A corrosive attitude from Apple top brass
Whether it wants to or not, the company needs to explain itself to Wall Street analysts.
Some companies just don't want to do "the call." They don't want to waste their time. They don't want to have to be constrained by those Wall Street nitwits who are trying to build models instead of sleek, elegant, loved machines. They don't want to have to defend themselves or their actions, or make cases for their products and their decisions about them in the face of the queries from lesser minds. They don't want to have to justify anything they have done beyond informing these overpaid jackals the obvious facts about their own supremacy.
They believe in the res ipsa loquitur form of Wall Street guidance, the Latin phrase that you learn the first week in law school: The thing speaks for itself.
I don't blame anyone who feels this way.
It's impossible to satisfy those who want so much from you and don't pay you a dime for what probably amounts of a degree of torture. It's unlike wasting solid time at the Department of Motor Vehicles to get a new license, or perhaps visiting Customs in some godforsaken banana republic where you have to just play along to get the heck out of there.
But it's part of the process -- the acknowledged price you have to pay to get people to recommend your stock. It's the cost of sponsorship, the process of promoting something you might just think is unseemly, or even unnecessary: your company's stock price.
So you suffer the consequences and do it the best you can, trying not to be too petulant or too angry or too condescending or dismissive. Indeed, for some, that's just a very tall order -- too tall, given the stature of the company for which they work vs. the stature or accomplishments or employs of their interlocutors.
That is what Apple (AAPL) CEO Tim Cook and his team are suffering through right now. They're trying hard to put into context why they even have to deal with this substrata of specimens known as Wall Street analysts. That's even as, alas, some of them are better -- which, in the case of Apple, means more loyal -- than others. It's even though a couple of them actually try to do good work, whatever that work actually may be.
That corrosive but never-to-be-admitted undercurrent is what stands out for me from last night's conference call -- not the gross margin to-and-fro, or the over-or-under ordering of supply parts for the Mini or the Mac or the smartphone iterations.
Some would call it arrogance, meaning that Apple feels it simply doesn't need to play ball beyond what information it feels the need to give out. The subtext: If you don't like our answers, go figure it out yourself, but good luck, because we will fire the supplier who helps you try to do it. Others would say this justifiably superior attitude is about trying not to let the veil be pierced. It's the veil that says, "Look, we make the best products in the world, and everyone knows that, and if we could make more of what we like, everyone would buy it, and we can charge whatever we like, and we would still do great, so stick that in your model pipe and go smoke it."
The clear implication of the thesis is this: Would you, any of you analysts, ever buy the device another company may be offering vs. our own device? Would you ever buy another company's machine for your kids? Would you ever even risk that? Take that needless chance? So why not just say, "Apple could earn $100 a share, or $200, or whatever, if every manufacturing company in the computer world would just make what Apple wants them to make."
You know what? All of this works, and all of this is totally realistic and understandable from Apple's point of view. It works if the real subject that the analysts cover is the quality and degree of love for the products that you make, and not some piece of paper that trades on an exchange.
But it is thorny and uncomfortable if it is about the trajectory of the stock price that has the audacity of representing your company's value. It is downright horrendous, moreover, when that trajectory is in a tailspin and you don't even want to dignify why that could be or how it could be stopped. Perhaps this is because you don't even care or worse, maybe it's because you think these little minds who are trying to set the price are so obtuse that it isn't even worth working with them in order to help.
It's almost as if you can hear the Apple top brass saying, "If only we could take these numbers and statistics right to the people instead of having to deal with you stooges. If we took it to a plebiscite and dealt with the real voters, the potential customers and the satisfied ones, we'd be much better off."
That's how you can brush off such conference-call staples as questions about market share, or pricing, or actual demand, as just pedestrian entries from knaves and mountebanks who wouldn't know the difference between a sleek Mac Lamborghini and its Trabant and Yugo competitors.
But there's a gigantic elephant in the room, and that's the stock price itself, and it will not be ignored by these small-minded, formerly subservient minions. It won't even be ignored by the ones that Apple occasionally helped a bit because they seemed to rise above the 90 I.Q. of the others.
As for the stock, Apple seems to believe, it's not responding the way the plebiscite would. The stock is not obeying the will of the satisfied customer or hearing the charms of the management, or marching to the tune of the most recent innovation, the iPad Mini.
Unfortunately, from Apple's point of view, the stock is now reacting to that litany of mundane inputs that trap the stocks of other mortal companies. Things like real demand, real customer satisfaction vs. other products -- yes, alas, other products -- like things made by Samsung, for heaven's sakes. It's reacting to how much is really being made on each item, now that the inferiors out there are suddenly making superior products, at least in the minds of some of the voters out there.
In fact, these annoying Lilliputians actually think they need ammo to stay positive -- ammo to do something as simple as breathing -- which is to reiterate their buys. I could see Tim Cook turning to his colleague, genuinely puzzled, saying, "It's as if we have to come up with something break through, something dazzling for them beyond what's obvious, which is how great we are."
But, at some point, your company's products may have genuine competition. In many places on earth, other companies may be taking share, as is the case with the Samsung phone, or have product lines that are in decline, like the iPod, or product lines that seem strong but can't carry the load, like the iPad. And it's a funny thing: When that happens, you actually do need to give these mendicants a little something juicy to keep them on board, to ensure there is no rebellion. Otherwise they feel that they are simply sticking fingers in the dikes that dams a bear lake, and that's not what they perceive their job to be.
The result? The flood is unleashed, and you get the wholesale alienation of those who never deserved a seat at the table anyway. If the company were private, who could care? If the stock's value were equal to the cash, then who would need these people at all? Maybe when it gets there, Apple won't have to even have a conference call.
But here's the simple fact of the matter: Apple is a public company. Until it no longer is, or until it actually does trade through its cash -- which at this pace, won't be long -- Apple's management is going to have to explain itself in a way that can round up more buyers than sellers. Alas, right now, that is obviously just not the case.
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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what a ranble to say nothing!
i'm sure from Apple's point of veiw they provide what is required to wall street. then because their stock has been successful the wall street monster wants more and more to the point where the "monster" is sucking resources from apple! so apple says FU and simply provides their required info.
Even though Apple's growth rate and margins are coming down to earth, Apple is still highly profitable, and it is sitting on a mountain of cash. As primarily a value investor, I would like to see them do two things immediately. First, split the stock, which would enable Apple to become a Dow component and attract more small investors. Second, increase the dividend to at least 3%, which would attract value investors but have a minimal effect on their cash flow, allowing room for future increases. There is no question that Apple is going the way of many other high flying companies. The real question is how well they make the transition from growth to value.
"But it's part of the process -- the acknowledged price you have to pay to get people to recommend your stock."
Hogwash, this isn't the stupid NFL where you have to give some bimbo or jock strap an interview. Companies should publish their earnings reports with all the commentary they want to provide and tell all of you anals and self serving pragmatists to shove your interviews. Nothing more worthless than Jim or Maria asking CEOs dumb questions so those two can rack in millions for hosting soap operas.
Apple should be shareholder friendly and split the stock.Millions more would
buy the stock.
"Caveat Emptor" my Latin answer Jimbo,...
Don't believe I will let Apple (aapl) rule my life, or investing/life choices....Period.
Basically Apple buys the i-phone for $25 from the Chinese who have killed dozens of people making the thing which in of itself should make Apple products banned in America
After all if we ban baby seal fur sales and ivory sales why not ban something that kills people ???
More to the point selling a $25 item for $500 creates a huge profit
Apple should have never been a $700.00 stock, there I said it. Competition is catching up and Apples market share and continuing ability to charge huge mark ups will begin to wane thus reducing revenue.
That being said they will still be a profitable and successful company, just not a $700.00 stock. Tech is all about the next big innovation, if it's Apple who has it then maybe they could rise back to the $600+ range, if it's someone else then it will be their stock that rises. With tech your everyone's darling 1 year and on everyone's hate list the next, Apple is no different Steve Jobs or not.
FLUNKY.......?? S.O.S. Hillary Clinton...?
"The most ADMIRED and Respected Woman in The Nation and the WORLD...!!!!!
FOR ELEVEN (11) Years RUNNING......!!!!!!
You really need to Get a Life, along with that spelling lesson...Comnutz.
People are way over reacting.99% of companies would kill to have their earnings.
I just wish people would rise up tp get these companies to split their stock.Is
We have Soldiers getting murdered almost every week, sometimes by so-called allies or trainees.
It was worst...///
Our Nations Cities clock in Murders everyday, along with other heinous crimes...
Kids killing kids, kids killing Parents and Siblings...Thrill killings,etc,etc.
Very un-fortunate and saddening..
And we have many people (mostly Repubs) that are hung up on 4 persons killed in Benghazi,Libya.
A location we shouldn't have been in the first place, not without an Army...
Rising stars in the State Dept?...If you knew that MUCH John McCain, WHY DIDN'T YOU DO SOMETHING??.....The Repukes are terrified of Hillary Clinton...They are LOSERS....
And what should we ban next....Apple juice from China....Yes we should, I could never figure that one out...Made from concentrate ??
That we shipped to them ???
I like the "Department of Motor Vehicles" analogy.
I suppose the one defense a company has is to continue to buy back its own stock until it doesn't have to answer to anybody.
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