This Apple and innovation nonsense

[Rogifan]

So AAPL is down again this morning when the market overall is up. And another Wall Street analyst lowered their price target claiming that Apple isn't innovating at the same pace they did under Steve Jobs. Can someone explain to me what pace they're referring to? We got the iMac in 1998, iPod in 2001, iTunes store in 2003, iPhone in 2007 and iPad in 2010. It's not like we were getting groundbreaking products every quarter under Steve. It was 6 years between iPod and iPhone. And when the iPad first came out many joked it was just a blown up iPhone. It hasn't even been 2 years since Steve passed away.

I don't get this logic at all. I'd love to ask these Wall Street guys - if Steve were still alive what would we have seen from Apple in 2012 that we didn't see under Cook? Some revolutionary TV interface or wearable computing product? What exactly would be different in terms of products? Apple didn't attend trade shows like CES or MWC when Steve was CEO; they didn't let the public in on new products they were working on. Seems to me there's little Apple is doing differently now than they did 2, 3, 5 years ago. Why is Wall Street so willing to buy into a false narrative?

 

[CrickettGrrrl]

Wall Street needs a hard reset.

 

[SilentLoner]

So AAPL is down again this morning when the market overall is up. And another Wall Street analyst lowered their price target claiming that Apple isn't innovating at the same pace they did under Steve Jobs. Can someone explain to me what pace they're referring to? We got the iMac in 1998, iPod in 2001, iTunes store in 2003, iPhone in 2007 and iPad in 2010. It's not like we were getting groundbreaking products every quarter under Steve. It was 6 years between iPod and iPhone. And when the iPad first came out many joked it was just a blown up iPhone. It hasn't even been 2 years since Steve passed away.

I don't get this logic at all. I'd love to ask these Wall Street guys - if Steve were still alive what would we have seen from Apple in 2012 that we didn't see under Cook? Some revolutionary TV interface or wearable computing product? What exactly would be different in terms of products? Apple didn't attend trade shows like CES or MWC when Steve was CEO; they didn't let the public in on new products they were working on. Seems to me there's little Apple is doing differently now than they did 2, 3, 5 years ago. Why is Wall Street so willing to buy into a false narrative?

Yeah it is making no sense to me either.

 

[APlotdevice]

This is a perfect example of how perception can often be completely out of step reality.

 

[MacsRgr8]

It must be a nightmare to have shareholders....

Couldn't Apple simply pay-off every shareholder and let it be a private company?

To hell with Wall Street and analysts. These guys make money by gambling.

 

[Rogifan]

This is a perfect example of how perception can often be completely out of step reality.

Or how perception becomes reality and everybody starts believing it. I hate to say it but maybe Apple needs someone other than Tim Cook to be their mouthpiece. Every time he speaks he brings the stock down.

 

[vrDrew]

Or how perception becomes reality and everybody starts believing it. (

The fact of the matter is that with $120 billion (and counting) in the bank - Apple doesn't need to placate stock analysts. It simply doesn't need to sell its shares to finance its day-to-day operations; it won't need to issue great swathes of stock to fund acquisitions.

So, from a long-term shareholder perspective its actually a good thing if the share-price periodically gets beaten down by know-nothing Wall Street talking heads. If you are using your AAPL dividends to reinvest in the company - guess what, your next round goy a little bit cheaper.

"Innovation" is a word that gets so overused it has become all but meaningless. And its also worth noting that "innovation" and "desirable" and/or "successful" are hardly one and the same thing.

Did Apple miss the boat by not coming out with a "phablet" like the Samsung Galaxy Note? Maybe. But if they'd brought out a 5" iPhone a year ago, it would have added yet another screen size for developers and content producers to cater to. Apple's most valuable asset isn't its "innovativeness" - its their ecosystem. Far better to let Samsung sell a few million chunky handsets to clueless dweebs, rather than poison the brand with a substandard product.

 

[thewinelake]

I'm not so sure you can ignore the effects of a sinking share price.

Many employees with stock options will be feeling somewhat glum. I suspect this may be enough to actually cause talent to leave Apple.

Outsiders will see the talk and headlines and begin to believe it, or at least will see some of the halo-effect slipping. Apple's "magic" is a significant part of the allure and their lead is being eaten into in many areas.

One of the few saving graces is that Microsoft seem to be struggling even more.

Apple have lots of patents that they're just sitting on (at least by the looks of things). It would be so nice to see them come out with some good stuff on augmented reality or home automation. I wonder if they should even consider lowering themselves to talking more openly about projects in the labs, although I suppose they'd be worried that Samsung would just copy them.

 

[vrDrew]

Outsiders will see the talk and headlines and begin to believe it, or at least will see some of the halo-effect slipping. Apple's "magic" is a significant part of the allure and their lead is being eaten into in many areas.

I'd recommend reading this Asymco blog entry:

Apple’s renaissance began with the iPod. This was not evident right away however. The product was unveiled on October 23, 2001 at a time when Apple’s share price had just fallen 70% from year-earlier levels. It was perhaps a good point from which one could expect a recovery to begin.

It was not to be. One year after the iPod’s launch the stock price had fallen another 20%. Indeed during 2001 the company was in the throes of a “bear market” in its shares. If we measure a time of persistent share price reduction as a bear market, then the one in 2001 was significant. For 154 days, between April 27 and September 28, 2001 the shares fell 38%

Throughout most of the previous twelve years Apple's share price seems to have fallen just as it was introducing products that would end up totally transforming the company's finances. You could even make an argument that a falling AAPL share price is a pretty good indicator of great things to come from the company.

As a public company, Apple's board and executives have to keep an eye on the share price. But they also need to remember its not the share price that makes the company successful: its the products they make.

 

[snberk103]

So AAPL is down again this morning when the market overall is up. And another Wall Street analyst ... Why is Wall Street so willing to buy into a false narrative?

Something many people forget is that stockbrokerage firms (who pay the analysts either directly or indirectly) only make money when stocks are being bought or being sold (with exceptions for the very large portfolios.) If everybody bought their stock portfolio and then held on to their stocks, the brokers would go broke and the analysts would have nothing to analyze.

So analysts are always screaming "BUY!" or "SELL!" - the masses follow along and the brokers make their commissions, and pay the analysts for the analysis.

I suspect there are just a bunch of Wall Street types who want more AAPL stocks to change hands.... there may some late Christmas bills to pay.

 

[Liquorpuki]

If Wall St analysts were always right, stocks would never be undervalued and Buffet would be poor

You seem upset that Apple could be undervalued. A lot of companies are undervalued

 

[ApfelKuchen]

It must be a nightmare to have shareholders....

Couldn't Apple simply pay-off every shareholder and let it be a private company?

A privately-held company still has to be owned by someone, so then it's a matter of which someone does the buying. If you look at the history of leveraged buy-outs (the typical method for going private), there's no assurance Apple would continue on as it has or as you'd wish it would.

However, you're right in a way. To a degree, that's what a stock buy-back (as just endorsed by Warren Buffett) is about. A certain amount of shares are purchased by the company (taken off the market). In essence, the shareholders who stick around have just bought-out those who bailed. Since there are now fewer shares, the remaining shareholders own a bigger piece of the Apple than they did before.

As far as all the negative comments and occasional shareholder lawsuits are concerned? If a publicly-held company listened to everything dissident shareholders, analysts, and pundits said, the company would grind to a halt - as in the U.S. government, there's rarely universal agreement on anything. Management and board need the strength of will to act decisively. As Warren Buffett (gotta love the guy) just said regarding Apple, the board and management should focus on building shareholder value over the long term. By all indications, that's exactly what Apple is doing.

In the end, it's not a matter of what the stock market thinks a company will do in the future (that's just betting on the horse race), it's a matter of what the company actually does.

 

[jdechko]

I hate to say it but maybe Apple needs someone other than Tim Cook to be their mouthpiece. Every time he speaks he brings the stock down.

But it's not Cook that's bringing the stock price down. I mean, obviously something is up with the stock--someone is doing something (quite possibly illegal) behind the curtains. Nothing else makes any sense given Apple's performance vs the industry (Apple up; nearly everyone else flat or down) and Apple's stock performance vs the industry (Apple way down; everyone else flat or up).

If there is one complaint I think that's valid, it's that Apple is holding too much cash. A huge bank account is cool and all, but right now it's wasted in the sense that it's not making any money (for Apple or investors).

 

[Rogifan]

But it's not Cook that's bringing the stock price down. I mean, obviously something is up with the stock--someone is doing something (quite possibly illegal) behind the curtains. Nothing else makes any sense given Apple's performance vs the industry (Apple up; nearly everyone else flat or down) and Apple's stock performance vs the industry (Apple way down; everyone else flat or up).

If there is one complaint I think that's valid, it's that Apple is holding too much cash. A huge bank account is cool and all, but right now it's wasted in the sense that it's not making any money (for Apple or investors).

I do think Apple needs to do something to stop the daily slide. Down 2.5% today for seemingly no reason. If a share buy back will halt the slide for now they should probably do it. Having the narrative be falling stock price day in and day out is no good.

 

[sdilley14]

So AAPL is down again this morning when the market overall is up. And another Wall Street analyst lowered their price target claiming that Apple isn't innovating at the same pace they did under Steve Jobs. Can someone explain to me what pace they're referring to? We got the iMac in 1998, iPod in 2001, iTunes store in 2003, iPhone in 2007 and iPad in 2010. It's not like we were getting groundbreaking products every quarter under Steve. It was 6 years between iPod and iPhone. And when the iPad first came out many joked it was just a blown up iPhone. It hasn't even been 2 years since Steve passed away.

I don't get this logic at all. I'd love to ask these Wall Street guys - if Steve were still alive what would we have seen from Apple in 2012 that we didn't see under Cook? Some revolutionary TV interface or wearable computing product? What exactly would be different in terms of products? Apple didn't attend trade shows like CES or MWC when Steve was CEO; they didn't let the public in on new products they were working on. Seems to me there's little Apple is doing differently now than they did 2, 3, 5 years ago. Why is Wall Street so willing to buy into a false narrative?

Agreed. It's annoying. And all of this coming off the heels of the company's (and any company in history for that matter) most profitable quarter. Makes.No.Sense.

 

[SomeDudeAsking]

Agreed. It's annoying. And all of this coming off the heels of the company's (and any company in history for that matter) most profitable quarter. Makes.No.Sense.

Did you not see that there was no profit growth for last quarter compared to a year ago? Did you not see the guidance from Apple that it will have dramatically smaller profits for the current quarter compared to the same quarter a year ago? Or that margins for iPads are a fraction of what they use to be because people are buying cheaper versions? Have you not seen that the market share of iPhones in China is the same as WINDOWS MOBILE and on the same declining trajectory? It doesn't take a genius to see why AAPL is tanking. There are a whole host of factors that show Apple is not a good better for future growth or innovation.

 

[LethalWolfe]

I don't get this logic at all. I'd love to ask these Wall Street guys - if Steve were still alive what would we have seen from Apple in 2012 that we didn't see under Cook? Some revolutionary TV interface or wearable computing product? What exactly would be different in terms of products?

The difference is that Jobs was a very unique individual with a track record of bringing products to market and making people lust after them. Cook has no such track record. Cook has not released his 'signature product' yet and even when he does I'm sure many will say, "Well, Jobs left a roadmap for the company so how much of this is really Cook and how much is Jobs?" Cook has to prove that he can lead Apple forward and not just coast on what Jobs built. Until he does that (which will take years) people will have doubts.

 

[Rogifan]

The difference is that Jobs was a very unique individual with a track record of bringing products to market and making people lust after them. Cook has no such track record. Cook has not released his 'signature product' yet and even when he does I'm sure many will say, "Well, Jobs left a roadmap for the company so how much of this is really Cook and how much is Jobs?" Cook has to prove that he can lead Apple forward and not just coast on what Jobs built. Until he does that (which will take years) people will have doubts.

And how does he prove that when people have preconceived notions and will believe what they want to believe. If Apple comes out with something new and its successful people will say it was part of Jobs pipeline. If they come out with something and it's a dud people will say Steve would never have released it, or the new Apple without Steve doesn't know what it's doing.

 

[LethalWolfe]

And how does he prove that when people have preconceived notions and will believe what they want to believe. If Apple comes out with something new and its successful people will say it was part of Jobs pipeline. If they come out with something and it's a dud people will say Steve would never have released it, or the new Apple without Steve doesn't know what it's doing.

It is a bit of damned if you do, damned if you don't situation for Cook. I think the only answer is longevity. Cook has to stay on long enough, and keep Apple successful enough, to get out of Jobs' shadow. Not an easy position to be in but Tim Cook probably knows that better than anyone.

 

[BaldiMac]

Did you not see that there was no profit growth for last quarter compared to a year ago?

Only if you ignore that the year ago quarter had an extra week.

Did you not see the guidance from Apple that it will have dramatically smaller profits for the current quarter compared to the same quarter a year ago?

Did you ignore the "why"?

Or that margins for iPads are a fraction of what they use to be because people are buying cheaper versions?

A very large fraction.

Have you not seen that the market share of iPhones in China is the same as WINDOWS MOBILE and on the same declining trajectory?

No. But then you just made that up.

It doesn't take a genius to see why AAPL is tanking. There are a whole host of factors that show Apple is not a good better for future growth or innovation.

And if you cherry pick only these factors, be non-specific about what time frame you are talking about, and interpret innovation arbitrarily, your prediction will be very hard to argue with.

 

[Squilly]

We're spoiled.