Apple is still better than its rivals
A disappointing quarter shows the company is not led by magicians.
I've never been a person who tells a great joke. In fact, if there is a good joke, chances are I'll end up screwing up either the delivery or the punch line, or both.
But have you heard the one about Apple's (AAPL) impending collapse after its earnings miss Tuesday? It is said to be of "RIM-like proportions." If you haven't heard it, you're not missing anything, because the joke is not very funny.
My column Tuesday ahead of Apple's announcement, which suggested Apple stock is heading to $1,500, caused quite the stir.
In fact, on numerous occasions I was labeled an "Apple fanboy" -- you know, the term used to describe investors in the company who have supported it since the stock was trading at $90 three years ago and possibly lower. In other words, it's a synonym for "smart."
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However, upon Apple's disappointing results, I was reminded on the company's Live Earnings Blog by a renowned supporter of Research In Motion (RIMM) that I should be embarrassed for having written such a glowing narrative about Apple.
But before we continue, I need to point out that the price target for $1,500 was projected three years out to 2015 and heavily predicated on the assumption that the company would have by then entered the automobile dashboard.
Nevertheless, by sheer virtue of Apple's recent dominance, there are many who have waited for a day like Tuesday to see the company fall flat on its face.
But what exactly has changed with its narrative? Absolutely nothing.
So looking at its number for the second quarter, some perspective is warranted here. Apple posted both revenue and profit increases of over 20%. Imagine what that means for a second. Confetti would be flying at RIM or Microsoft headquarters. At Apple, however, that is just not good enough.
That level of growth was its slowest in over two years.
Still, for the quarter the company sold 17 million iPads, topping forecasts, while selling 26 million iPhones. What's more, while its iPhone sales have increased almost 30% year over year, it is considered "tepid" by the standards imposed on the company. Accordingly, I think there's a meaningful gap between how well the company actually performed in the second quarter and how the market has responded.
After the report was released, the stock dropped 5% after hours. The question is, will it find a new near-term low exceeding its previous level of $522? Not likely.
The anticipation of the iPhone 5 and iPad mini clearly cannibalized its second-quarter sales to some degree, and I think astute investors understand this.
All this quarter proves is that the people running Apple are human and its performance is based on real macro events and not magic.
Apple is hated by many for one reason and one reason only -- it is loved by many more! I hope that makes sense. If not, here's what I mean. It is not the company's fault that its stock has taken on a life and popularity never before been seen. In fact, in many respects the love affair with the AAPL ticker has been (admittedly) awkward.
I have seen the ticker "AAPL" on several license plates across many states. The phenomenon has exceeded rationality. What's more, the popularity of the iPhone and iPad has served to only compound the issue, which has resulted in consistently high expectations for the company, many of which it has been able to not only meet but blow out of the water.
As those who loathe the company's success are dancing in the streets, they need to also remember that even on Apple's worst day it is still better than every other company out there. Its numbers prove it.
In the process, companies including RIM, Microsoft, Google and Amazon (AMZN) continue to squander operational resources to try to keep up with Apple by producing "Apple-like" products, or something close enough that is considered "respectable."
But for Apple, when has "respectable" ever been enough?
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Hotels and restaurants are increasingly fighting back against negative online reviews -- by suing the writers. So be careful how you phrase your disgust with that disappointing dinner.
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