Will Apple Bounce Back?
I always found investors to be a funny species to watch in action. One day, they will believe that a dot com business that promises golden piles of profits in 10 years is a killer bargain. A few days after, anything "dot com" is good for nothing and the marvelous promises of future gold mines do not mean anything anymore.
It is pretty much the same thing for Apple now. Apple reported sustained profits for 11 quarters and a sales slowdown coupled with other circumstances were enough for a huge drop in stock value.
One day, you are a darling. The next day... whatever.
I am not an investor. I do not want to be one. (Wait, I just lied. I invest in an RRSP. Does that count?) Imagine the pain I would go through. Each and every day, having to pontificate internally about what is hot and what is not; changing my mind instantly because of money. Isn't money a corrupting religion? That would make me very unhappy.
I find this situation sad, but funny at the same time. Sad because strong performance and the upcoming Mac OS X suddenly gave way to big problems at Wall Street. Funny because investors - whether they had to protect their fund performances or their own pants - did their usual thing when dumping AAPL all on the same day.
In any case, will Apple bounce back? Of course. Apple always bounces back.
In fact, Apple's business game is a little... seismic. Have you ever seen a seismograph in action? When it detects the presence of an earthquake and records its magnitude, it writes up and down, and up and down...
In plain English, the best way to describe Apple in a line is to say that it alternates between "open mouth, insert foot" and "let's kick ass with insanely great products."
Now, about Apple's next comeback...
If we believe Steve Jobs, as reported on ZDNet, it will happen next year. According to Mr. Jobs, the remainder of 2000 will remind us of tougher times, but 2001 will witness Apple shining again.
Jobs said that Cube sales, changes in sales force and the megahertz problem affected Apple only recently. Cheaper Cubes, faster processors and other changes will help Apple get back on track, according to him.
I believe that faster speeds, a completely new product, and more efforts to convert PC users would not hurt. What new product? Well, colleague Samuel Sharp at MacSoldiers has been talking about a sub-notebook for ages and I would like to see such an idea making it to the shelves. I will discuss such things in details later, but I just feel like hinting for the moment. These factors would not change the world, but they would not hurt.
In any case, people should not wonder for long if Apple's successes and debacles are spectacular or not. Most of the time, what happens is not as spectacular as some describe it.
Highs and lows are part of the financial world and because it became part of it, Apple is bound to feel the effects of market hopes and fears regularly. We may feel the temptation to say that stock debacles or super invincibility streaks are historical each time they happen. Such feelings would take us far away from objectivity since the same incidents repeat themselves at times.
What Apple users and investors have to do is to sit back and avoid this market frenzy and ask themselves if there is anything unusual about it and realize that no, it is business as usual. Most of the time, they should find that no, there is nothing abnormal about all of this.
We should go beyond the idea that the last snowstorm was the coldest and meanest one in history and that the next will be even worse. We just have to go with the flow and learn to swim despite the waves, although overwhelming they may seem. There are always reasons behind problems and no matter how important they are, putting things back into perspective is a vital exercise.
I think that Apple officers know this well and that they are already working on the next big thing. Mitch Mandich left and new blood is joining the company. Apple also has a clear idea of what could have caused problems and that helps when it comes to finding solutions. They will fight back and this is not the first time that they have done so.
I find this whole situation funny. Because of lower profit estimates, Apple takes a beating in the financial world. If I may, I will suggest one thing to investors. They should do like the old movies. They should know how to use silences in their favor.
Compare old black and white movies to today's movies. In an old movie, you can have a minute of silence that includes images that catch your attention and have a meaning beyond any sound. Today, it seems that special effects count more than the meaning of the movie. Do you get the parallel?
If the stock market was just a bit... calmer.
Hey, it is all dreaming here, not an investor's reality. I guess that we have to deal with it since we are not the ones in charge at Wall Street.
Apple will bounce back, or my name is Snoopy.
Despite what I said about investors... if I had a few thousand bucks to waste now, I would buy some AAPL and hold for the next 18 months because it seems like the perfect time to bet! Apple knows how to raise hell in the computer industry...
Oh, one more thing. Isn't it odd to note that Apple finds itself in trouble just a bit after Steve Jobs' official acceptance (in January 2000) of the CEO position? Maybe he should go back to interim status :-)
Your comments are welcomed.