Wednesday, October 19

What did they expect?

An odd thing happened yesterday when Apple Inc. reported its earnings for the quarter. When the numbers came in lower than “Wall Street expectations,” the stock fell in after-hours trading. In fact, Apple exceeded its own prediction of earnings, but fell short of outsiders’ expectations. Since the company has exceeded outsiders’ expectations for the past 20 or so quarters, but came in below them (for good reason, by the way) this one time, the stock was punished by “the Street.”

What a bunch of bogus nonsense. The actual earnings and profits were the highest ever. The reason for not being as high as “expectations” was that Apple was preparing to introduce a new phone in the following quarter. Potential buyers of a new phone stopped buying the older model and that reduced sales for the reported quarter. This is to be expected—if you know a brand new magical gadget is just around the corner, and you don’t need a new phone right now, you wait to buy the new one which, by the way, set an all-time sales record—Four million units in the first three days worldwide.

But most distressing were the headlines of the articles, all of them implying that Apple was on the skids and everybody had better get out NOW. We are staying in for the long haul. We’re not going to abandon the company we watched pull out of almost certain bankruptcy to grow and become the most valuable company on earth. Our personal stock in Apple has increased in value by about 300%, and our daughter’s cache of shares has gone up over 5,000%.

Not bad for a fading star of a company.


Pete S. said...

Steve Gibson, a tech guy that specializes in computer security, opined that Apple will do well for about three years without Steve Jobs, living off the Jobs magic that's still in the development pipeline. After that Apple will be relying on nothing but non-Jobs ideas and could very well decay into a humdrum company like all the others.

Tom Hurley said...

Steve set up Apple University, which teaches thinking the Jobs way. It could pump needed magic into the mix and keep things going. In its heyday, Western Electric was a hotbed of innovation (the transistor, for example) that encouraged unrestricted out-of-the-box thinking. John Lasseter at Pixar has done the same thing with his people, as did Walt Disney. Frank Thomas, Disney’s head animator, told me about 30 years ago that Walt had established the same thing as what Steve has set up. The Disney magic still lives today.

Also you might consider that after Apple produces Steve Jobs’ last idea, there’s nothing left to be invented anyway.