Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
I recently touched on the wild ride Sprint was having on Wall Street as investors remained concerned over the carrier’s direction and, more importantly, ability to pay for that direction.
Many would argue that this sort of concern has some strong backing in reality as the carrier has shown a propensity to throw money at problems that doesn’t often result in a solution.
It’s with this background that this week I take a look at another telecom-related company also experiencing its own fair share of investor anxiety: Apple.
You may know this Cupertino-based company for its innovative advertising or astutely designed hardware and software, or by just turning over your current smartphone or tablet, which is more than likely emblazoned with an Apple logo.
Financially, you may know Apple from the fact it has more cash in its pockets than there is cash in circulation.
Yet somehow, investors are concerned that this money-making machine is not making enough money. This concern has trickled over into Apple’s stock price, which this week tumbled from a near 52-week record high of around $133 per share to at one point below $122 per share. Those who like to watch car crashes noted the dive wiped out untold billions of dollars worth of investor value, which is sort of like saying the dive wiped out an untold number of unicorns.
This week’s selloff was connected to Apple announcing quarterly results that included a company record $49.6 billion in revenue and $10.7 billion in profits, which fell just short of analysts expectations of “all” revenue and “all” profits. Some people are just never satisfied.
As part of its reporting, Apple said it sold a record number of iPhones and somehow figured out that a record number of customers switched to iPhones from devices powered by Google’s Android OS. (And you are afraid Google knows too much about you.)
However, sales of iPads continue to slow, which would seem to indicate that either people realize they only need three iPads per person, or perhaps the recently enlarged iPhone can now take place of one of those iPads.
However, the quarterly results followed a recent report that the company’s latest fashion statement, the Apple Watch, was not selling in the volumes expected from something affixed with an Apple logo, even though that product now dominates a market segment that should not even exist.
Apple would only say that Watch sales through the first nine weeks since the product launched were higher than that of either the original iPhone or original iPad. However, the lack of actual product on store shelves, and thus the lack of people camping outside of those locations, seems to have left the feeling that Watch sales were off.
I guess some might say that BlackBerry’s slow and painful tumble from the top of the smartphone world also began with small issues, which before anyone realized it had become fissures big enough to house polar bears. And, backed by my ability to know the future, I would say this is crazy talk. There is no possible way Apple will ever not be the king of the whatever-it-is-it’s-involved-in industry. Never! (Just don’t put Tim Cook on the cover of any “Madden” games.)
If anything, the Watch issue seems to have shown that Apple’s perceived fortunes are somewhat reliant on the perceived consumer demand for its products enforced by people willing to forgo sleeping in their own beds or showering just to be one of the first million people to get their hands on the latest Apple product.
At the end of the day, I say all of this nonsense is due to unreasonably high expectations placed on Apple, which the company has fostered by being successful … in its recent history. Just like everything that involves the financial community, memories are short, and we will just forget any notion that 10 years ago Apple was a mere shell of a company relying on hard drive-based music storage devices and partnerships with Motorola on something ridiculously called the Rokr in order to get into the mobile device market.
100 tunes in your pocket!?!
Is Apple somehow less valuable today as a company than it was a week, month or year ago? No, but then again it was probably never as valuable of a company as its stock price suggested. And while Wall Street appears to be tripping over itself attempting to unload Apple shares, there are likely plenty of “normal” folks more than willing to pick up the scraps.
Thanks for checking out this week’s Worst of the Week column. Here is a quick, but satisfying extra:
– Speaking of companies struggling with expectations, what the hell happened to Qualcomm?
The I guess one-time chip and technology giant this week announced plans for some serious restructuring, which I am guessing is proving to be a real bummer for the San Diego-based company. That restructuring includes cutting 15% of its workforce, which might put a dent in the beach volleyball games I always assumed the company employees were playing all day.
I welcome your comments. Please send me an e-mail at dmeyer@rcrwireless.com.
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