industries nothing has changed. When it comes to video I’m sure some people have switched hardware but more than likely they are still using their mac rig with Avid Pro Tools 10 if they didn’t like FCPX.

        1. Avid has definitely gotten a bump, but I think ultimately FCPX will gain a large following from the next generation of editors & film makers.

          And for every editor leaving the mac platform, 1000 new web and app developers are discovering the Mac.

  3. It’s Wall Street that has the problem. They try to put a label on Apple, but none of the labels they are choosing seem to fit, so therefore they conclude that Apple must be wrong.

    For at least the last ten years, it’s been pointed out time and again that Apple doesn’t operate like other companies. The conventional ways of running a business only have a minimal part to play within Apple. Apple will never behave in the way that Wall Street would like it to do. But despite all this, there is no shortage of analysts pontificating about what Apple needs to do and virtually all of those analysts demonstrate that they have a poor understanding of Apple.

    The reason why Apple does so well is that it pursues excellence above all else. That’s a concept that is lost on the speculators who are obsessed about short term profit, but it’s what sets Apple apart and it’s what will secure Apple’s future.

  4. The only people with an identity crisis is the stupid anal-ists who think there running Apple instead of doing there job which is to view the overall business performance of Apple.
    They want to tell Apple when to release new products, what those products should feature, how much they cost and so on.
    And of course they want all of Apple’s savings going to there dividends.

    1. b9bot, I agree. And its ok to mis-spell once in a while. The darn speller on the iPhone tends to make my text a “correctly spelled” but confusing mess of words.

      “worms Roxanne, worms!!”

  5. I am certainly no expert on the stock market. I am more interested in the Steve Jobs quote about Apple’s identity. I find it a bit hard as a consumer to reconcile Apple’s business model with the notion that “Apple’s fundamentally a software company.” Many of the users of Apple products I know (my own family included), buy Apple computers because of the hardware, not the software. Now this is not true when it comes to iOS devices. It’s the combination of hardware AND software that makes iOS devices such stellar products.

    On the desktop/laptop front, the operating system is the best. But I couldn’t say that about all Apple’s desktop software. Of the iWork suite, Keynote is the finest. PowerPoint wouldn’t stand a chance next to it. I could not make the same claim about Pages and Numbers. Most of my colleagues and family members who are Mac users stay clear of those two applications indicating they lack some important feature parity with the MS offering.

    In terms of some of the other professional applications, Apple’s handing of those, if it is “fundamentally a software company,” leaves much to be desired. They redeemed themselves with addressing the issues in Final Cut Pro. The same is not true for Aperture. And yes, I have been an Aperture user for many years. But as a photographer whose work is not merely hobbyist, but is meant to actually earn money, Adobe is looking more like a software company, focusing on regularly updating essential applications such as Lightroom. Apple tweaks, no doubt. But significant features that reflect the changing technologies aren’t being added to the application. The workflow is still great. The UI is still the best. But for a company that is fundamentally a software company, key updates such as lens profiles, perspective correction etc. aren’t being added. You have to buy additional plugins.

    So, it’s not just wall street that has problems nailing Apple’s identity. Some every day users do as well.

    1. That’s because you aren’t clude in and rely on other’s exoerience and hersay.

      Apple is the best software comanyin the world, ask Bill Gates.

      Maps is actually a better app than GM despite a somewhat lagging data deficiency, which gets better all the time.

      1. Why would I ask Bill Gates? He is not the product user, I am. If your measure of great software is Apple’s Map program, then you are truly not clued in. Applications like the iWork Suite, Aperture, and Final Cut Pro X are more critical for us long-term professional Mac OS X users. A map program is a dime a dozen. This is not hearsay. This is my personal experience. This is my employees’ personal experience. We are a business, not some entity looking for directions to the nearest McDonalds. Now, that is CLUED in.

  6. “… camp of analysts and some investors said there is strong evidence that Apple should be viewed in a different light: as a software-hardware hybrid.”

    The “penetrating insight” and “brilliance” of these people is something to behold.

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