It’s absolutely amazing what has happened to Apple’s share price over the last six months. From a high of $702 in September 2012 to the lower 400’s in March 2013, it’s been one wild ride. Full disclosure: I do not own any shares of Apple or shares of any other firm for that matter. Even fuller disclosure: I am a marketing Ph.D. not a finance Ph.D. and sometimes Wall Street makes no sense to me whatsoever.
Case in point – Apple. The rumormongering goes something along the lines of this: Apple has not had a blockbuster product since Steve Jobs died and worries persist that Android/Samsung is eating into iPhone’s market share. I believe I started this paragraph with the word rumormongering.
Apple has one of the best balance sheets in recent memory ($137 billion in cash, zero debt, $12 to $16 billion in new cash per quarter, a single-digit P/E ratio). As for iPhone, not only did the iPhone 5 outsell Galaxy in the US and around the world, but the iPhone 4s ALSO outsold Galaxy in the US and around the world for the last quarter of 2012. While no one seemed too excited about iPad mini (even I complained they missed the price point), Apple could not keep the device in stock during the holiday shopping season. Over 80% of Apple’s revenue came from products released in the last 12 months.
Once again, Philip Elmer-DeWitt of the Apple 2.0 blog hit the nail on the head. Steve Jobs was known for having a reality distortion field around him. In this post, Philip suggests that the reality distortion field has been inverted: now everything is normal inside Apple yet people on the outside cannot grip reality.
Here is my take – the business press has been writing positive articles about Apple for so long that those articles are no longer interesting to readers anymore. Instead, the articles that say Apple is “in big trouble,” “losing it’s cool” or “just plain doomed” attract more attention. I’m curious to see how long business press will keep ignoring fundamentals and instead continue with rumormongering just to attract attention. What will they do if Apple does roll out at least one or perhaps two new product lines this year? We’ll just have to wait and see.
Something to think about today…
Associate Professor of Marketing
Stillman School of Business
Seton Hall University