“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.]