Why nothing Apple does is ever good enough

“Apple is kind of like a wildfire. It burns so hot, it creates its own weather,” Marcus Wohlsen writes for Wired.

“How else to explain Wall Street’s rats-off-a-sinking-ship reaction to another quarter of stratospheric sales and profits from the cash machine that Jobs built?” Wohlsen writes. “The only rule with Apple is: No matter how well it does, a whole different school of stock market physics seems to apply.”

“The company said it sold a record number of iPhones for the quarter (51 million), as well as a record number of iPads (26 million). And big profits and sales are predicted to continue. For casual students of capitalism, all this sounds like everything is going right,” Wohlsen writes. “Apple’s numbers represent a healthy consistency but not that next level of nose bleed-inducing altitudes. It’s possible Apple could once again reach those heights with the release of a category-creating wearable gadget or smart device, and some of the pessimism around Apple arises from the reality that the company has yet to do this.”

Read more in the full article here.

Related articles:
Was iPhone 5c the cause of Apple’s woes? – January 28, 2014
Q114: The best and worst Apple analysts – January 28, 2014
Apple posts record quarterly revenue, record iPhone and iPad unit sales; shares plummet – January 27, 2014
Apple stock collapses in after hours trading – January 27, 2014
MacDailyNews presents live notes from Apple’s Q114 Conference Call – January 27, 2014
Apple beats Street with record quarterly revenue, record iPhone and iPad unit sales – January 27, 2014

47 Comments

    1. Yep, but it’s not going to anytime soon. Next quarter will suck in China and around the world, and it will take Apple another quarter to get their new (Ha!) “phablets” out (two of them?) So . . . don’t get your checkbook out until next fall at the earliest. Hard times are a’comin’!

    1. Yes and no. Apple is picking up the “halo” on the Macs and iPads. As the sales of the other “halo” products pick up their share increases. If people do not need 2 or 3 iPhones in their pocket, isn’t the “halo” the next step along with those other “be patient” “something NEW” products and devices and services … The Tinny story.

      Timmy, Apple can chew gum and walk at the same time. So can they release NEW market products and services without seeing it they work out for 2 or 4 years.

  1. There is one thing I don’t understand, can somebody please explain: Apple has tons of cash abroad, like in Germany where I live. I understand that bringing this money home costs a lot of taxes. So far so good, that’s easy to understand.

    But why Apple does not use this cash to buy back stocks from the Frankfurt stock market where Apple is listed. And the same in all the other countries outside Europe. Apple is listed all over the world at all leading stock markets and could make a good value out of the cash.

    Who can explain in a serious way?

    1. I can, but no one will like it. The answer: extraordinarily bad financial management at Apple–first, last, and foremost. Everyone here loves to hate on the “ICon” man, but SOMETHING from his philosophy must be done–beyond what is currently being done–to rally this stock valuation. Since absolutely NO new ideas seem to be forthcoming from the company, it must do SOMETHING ELSE to shore up its valuation. And buying back its stock is better than nothing.

      For those who want the company to just hold on to its cash pile: And do what with it? Pile up those interest earnings? Oh wow. Buy another piddling little company that has a few measly patents? Build a sapphire glass factory? Bull.

      With that amount of money Apple could buy a handful of mega-operations, but the DOJ wouldn’t let that happen in a million years. The fact is that the Apple CFO and his/her advisors live in the deep dark financial past when “saved” money was “earned” money. Not anymore. Invest it, Apple, or return it in some fashion to those of actually own it: the shareholders. This massive war chest is not Tim Cook’s to keep. It is ours.

  2. I think that a lot of the problem is that these analysts seem to think if Apple is not launching new game changing gadgets then it goes back to being a that labouring company from the 1990s. However that really is not remotely the case at all and the mature big selling company it is now needs to be seen as the norm with the occasional launch of the game changer. Too many have been too spoilt and now have to much expectation. Apple probably didn’t help itself in that regard and it now needs to be a little more lateral thinking with its maturing products as it is traditionally seen with its new products otherwise you get the idiots like I heard the other week saying that the future for the smart phone is now taking place on Android.

    1. Kitkat is pretty decent now. Personally still prefer ios but, as I said in a previous post Apple is charging $850 for a 64gb 5S with a build cost of $215. Margins only going one way with a Moto G costing $199 and that’s what the street is looking at.
      $500 margins on hardware are a thing of the past.

  3. The Apple FUD mongers are now starting to get real pathetic. At this point, they are literally asking “Apple, can you please fail just this once, so it can look like my predictions are correct?”. What these “analysts” don’t understand is that Apple is a successful company with 30+ years of experience in building quality products. These articles say more about the writers than it does about Apple.

  4. It’s one thing to perhaps doubt that Apple can continue on the same successful path, or to doubt that they can bring in something new which will be as revolutionary/innovative, but it’s then madness to somehow think that less successful companies, with no track record of doing anything good of their own accord will somehow pull a magical formula for success out of their behinds when they’ve not done so for the last decade or more.

    1. Amen, and in the Wall Street scheme of things, apple is too powerful and too independent. Apple is able finance itself for years without relying on Wall Street. They are very afraid of Apple.

    2. Wall Street is friendly only to those they can make easy profit from. The tax loop hole is the same for everyone, Apple gets investigated, companies like GE, FB, pays ZERO tax.

      The only industry that’s growing in this country is Big Pharma, Insurance, Prison, Defense, Banks…. See the picture?

  5. It is a strategy of Apple haters on wallstreet. Between the introduction of the iPhone and the iPad, prognosticators enmasse greatly under estimated Apple at every quarter. Well, they got tired of underestimating. Around the time of the iPad, they started “overestimating” deliberately to use as a negative “perception” to drive Apple down.

  6. Coz Apple is already earning the industry best results using the most efficient way . And other big market share holders are earning too little that they can grow in 10 years which is what Apple grows for one year

  7. Apple is slow to bring on new and innovative products. They need to step up the pace or they will get lapped. It’s frustrating as an investor and apple product fan to hear about rumors of completely new products like TV and watch for years with nothing to show for it. For gods sake at least give us mobile payments. You can do that with the hardware line up they have now. They are just too goddam slow.

    1. You must be one of those Wall Street tech analystis I was referring to earlier. It’s good to see a dissatisfied Wall Street bankster who is so unhappy with his life, that he decides to take it out on a more successful entity just to prop himself up. It must feel so good doing this, huh?

      1. Whatever happened to the tradition of jumping from a window when you were financially embarrassed? Like in the 1929 stock market crash? Passé, I guess. I wish they would revive it for analysts.

    2. @GP:
      Perhaps you should read this article just posted on 9 to 5 Mac: http://9to5mac.com/2014/01/28/investors-wont-wait-forever-for-new-apple-product-categories-warns-analyst/#comments

      Neither Apple nor any other company innovates on command. It does not work that way, despite what you (and analysts) may assume. For example, Apple was not the first to have a 4G phone, and for good reason: battery life. I recall friends of mine who got suckered into buying Droid 4G phones, only to become infuriated at their terrible battery performance. The result: the next phone they bought was – get ready – an iPhone. Apple simply waited until companies like Broadcom could perfect a low power 4G chip, rather than please analysts and pedantic, sophomoric consumers.

      Meanwhile, amid the panic resulting from Apple beating its revenue and earnings numbers, Carl Icahn just snapped up another $500 million in Apple stock:

      http://www.macrumors.com/2014/01/28/icahn-buys-more-shares/

      You might not like Icahn. But to paraphrase Warren Buffett, “Be greedy when others are fearful.” And that’s exactly what Icahn did, buying Apple stock on a dip. THAT is how money is made.

      You might not feel the same way, but I am content to let Apple get it right before getting a product ready for launch. Or, if you prefer, I proudly direct to you – drum roll please – the awesome Samsung Galaxy Watch!

      People like you make my head hurt.

    3. Who’s creating the rumours? Speculators and ‘analysts’.
      Are the public at large rising up and demanding mobile payments?
      I doubt if more than a few percent even know what mobile payments are!
      Show which other company is developing cutting-edge devices like Apple is, that isn’t just a copy.
      I’ve yet to see any other equivalent devices that show a compelling reason to change from the Apple ones I have, except, possibly, the Nokia with the 42Mp camera, but that’s about it, and I wouldn’t want it with the shonky OS that it comes installed with.

    4. Yes, because everyone is just running to the store to buy a big, clunky, ugly-ass Samsung Galaxy Gear watch.

      Introducing “new and innovative”products just for the sake of saying you did does not mean the products have any value to the customer.

      Apple’s prime objective is providing a product with value. If the underlying technology (CPUs, batteries, screens, software) is not ready to support the value objective, they won’t release the product.

  8. Apple is a great company and a crappy stock. Thats not going to change. Ive been hanging on waiting for reality and common sense to prevail…..its not going to happen. I could be making 3x the income by selling and spreading the money around elsewhere. After a few years that adds up to a substantial amount of money. In order for AAPL to have any chance to ouperform that scenario they would have to reinvent the wheel every 3 years. And that probably wouldnt even be enough. The next time Apple gets anywhere near 600 im out. Im sure i will get the opportunity to buy it back at 500 if i choose to.

    1. Go right ahead. Knock yourself out. To you and other short-term thinking investors, Apple is “dead money.” At the moment, it probably is.

      That’s not to say you are wrong. Every investor has a different approach. But there is much to be said for patience, a quality found in the most successful of investors.

      Some of the best investments are those that grow more slowly, but which pay a steady, increasing dividend. I’m as disappointed as anyone else that Wall Street bitch-slapped Apple yesterday, even though the company beat analyst estimates for both revenue and earnings. For almost any other company, that would result in analyst upgrades and a rise in the stock’s price. But Apple is held to a different standard, something that frustrates the individual investor.

      That is where patience is required. Over time, a company’s stock price will correlate with its earnings and earnings growth. But the two don’t move in lock-step. A few months from now, once we’re past the hysteria and program trades that can send a stock diving, I think we’ll see a different story. But that requires patience.

      Some of the best stocks in my portfolio are tortoises, not hares. They grow more slowly and pay good dividends, which I always reinvest. Where the hare can zoom up to nosebleed levels, the tortoise chugs along. Some investors will take a quick profit off the hare and move on. But the tortoise will keep shuffling along, growing more quietly, paying out growing dividends quarter after quarter, that when reinvested and compounded, over years, turn into something incredible.

      But that takes patience.

      Think of a tree. You can plant one, but yelling at it to grow faster won’t change a thing. A tree grows at its own pace. That is something many investors (and analysts) cannot comprehend. Such is true of a company like Apple.

      Apple is like a movie studio or pharmaceutical company. Its stock is priced by Wall Street based on the blockbusters it produces every few years. Pixar does not come out with a new movie every year; Universal does not always have a major blockbuster motion picture every year; Pfizer, Merck or other large pharma company has a major blockbuster drug only every several (or more) years. Much R&D is required, and that can take many years to perfect.

      Patience.

      You can chase the next hot stock, and if your timing is right, you can ride and jump off before it becomes overvalued and crashes. Or you can choose to ride a stock at a slower pace, reinvest compounding dividends over time, and profit well, as Warren Buffett has done so successfully during his career. There is no right or wrong, but it’s your choice on which type of investment you prefer.

      For the patient investor, even a Proctor and Gamble or General Mills can be rewarding. Apple has hit the headwinds of its size and the ridiculous expectations placed on it by analysts. But if you step back and look at Apple from a multi-year perspective, stay off CNBC (and even this website), you might see it differently.

      But you must be patient. Impatience is the worst enemy of the individual investor.

      1. “Over time a companies stock price will correlate with earnings and earnings growth” That is true. What is Apples potential for growth in the future 2 – 3 percent a year? And Apple doesn’t get the normal appreciation because their earnings and growth are mostly connected to one product that Wall Street obviously believes has potential to diminish. Right now I’m earning $3.05 a share. I can do better. Here is the question. Does Apple have a better chance of seeing $450 or $700 in the next 2 years? Like Randian said you cant fight the trend. The Apple story has changed. Of course your personal situation and circumstances also matter. Apple as a long term investment doesn’t make sense for me anymore. And if i do get out there is a very good chance that i will get an opportunity to buy back in ridiculously cheap in the future.

    2. Apple is a great company and a crappy stock.

      From a behavioral perspective, for the last 1.5 years, yeah!

      But that has anything to do with ‘it’s not going to happen’? Open up your perspective and watch what OTHER behavior is going on as well. THERE is the explanation. There is zero reason to nail Apple for the inane price of AAPL, is there.

      1. This hasn’t just been going on for 1.5 years. Where have you been? Some a-hole today predicted shares falling another 40%. What other great companies ever got disrespected like that? He didn’t say their earnings were going to fall 40% so i guess he thinks the stock will trade at a PE of 4. The street will never give Apple the price it deserves thats become abundantly clear. It might have periods where the stock shoots up but they will be short lived.

          1. I seem to remember being frustrated with the stock taking hits after good earnings reports a lot longer than that but i guess you are right. I think i just need another Apple pep talk.

  9. Apple is sitting on a mountain of cash which most companies would have used to put back into expanding the business into new markets. Apple is certainly wealthy enough to be a conglomerate. I think Wall Street sees Apple as an underachieving company considering the wealth the company has. Apple is being run like the company used to be run back in the 1990’s before the massive wealth came to them and Apple’s thinking hasn’t grown beyond just hardware. Another thing is that Apple doesn’t have a tendency to destroy rival companies that could give them future grief.

    Don’t get me wrong. If I founded a company and had certain goals in mind I would run it the way I see fit and would likely ignore shareholders just as well. Even as a shareholder I believe Apple is certainly being run well. Not perfect to my standards only because as a shareholder I’d like to see better returns. How did Apple not manage to rise at least in line with the rest of the stock market in all of 2013 certainly puzzles me?

    I do feel that Apple should be looking further than just turning out iPhones and iPads because Android has the mobile industry glutted with devices. That may not last forever but of course I’m being impatient. I’d feel a lot more assured if Apple got more into software and services and I figured it would only be a matter of buying talent. However I know nothing about running a company and it may not be that easy or every company would be successful.

    My greed clouds my judgment about how Apple isn’t doing enough. As a long-term shareholder I’m well ahead and if Apple continues to increase dividends then I’m set for good. I like to think in theoretical terms and when I see Google and Amazon shareholders doing so well, I figure why can’t Apple shareholders be doing at least as well. I keep looking at Apple’s cash pile and keep wondering why they refuse to use it to grow the company far beyond hardware.

    Expanding a business really looks so simple to do if you have the money, from my perspective. But if that’s not how Apple operates then who am I to say otherwise. It just seems somewhat unfair that if Apple isn’t going to use that mountain of cash to make the company stronger, then they might as well give it to shareholders in the form of dividends before their business fails. However, I don’t believe Apple’s business is failing in any way. It seems their growth has been greatly impeded by Google/Android but by no means failing.

  10. What a wasted article, no insight into the machinations of the manipulation of Apple stock, yet the possibility is so there. Not a single investigative reporter and track down what’s going on here, not a single lawyer can figure out what’s going on.

    “Manipulators, manipulators, manipulators” drowning out the call.

    Might take a while for the stock to recover. They sure are trying hard to rest it all on the next best thing that Apple releases and then it could get real ugly.

    Then again, it’s a buying opportunity.

  11. Amen, fscuttle. AAPL has been and remains dead money walking–and that is a most lamentable, unarguable fact. I currently own seven figures of this stock, and were it not for its dividend (the most pathetic dividend of all time, given the $160+ billion the company is sitting on), I would be long, long gone. I still have an original Fat Mac, Mac Portable, and ][gs in a display area downstairs; and I sigh deeply every time I walk past them. Those were the days, folks . . . and the reason i’ve held AAPL since 1988.

    As scuttle says above, it will soon be time (I hope) to bail on this volatile mess. You simply cannot fight the trend, no matter how much you’d like to. Love and commitment cannot fix all.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.