Jim Cramer: Apple needs new analysts that know how to cover its business correctly

Tyler Clifford for CNBC:

CNBC’s Jim Cramer on Wednesday suggested that firms should shuffle the analysts they have assigned to cover Apple.

The company needs a new cohort of researchers that will give more weight to its subscription service business than its iPhone sales, the Mad Money host said. “People just don’t understand how to evaluate the new Apple. They view it as a sagging hardware story,” he said. “People keep underestimating Apple’s new business model.”

Apple deserves analysts that are focused on entertainment or consumer packaged goods, Cramer argued. Tech analysts, he said, that cover hardware and software companies “won’t understand any of this.”

Cramer said Apple should begin revealing the number of subscribers it has so that analysts can build models… “If the churn is low, you can figure out the lifetime value of a subscription… It’s a terrific annuity if you have low churn,” he said. “A tech analyst who covers hardware or software companies won’t understand any of this.”

MacDailyNews Take: The analysts who understand Apple and its place in the various markets in which it competes are few and far between. Gene Munster, for one rare example. The rest are largely clueless, hung up on the wrong data points (iPhone unit sales) and oblivious to the colossus that Apple’s building with in Services.

Any analyst (or pundit) who refers to Apple Inc. as “the iPhone-maker” is worthless; don’t waste your time or money on them. Perhaps Apple’s ever-growing, already huge Services numbers will grow so large as to jolt them awake someday, but we wouldn’t bank on it.

16 Comments

  1. Apple needs a new CFO badly. Look how Google has performed when they replaced their CFO with the former CFO of Morgan Stanley. Luca should be recommending this not Jim Cramer.

  2. Very few MDN readers have any first hand experience in direct management or on the Board of Directors of a company as large as Apple, Google, or Microsoft, but they have no shortage of opinions as to what changes Apple needs to make and how amazing the results of their recommendations would be.

    1. What, Al Gore had experience before he joined the BoD of Apple?

      Your typical management consultant from McKinsey has had no first hand experience in direct management or on the BoD of ANY company let alone a company as large as an Apple, Google or Microsoft, but they are paid 7 figures for their recommendations to those companies.

      MDN readers have as much right to give their recs as much as anyone. It’s probably wrong, but so are lots of consultants, and C-level execs.

      1. Al Gore had about 25 years or experience at the highest levels of government before he joined the Apple BOD. You certainly have a right to your opinion as to how relevant that experience is when it comes to sitting on the Board of a huge technology company. When people bitch about Al Gore serving on the BOD, in my opinion they are usually upset by his political views, not the lack of value to the experience he has had. It’s important to remember that the role of the board members is not to run the company. That is the role of the officers of the company.

        1. I have no problems with Al’s politics. Al was a Senator with a small staff. That’s like being the boss of a small store. As Veep, he got a bigger staff, but still, hardly the stuff that tells you the guy is qualified to give advice to the largest companies in the World. By your standard, no one would be qualified to give advice to the largest companies in the World, since no one has direct management experience at companies “as large as Apple, Google or Microsoft”, before they do it. It just doesn’t make a whole lot of sense to want to censor opinion just because people have no prior direct experience.

          1. Size of staff is a poor indicator of competence of the decision maker. If anything, bureaucratic largesse often indicates incompetence in an executive suite.

            Does Warren Buffet rely on a massive staff to make his investment decisions? No. The average senator has a staff of about 34 people, not insane by today’s standards. But it does take a lot of knowledge and a support staff to competently manage complex issues.

            Speaking about competence: Gore is a Harvard grad (with honors), president of his class. Army veteran who enrolled and served in Vietnam instead of falsely claiming bone spurs and having his daddy protect him. On his return, Gore graduated from Vanderbilt Law School. Represented Tennessee from 1976 as a moderate with huge constituent support. Served on Energy and Commerce, the Science and Technology committees, as well as the House Intelligence Committee. In the Senate, served on the Homeland Security and Governmental Affairs, the Rules and Administration, and the Armed Services Committees. In that capacity, he pushed hard for modernization of the government and US armed forces, articulating to other congressmen the dire need for high speed computing and communications networks. He introduced the Supercomputer Network Study Act of 1986 and the High Performance Computing Act of 1991. This bill funded the National Information Infrastructure, which as we all should know transformed and replaced flegling government networks like ARPANET into the modern open internet you take for granted today. If not for a vision of an open internet accessible by all citizens pushed for by Gore, the internet today could very well have evolved instead into a balkanized mess of incompatible regional networks dominated by old phone companies.

            As US Vice Prez 1992-2000, Gore worked to trim waste in the Government. He was regularly recognized for his efforts replacing old tech with new more capable systems. Gore did play a strong role in supporting the IT boom throughout the 1990’s, something MDN right wingers cannot deny. Notably he proposed in 1998 an “Electronic Bill of Rights” to protect privacy online, which remains a core tenet of Apple to this day — almost alone in the IT industry. New Gingrich, frequent critic of all things Clintonian in public while being good friends in private, stated: “In all fairness, it’s something Gore had worked on a long time. Gore is not the Father of the Internet, but in all fairness, Gore is the person who, in the Congress, most systematically worked to make sure that we got to an Internet, and the truth is — and I worked with him starting in 1978 when I got [to Congress], we were both part of a “futures group”—the fact is, in the Clinton administration, the world we had talked about in the ’80s began to actually happen.”

            It is no wonder why in 2003, Steve Jobs recruited Gore to be an Apple boardmember. “Al brings an incredible wealth of knowledge and wisdom to Apple from having helped run the largest organization in the world—the United States government—as a Congressman, Senator and our 45th Vice President. Al is also an avid Mac user and does his own video editing in Final Cut Pro,” said Steve Jobs, Apple’s CEO. “Al is going to be a terrific Director and we’re excited and honored that he has chosen Apple as his first private sector board to serve on.”

            There is a very good reason that Apple did not recruit old Bone Spurs, a 7-time bankrupt businessman set up by his dad Frank Trump, a corrupt multimillionaire NY slumlord, to join Apple in any capacity. Trump was a longtime Android user, who tweeted his narrowminded opinions daily from 2012 – 2017 on an insecure not-updated trackable 2012 Samsung S3 until the White House IT staff finally pried it out of his little hands. Trump’s campaign server was managed by idiots using an old version of Windows — but ironically Assange was only delivered dirt from the opposing party’s almost as incompetently managed server by Russian intelligence. Trump’s Twitter account was registered to a Google email address which appears to belong to Dan Scavino, which indicates that Trump didn’t even know how to set up Twitter himself. So while whining about the use of a “private” secured Mac email server managed by staffmembers (Powell, Clinton, and others did this routinely to manage their Blackberry devices), Trump spend his entire campaign and the first year of his presidency relying on Twitter and Google servers managed by SillyCon Valley dorks. To this day, he regularly refuses to use secure or federal communication networks, preferring to air stuff like staffing decisions over Twitter. f!cking Hypocrite. What is worse, the current administration is so incompetent in tech matters that nothing good is expected to happen for the tech world anytime soon. If anything, Trump set back US IT infrastructure many years by appointing a Verizon stooge to the FCC chairman position. Trump is allowing SillyCon Valley to consolidate massive power while US IT infrastructure and security and public policy dramatically lags many other nations by objective measures — all while US consumers continue to pay very high prices for mediocre network access, in most cases through monopoly networks. Trump shows complete ignorance to the risks that the current internet faces as well as the need for dramatic modernization of the internet infrastructure that, in many ways, has been transformed by greedy corporations into the biggest Achilles Heel of the national infrastructure.

            How do you stop tech illiterates from using common sense? Lead xenophobic pep rallies using nonsensical and hypocritical chants in wannabe dictator style. The brainless Android-using masses will follow any piper that promises security while ignoring how bad tech security is now being mismanaged.

            Last point: The EU fined Google for violating privacy laws. The incompetent administration and Congress haven’t bothered to write or pass any law protecting internet users from data theft, not even the one Apple director Gore proposed decades ago. Apparently the low info voter would rather have a great wall of china instead of real internet security.

            1. LOL, who knew. My comment was very little about Al, and all about the OP’s comment that you have to have first-hand experience at managing a giant company to give Apple advice.

              I used to live near Al, by the Naval Observatory. While all those things you wrote about Al are admirable, let’s not forget he got a huge leg up in life, much like mr. bone spurs.

      2. Your rip on Gore shows your bias. Tyou are in no way qualified to give any advice except whether its Burger King or Taco Bell for lunch.

        You are ignorant

        1. I suppose this is to me. I didn’t “rip” Gore. I just pointed out to the OP that if the only people who can give advice have to have had direct prior experience running a giant company, then no one would be qualified.

  3. Stock Market 101: Wall Street doesn’t control, decide or “set” the price of a stock. Nor does it “reflect” the state of the economy, let alone the state of any company represented.
    For example, the success of Apple (or lack thereof) has no direct effect on the price of Apple’s stock. Rather, when traders are (in general) more interested in selling it than buying it, the price of a stock declines. The opposite is also true.
    If you “Play” the stock market (trade) you quickly discover the only way to make money on a rising stock is to be among the first to buy it (when it is still low). And the only way to avoid losing money on a declining stock is to be among the first to sell it (when it is still high). The net result, folks, is traders don’t watch the company behind the stock. They are watching each other. If a few start selling a stock, the rest rush to sell it, too. If they hear some news (or some analyst’s comments) that they think will cause other traders to react, they will try to be among the first to so react. Thus they become a self-fulfilling prophecy.
    Investors, on the other hand, are interested in the company. They buy and hold for the long term. For them, it’s a savings account with (hopefully) a better return. But because of this, Investors don’t influence price changes in any way.
    Wall Street is not smart, stupid or clueless. People who cry, “They just don’t understand Apple,” don’t understand the market. It’s a mob-mentality, pure & simple. They don’t care about you, me or Apple. They only care about each other and any “skill” they may have is simply the ability to predict what other traders might do before they do it.

    In other words, “traders” are like sheep… If a few suddenly start to run, they all run and in the same direction. Only afterward will analysts attempt to figure out why.
    What’s the solution for Apple? Minimize their reliance/exposure to traders. So, you begin share buy-backs and bond issues – with an eye toward reducing your risk (from traders) or perhaps one day eliminating it! (Get out of the stock market and go private. All they’d really need is lots of money to fund themselves! Hmmm.)
    I’ll get off my soap-box, now.

  4. Forget the post iPhone Apple, analysts haven’t understood Apple for decades. At every turn they’ve almost universally doomed Apple to failure. This is not a new thing.

  5. Gag me ! Mike’s falsehoods in praise of Gore are riotously funny and inane. Dig further my friend. He and his crooked old man (another Senator Gore) have profited from big oil for 6 or 7 decades. His Army service was a joke—I am a Vietnam vet and we all knew the real story—his old man had him go over there in complete safety, to lay the groundwork for a political career, as a “reporter” writing drivel in The Army Times and a few others. We got our asses shot at, he went to the club and drank every night. He went to divinity school and got kicked out. He was blowing week and coke among other things. In the 1996 campaign he violated campaign laws by sneaking in huge Chinese cash “donations” which were laundered through his fake appearances in front of Buddhist monks and followers. Give me a break. He has been a scumbag throughout his entire life. Look into Armand Hammer and the senior Senator Gore for the real truth about his dad lining his pockets from corporate billionaires. Al grew up living in a penthouse suite in Washington DC for God’s sake. Get studying before you embarrass yourself any further. Another Devilcrat troll you are, Mike!

    1. citizen apparently has gotten Gore confused with George Dubya Bush, Fighter Ace. Gore may not be a saint, but the slander against him funded by political opponents has been thoroughly debunked. Gore Sr. was against Gore joining the Army at all — cowards like Ol’ Bone Spurs show that staying out of Vietnam wasn’t difficult if you were wealthy and connected. The fact that Gore spent any time in Vietnam at all shows that he was not being protected by his father.

      “There is no hard evidence that Gore’s father, other government officials, or top commanders intervened on his behalf.” according to Dess Stokes, staff sergeant at the Newark Armed Forces Entrance and Examination Station. On the day Gore walked in, doesn’t remember any communication from superiors about Gore. “A kid with Gore’s background (a 134 IQ and a Harvard degree)”, he said, “didn’t need to be a senator’s son with high-level contacts to get the military job he wanted –You pretty much got your choice of assignments.”

      In fact, Gore requested a tour in Vietnam but his orders were delayed by the Army until AFTER the 1970 election, reportedly so that Senator Al Gore Sr. could not use Gore Jr. in Vietnam as a patriotic campaign ad poster (which Gore Sr wasn’t going to do anyway). By the time Gore got to to Vietnam, he had only 7 months left in his tour of duty.

      Gore served with the 20th Engineer Brigade primarily in Bien Hoa, South Vietnam. The Castle Courier, the newspaper of the U.S. Army Engineering Command, and other publications suggest that Gore pulled his weight, which in his case meant choppering around to report features about the good works of the 20th Engineers, who were tasked with paving roads, building bridges, and clearing jungle to support combat operations. William Smith, another reporter attached to the 20th, recalls the morning in early 1971 when a sergeant asked him to go to Khe Sanh, fifteens miles south of the Demilitarized Zone, to cover the engineers’ role in reopening an abandoned airstrip. When Smith said he was scheduled to leave for R&R in Hawaii, the sergeant called for volunteers. Gore stepped up and spent a cold night in a foxhole. “Al did what everybody else did,” said Mike O’Hara, the photographer who shot the Khe Sanh assignment. Gore himself did not boast about being a Rambo: “I carried that rifle all over Vietnam and walked like that in every part of the country. I was not involved in fire fights. I was not in the infantry. I was in areas where combat took place. I did not see combat myself. I was fired upon. The engineers frequently took fire, but we usually had a critical mass of bulldozers and equipment that made it mostly harassment fire.”

      “citizen”, are you demeaning the contributions that the Engineer Brigade made just because they weren’t on the front line at all times?

      speaking of laundering money — why do you approve of Trump’s longtime corruption?

      I have cited the sources of my information. citizen, the least you could do is identify the official sources for your lies.

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