Too much Apple hatred
While the consensus doesn't believe in the tech giant anymore, what's the truth?
When the consensus speaks, it sure is hard to argue with it. Tuesday night, the consensus on the Apple (AAPL) call was this: No matter how the company spins it, there is a saturation of high-end phones. Even though Apple sold a monstrous 31.3 million iPhones -- about 5 million more than anyone was looking for -- it doesn't matter. The consensus holds that the market isn't growing anymore.
In fact, the additional phones, at least according to the analysts, are the "wrong" phones -- because many are iPhone 4 and 4s models, and that's not the Apple way. This company is supposed to only sell brand-new phones, and the trade-down and starter-phone gambit is something the other guys do, not Apple. It's worse. The consensus believes -- even as Apple's gross margins have stayed steadier than most had thought -- that Apple product is now cannibalizing and that the iPhone 5 isn't "good enough" to entice new buyers.In other words, the consensus has spoken, and Apple doesn't have it anymore. The imagination, the excitement and the new-product glow are all finished -- because the old products, the Steve Jobs products, are now overshadowing the Tim Cook products. Unless that changes -- and the consensus sure doesn't believe that's possible -- Apple is a low- to no-growth company that you don't really have to pay attention to anymore.
Not only that, but the consensus doesn't like where Apple sells its product. Apple's blowing the doors off sales in Russia and India, the U.K., Turkey, Poland and many Asian countries, and it's doing some incredible sales, of course, in the U.S. But all that means nothing.
The only sales that matter are from China, and China -- well -- it isn't Apple's strong suit. Oh, sure, Apple sells a lot of tablets there. The consensus has to acknowledge that, because how else could China be generating 14% of sales? But you can tell the consensus wants to see double or triple that before the jackal-led think-pack is satisfied. You could tell by the tone that the consensus isn't happy with the "Arc of time" opportunity that Tim Cook has traced out about China, because the analysts want Chinese growth here and now. It's almost as if a Chinese phone sale is worth two or three phone sales in India -- something that I am sure the Indians aren't too crazy about!
Oh, and did the consensus ever bury the iPad tablet as a new product. If you listened to this call you would have thought an iPad sale is nothing but a sale of a Sony Trinitorn television or, worse, a Zenith -- and that Zenith TVs are kind of giveaways that don't matter anymore. Between the sales of the iPhone 4 that cannibalize, and the declining tablet sales, you can only surmise that Apple's doing nothing right and is on its last legs.
What's the truth? Well, how about this? The consensus hates Apple too much. It is tired of Apple telling it how it is doing, and it is now telling Apple how the consensus thinks it is doing. There's only one problem: The stock market doesn't seem to care either way. Information technology is not doing as well as Apple says it is, and it is not as bad as the analysts say either. It's just that the balance of power has shifted, and that makes for some pretty depressing reading until new products come out and the discourse changes to the positive -- and, with it, the longer-term trajectory of the stock. That's unless, of course, the consensus is right and there is no "there" there -- at least not any longer.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and is long AAPL.
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As far as the iPhone goes, as long as Apple keeps re-inventing them and coming out with a new version, people will keep buying them. This is particularly true if the new plans by the providers allow you to get a new phone every year instead of every two years. I was in a Verizon store a few weeks ago and the place was packed in the middle of the afternoon on a weekday - most of the people I saw were getting new phones. No one was hanging around the self-pay kiosks, everyone was standing in line waiting to get their new phone activated and have all their contact info transferred over.
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