“Tim Cook and Luca Maestri had one goal for last week’s earnings conference call: convince Wall Street to begin thinking differently about Apple,” Neil Cybart writes for Above Avalon. “For the past two decades, Apple’s success has been judged by hardware unit sales growth, a metric that is now becoming increasingly at odds with the long-term strategy being pushed by Jony Ive. Management now finds itself searching for a new Apple narrative as iPhone sales growth slows. Wall Street has effectively declared the old Apple narrative broken.”
“A company’s narrative is the primary way a management team balances near-term demands associated with being a public company with long-term goals aimed at value creation. If a company suffers from a broken narrative, Wall Street struggles to properly judge the management team. The company’s valuation suffers as a result. Amazon represents a perfect example of how important a narrative can be to a company,” Cybart writes. “Apple management appears to be ready to push a new narrative on Wall Street… However, by talking up services revenue, management is moving away from Apple’s strength at the intersection of hardware, software, and services. Positioning Apple as a services company would also mean that Apple’s competitor list just got a lot longer with a slew of new players including Facebook, Netflix, Spotify and Hulu. This comparsion seems highly problematic for Apple since the company is known to have limited resources, and to not have a new narrative built around one of its strengths is questionable.”
Cybart writes, “A long-lasting narrative for Apple needs to reflect ideals pushed by Jony Ive.”
Much more in the full article – recommended – here.
MacDailyNews Take: If Apple can get Wall Street to the point where the company’s “success will be measured by management’s ability to come up with new products that people love,” then the sky’s the limit!
UPDATE: 4:19pm ET: Alphabet Inc. surpasses Apple, now the world’s most valuable company