What Will Apple Do?

[budwzr]

I don't own Apple stock, but does anyone think it's going to tank tomorrow?

And they're already saying the iPhone 5 is underwhelming.

If the new iPhone tanks, and there's no CEO at Apple, it could be a disaster for PR.

[edDV]

I don't own Apple stock, but does anyone think it's going to tank tomorrow?

And they're already saying the iPhone 5 is underwhelming.

If the new iPhone tanks, and there's no CEO at Apple, it could be a disaster for PR.

I own a fair amount of AAPL and if it tanks, I'll buy more. iPhone 5 is still in the future. The new product is the iPhone 4s (new inside but similar outside).

The iPhone 5 rumors were from the press. I think CEO Cook should have put down those rumors before the 4s launch.

[JimmyS]

The stock could take a short term hit, but since the concerns of Job's health conditions have already been dealt with for an extended period of time, most of the damage has probably already been absorbed into the current price.

The new iphone should continue to sell well over time, as it is really a completely new design internally with greatly increased capabilities. But since they did not change the external design, I'm wondering if it will generate the initial sales surge that previous new models have done.

Tim Cook became Apples CEO a while back when Jobs stepped down due to his health problems. They'll be looking for a new chairman of the board. Cook is regarded as an operations genius, but it remains to be seen if he has the vision to keep the future product pipeline as strong in the long term. The management team that Jobs has assembled is generally regarded as one of the finest in the industry, and they still have their design guru Jonnie Ives onboard.

[edDV]

At the first sign of product price discount, I sell my AAPL.

[Computer Nerd Kev]

At the first sign of product price discount, I sell my AAPL.

I'm intrigued by your comment, clearly you doubt that a price drop would encourage a significantly greater number of people to buy from Apple. Would you expect sales to stay roughly the same with less profits for Apple and larger smiles on customer's faces; or would you say that a price drop would damage any perceived exclusivity regarding Apple products, therefore resulting in both reduced sales and a changed attitude towards the company.

As for where I stand (Jobs or no Jobs) in this latest incarnation of humanity's standard computer debates, well an Ipad would have to cost about $50 before I'd buy one, and even then it would just be as a fun thing to hack.

Ha, that and my spell checker wants to correct the word "Ipad"!

[jman98]

The stock market defies logic. I'm sure that some people will be an absolute panic (although they SHOULD have seen this coming, for reasons I will explain later) and sell and others will see a price drop as a buying opportunity. SCO got into a court battle with Novell a few years ago over the rights to some Unix source code and it involved Linux. For years it was apparent that SCO was going to lose the court battle and probably go out of business as a result, but their stock maintained about a $5 a share price for a long time as idiot investors who know nothing about the legal world or IT believed that SCO just might win their suit and in so doing be worth a fortune (potentially billions would come their had they won). SCO went into bankruptcy and barely exists as a small IT company with revenues that are but a fraction of the business they did back in the 1990s. Its stock is no longer traded.

Unfortunately the reality is that pancreatic cancer is a death sentence. How long you get depends on how early they detect it. Jobs had 7 years. He lived longer than most people who get it detected early as I think I read somewhere that living 5 years after very early detection was the average. He also was known to have had a liver transplant and the anti-rejection drugs that you have to take for that can cause cancer to spread. Unless your head was buried in the sand anyone following Apple had to know that he was living on borrowed time. He was replaced as CEO recently and he was on a leave of absence quite a bit in the past year or two. I don't consider myself to be an Apple insider, but my understanding is that he sometimes had the ideas Apple used, but other than giving feedback on potential designs he really had very little to do with the actual design process. I don't remember his name but there's a guy who's still at Apple who's basically the brains behind stuff like the iPhone and iPad and he's still there. I learned long ago not to count Apple out. The iPhone completely and utterly revolutionized the mobile telephone business. Nokia, who not that long ago was the industry leader, got completely caught off guard by the iPhone and they've never really recovered. Nobody prior to Apple had much luck with pad type devices and no matter how many industry writers praised them, nobody wanted them. The early non-Apple ones were basically everything that was wrong with PCs in a portable device. Apple made the whole pad thing work. The strong design guys are still there and they'll have new ideas I'm sure. I think Apple will be fine but it will be interesting to see how the market reacts today. Right now Apple projects to open less than 1% lower, so there's no indication of panic selling - yet.

[JimmyS]

After pondering a bit more on the question of how the new iphone 4s will fare, I started wondering how the new Siri technology may play out for it. After a bit of reading, it looks as though Apple may be on to somthing here. Its roots stem from a very advanced DARPA AI project. A number of people commenting about it are saying it could be the beginning of somthing huge.

This page at 9to5mac has some very interesting information, past and present.

http://9to5mac.com/2011/10/03/co-founder-of-siri-assistant-is-a-world-changing-event-interview/


The Siri saga also gives a bit more witness to the vision of Steve Jobs. After playing with the Siri app. when it was first released for the iphone 3gs, he immediately called them and setup meetings with them and a short while later, Apple purchased the company.

[edDV]

At the first sign of product price discount, I sell my AAPL.

I'm intrigued by your comment, clearly you doubt that a price drop would encourage a significantly greater number of people to buy from Apple. Would you expect sales to stay roughly the same with less profits for Apple and larger smiles on customer's faces; or would you say that a price drop would damage any perceived exclusivity regarding Apple products, therefore resulting in both reduced sales and a changed attitude towards the company.

Mostly the latter. I invest in the Apple's brilliant business model which was created and maintained by Jobs.

Today Apple has a profit margin of 23.5% and $76 billion in cash yet trades at just 15 times earnings. If you subtract out the cash, the business is seeing a P/E just over 10. Ridiculous!

This company will continue to grow through international expansion and additional product lines. The stock should double again. I'd like to see a 6x stock split and a dividend to get the stock going again.

This is the Apple business model as I see it.

1. Premium pricing justified by feature innovation, style, promotion and culture.

2. Rapid obsolescence, encouraging trade up every year or two to get new features. The culture favors fashion trendiness.

3. Expansion of product line breadth. Computer, iPod, iPhone and then iPad. Next a line of TV sets and other high tech appliances.

4. Control of retail and support channel. Apple keeps all the channel profit and controls pricing. Apple's cash allows direct retail sales investment as they expand internationally. No reason to share profits with a local distributor.

My fear is the new CEO or the board will dilute this near perfect business model. Jobs had the power to guard his golden egg business plan.

Personally I'm more a PC guy than a Mac guy but I'm not the target customer. I value AAPL stock over Apple products. I own no iXXX products. Yet, I can see the value Apple products represent to others in the target segments.

[MOVIEGEEK]

Good points edDV, I also own some AAPL because the P/E is low and EPS is a phenomenal $25. As long as people buy overpriced status symbols I will hold the stock.

[budwzr]

A business report show, the other day, said that the younger customers are steering away from i-stuff because they don't want to use whatever their parents are using, and that the price point is too high.

I predict that security will slack off and more inroads and hacks will be made in the IOS. There's already a cross platform "FaceTime" on Android that bridges over to the i-stuff. The more integrated the i-stuff becomes, the more i-users will resent Apple trying to block everything, and there will be a revolt.

Google is in some Fed investigation right now, but if they get through it, look for Android on cheaper devices, and as Android penetrates and morphs into refrigerators and toasters, it will become the de facto standard like Windows.

Apple's OS will become the odd man out, unless they re-invent themselves again. Steve's passion to win came from a deep hatred toward Microsoft, and that drove him like a maniacal juggernaut. No other CEO could possibly match that.

[16mmJunkie]

Welll I don't know about reports and all..... this one dated a few months ago states 54 % of younger are switching to Apple products from Android..... And I think the consumer will go to handheld devices as the time passes....desktops will not be a big "home" item anymore... that may give Apple a foothold
http://www.nbcbayarea.com/blogs/press-here/More-Android-BlackBerry-Users-Switching-to-...115305239.html

[budwzr]

Those "News" shows are actually sponsored, not just by regular commercials, but the "reporting" too. You can buy a spot INSIDE the news. The typical "Local News" viewer believes what they're seeing and hearing because "It was on the news!"

[lordsmurf]

Those "News" shows are actually sponsored, not just by regular commercials, but the "reporting" too. You can buy a spot INSIDE the news. The typical "Local News" viewer believes what they're seeing and hearing because "It was on the news!"

According to what authoritative references?
(Please don't confuse TMZ or E! with actual newscasts.)

[budwzr]

Those "News" shows are actually sponsored, not just by regular commercials, but the "reporting" too. You can buy a spot INSIDE the news. The typical "Local News" viewer believes what they're seeing and hearing because "It was on the news!"

According to what authoritative references?
(Please don't confuse TMZ or E! with actual newscasts.)

An example is the Alan Mendelssohn "Your Money" pieces.

Or when they do a "man in the street" interview at a restaurant.

Or Huell Howser's "California Gold".

And those travel shows like Rick Steves on PBS. "travel shows" purport to have a host giving you "inside scoop", like those Vegas shows with "Tips" to win next time you go.

Many of these shows are directly financed as a big commercial, others are designed to capture eyeballs and THEN sell ads, like the Dance and talent shows.

Why do you think there's so many "news" shows at all hours? It's cheap to produce, it's local targeted advertising, it works. All you need is a set, a weather girl with huge bazongas, and a man with a microphone in the field.

How can I find an "authoritative reference"? Which authority would that be?

[edDV]

...
Apple's OS will become the odd man out, unless they re-invent themselves again. Steve's passion to win came from a deep hatred toward Microsoft, and that drove him like a maniacal juggernaut. No other CEO could possibly match that.

Apple is most vulnerable in the cloud where Google, Microsoft and Amazon rule. Execution is critical here.

The partnership of Microsoft and Nokia in the cheap smart phone space will fill out the low end particularly in developing markets. Google's Android will compete in the middle to high end which is where they want to be for advertising.

Apple needs the right mix of gated community vs. interoperability with the other cloud services.

[budwzr]

Apple's fine as a flashy distraction, but there's a big cloud looming.

[edDV]

First let me say I was never an Apple employee, but Apple did invest in startups that I led.

In respect to Steve Jobs, when he left or was kicked, the management hole and discipline went into steep decline that lasted through the 90's.

When Steve returned in the late 90's discipline and strategic focus returned and all started rowing in unison.

Jobs was a master of execution as Apple ramped up. Rarely was there a product shortage in the channel and that is not easy to accomplish.

Most talk about Jobs as a product guru, but his great talent was setting a high standard and managing the nuts and bolts of delivering millions of products on time. The media fails to understand what a technology CEO does day to day*.


* other than funds raising which is constant and best assigned to the Chairman of the Board+CFO.

[rumplestiltskin]

Steve brought in Tim Cook to run the "nuts and bolts" (he's the supply-chain guy).

See this:

http://www.macrumors.com/2011/10/06/steve-jobs-legacy-to-live-on-in-apple-university/