London Evening Standard, Jim Armitage column
Nov 08, 2012 (London Evening Standard - McClatchy-Tribune Information Services via COMTEX) --
Apple. One subject for a newspaper guaranteed to provoke a flood of emails -- half angry, half happy. In September, I warned that the company's explosive growth story was looking wobbly and that the Jobs legacy was proving tough to live up to. I soon received a Blackberry-full of messages from Apple cult members telling me what nonsense I was talking. But there was a similar number agreeing with me.
Events since then have shown, I'd say (in an annoying I-told-you-so sort of way), that I was on the correct side of the argument. A nasty profit warning followed. The share price plummeted. As a colleague just pointed out: "You had to get one right eventually."
When I wrote that piece, Apple shares were just shy of $700. Today, there are less than $570 -- a fall in the company's value of more than $100 million. The point I was making was that the new iPhone launch seemed unimpressive and symptomatic of a company losing that jaw-dropping cool for which Steve Jobs was famous.
Rivals such as Samsung and even that old also-ran Nokia are coming up with ever-better products at far cheaper prices, I pointed out. The argument still stands. Yesterday, research showed people are getting Android phones at a rate six times faster than iPhones. That is up from four times faster in May.
I also argued that Apple was behaving like all other new global behemoths, becoming leaden-footed, focusing too much on launching legal actions against its rivals and missing the detailed stuff that's so important in keeping a business successful.
Don't get me wrong, Apple is still a phenomenal company, possibly the greatest company in the world today. But it was never worth $700 a share.
So how about $570 That's the head-scratcher now. I think we're getting closer. Part of the fall in recent weeks has been down to Apple's Chinese partner finding it difficult to make the new iPhone5. To get the device slimmer and lighter involves a fairly tortuously complex design process, apparently.
For investors, this is good and bad. The bad news is it has meant lost sales (and the profit warning). But most of that is now in the share price.
The good news is that demand for the new phone is clearly vast _ otherwise supply shortages would not be such an issue. Also, it's likely that, sooner or later, the suppliers will sort out the production problems and sales will leap again _ as the pent-up demand is filled.
Meanwhile, in the longer term, investors should take heart in the fact that core (forgive the pun) Apple fans remain weird. They happily spend ridiculous amounts of money on devices not much different from far cheaper rival products. They upgrade their old bit of Apple kit every time a tweaked version comes out. They evangelize about it in a way that speaks louder than any amount of advertising. I still suspect the growth of this group of dream customers will slow, but their numbers will remain vast.
Apple is still not down to the $530 levels of May. There may be further to go yet. But we're getting to levels where it's looking tempting again.
Let the emails commence...
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