We've got all the Apple we need
Until the company offers something new, there's no reason to buy more products -- or stock.
"How can Apple's (AAPL) stock go down from here? Everyone I know has an iPhone."
There it is: The single most damning question that can be asked both about Apple the company and, perhaps more important, Apple the stock.
It's the inquiry that explains this stock's inability to get out of its own way despite the huge cash hoard, despite the millions and millions of iPhones sold, despite the popularity of the iPad and despite the love of the ecosystem. All of these, of course, have been extolled repeatedly by management to the total deaf ears of the gathered, beleaguered analyst community.
The reason Apple shares can't lift -- even despite what you'd consider impressive earnings if you didn't know any better -- is that everyone owns an Apple and everyone seems to own the stock. You can't sell iPhones to people who have iPhones, unless the new iPhones are far better than the old ones -- which they aren't. You also can't sell Apple stock to people who already have Apple stock.
However, you can sell Samsung (SSNLF) phones to Apple iPhone users, and that's happening in increasing numbers around the globe. You can sell PepsiCo (PEP), McDonald's (MCD) and Kimberly Clark (KMB) to Apple shareholders, too -- because that's what those folks should buy if they want dividends, steady growth and increasing gross margins with lessened competition and declining raw costs.
Now, I do not mean to be condescending when I write that Apple's earnings were impressive if you didn't know any better. I am simply pointing out that, if the people who own Apple's stock were to listen to the conference call, they would know exactly what I am talking about. It was a surreal call. It was as if management was giving you a liberal arts survey course on the greatness of the Apple civilization, and that the analysts were critiquing The Rise and Fall of the Apple Empire. Apple was teaching the wrong course!
This is why: As Apple prattled on about how much the people really love Apple and how Apple intends, in return, to shower them with cash, the analyst community was trying to figure out how poorly Apple really was performing. The analysts -- many of them no doubt scrawling on their iPads and listening on their iPhones -- only want to try to figure out how badly Apple is really getting trounced by Samsung. They are fixated, correctly, on gross margins, because gross margins are the giveaway as to whether Apple can continue charging more than everyone else and still be loved. The community's giving that metric a raging thumbs-down -- which is, again, why this feels more like the fall of the Roman Empire and not the rise of it.
Now, I do believe Apple can create a fixed-income floor for its stock, not unlike Pfizer (PFE) or PepsiCo or Kimberly. But we all accept slow revenue growth from those companies in return for consistent earnings and increasing dividends. The compact requires consistent earnings, and Apple cannot give consistent earnings because it doesn't have the horses to give them.
What should have happened? Apple had needed to change the dialogue Tuesday night. It had needed to say, "Come the third quarter of this year, you will see the most exciting products ever." Or it had needed to say that it was taking the $50 billion with which it had planned to buy back stock -- as well as $20 billion of that dividend money -- and will instead use it to buy Dish Network (DISH), Sprint (S) and Netflix (NFLX) and offer iTelevision by the first quarter of next year.
Only then would we not be owning everything Apple has to offer. Only then would the stock find new buyers. Otherwise, when it comes to Apple -- the stock and the product -- everyone has what they need already, and there's no need to have any more of either one.
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.
More from TheStreet.com
he finally turns on apple.....he got you in at 700......now out at 400..........nice trade
huckster........did stefanie link help you or was she "working" on getting your lemmings to buy 1900
The successful long-term prospects for the purveyor of high-tech/electronic gadgets such as computers and smartphones require (1) significantly improving products at (2) an attractive and decreasing price point.
The prospects for an AAPL are not built on this foundation. Rather, such a company makes its money by relying on the fanboy. And just as bubbles have a way of popping, fanboys have a way of disappearing.
what is apple going to do next? a giant screen TV with the internet, phone, netflix, etc all in one big box? all the technology a modern home needs in one big box?
1. A Socialist wrote the Pledge of Allegiance.
2. Jesus healed the sick and helped the poor, for free.
3. Joseph McCarthy was an un-American, witch hunting sissy.
4. Jefferson Davis and Robert E. Lee were traitors.
5. The South lost the Civil War, get over it.
6. The Founding Fathers were liberals.
7. Fascism is a right-wing trait.
8. Sarah Palin is an idiot.
9. The Earth is round.
10. Reagan raised taxes eleven times as President.
Not being invested in Apple, I would not be here to disparage or encourage the Company..Neither.
They have taken a lot of Technology from others,and expanded or improved it for consumer usage.
Much of their success, I believe has or is in their "marketing concepts"....imo
They also used/employed another concept..."Of build it, they will come." And of course;
PT Barnum's ideaology of "one born every minute."
When the last "couple generations" come to their senses, they will realize that they don'y always need the "latest and greatest"; Others may provide cheaper or there are more important things in life.
Because of that I don't really believe Apple is a "good long term" investment at this time.
It's the forecast stupid! Apple could easily earn $6-8 per share in the next quarter which is 10-20% below the $9 currently estimated by WS analysts. People don't like falling revenues and profits.
Steve...Think they had that in "1984" and I believe they have plenty of Technology to do that today.
Our big Flat screen has enough input jacks on it, to probably wire everything except the "kitchen sink" into it....And it's already 5-7 years old.
All I need are the adjuncts or converters to make it happen...Our PC has a bunch too, but I don't have any of it wired together....Just lazy.
Even AT&T or the Bell System...Had the Picture Phone back in the 60s..??
Today you have Skype or other Applications..?
Tim Cook has done a pretty good job in running the company, keeping EPS above what was expected but He'll have a tough time next quarter if he can't improve those gross profit margins. Software vs. hardware; It'll be interesting to see what direction Mr. Cook will go. I'm sure he'll try both but just how much further can you build on the current products; iPhone, ipod, ipad,....
At least current stock owners can look forward to those dividens so, at least for the short term, Apple should be ok to hold on to.
Fatty cakes....Your humor is in a degradation process...You use to be funnier??
They must have put different ingredients in the Chalupas...har,har,har.
ABS...Just curious..HOW DOES the "boston bombers" parents get money on the Dole from the U.S.?
I thought they lived outside the U.S. and were not Citizens ??
I KNOW his Dad was back in his homeland...
Finally a simple easy to understand explanation as to why Apple will now decline and will no longer serve the community of growth investors. Simple and to the point. Now I'm no fan of Cramer but I'm not an Apple Sheeple either.
I suspect that many of those that hang on to this stock are th same ones that had a chip implanted in their brains at the Apple Store. It's a cult folks! Yes great HW but Jobs was so full of himself that he failed to understand that you can convert everyone. You can't claim to be for freedom and yet close the platform. You can't sell HW forever. Apple is not the new Microsoft as some have mentioned it's the new DELL. Once the other vendors have caught, up and they have, you have only your "Cult" following supporting you. Please note the "Cult" does not buy stock. Buyers of stock determine the price not the cult following.
Those that believe there is some other magic world transforming things coming from Apple have taken more acid than Jobs did. It's all commodity now... One of the big killers was when the phone companies dropped the subsidies for the iPhones. They are now expensive for the consumer and lower margin for Apple.
Royal....They already have that in MANY Computers,PCs...
Under certain programs and tools and going into the Control Panel..
not being a smart azz...
But just a few clicks away, you can do a lot of clean up and repairs on your PC..
The first Dell....We had lasted over 12 years, even with all the bullshidt, people would send us and attacks from the outside.
I had Firewalls and a lot of anti-virus programs.
Went in and cleaned stuff out for smoother ops and did major clean ups about every few weeks..
Delete stuff you don't need..
Markets will finish in the Black (is that racist??)..
Just about the Whole World has finished in the Black, in the last 24 hours..
And Gold, along with Oil is up too..Or it was?
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.