Apple's Seeds of Discontent
Last post I focused on Google, but much of the same fear and frustration swirling around those sharescan be said of Apple as well, another of last year's high-flyers that have come crashing back down to earth.
In fact, Apple's fall from its high is actually more precipitous than Google's --and therefore might present an even better "buy" opportunity than Google.
Amazing to me that I even have to write this, but alas, such is the trading environment on the Street right now. And I stress the word "trading" because this certainly isn't "investing." If it were the latter, people would focus on the products Apple is selling, the pipeline it's developing, the innovation it's offering, and the market trends of which Apple continues to take advantage. More than that, if you believe that digital entertainment and easy-to-use, slick-looking computers that offer a great user-experience have any kind of future in the marketplace, then Apple offers up some true, longer term opportunities.
Morgan Stanley agrees, saying new product announcements and margin expansion will drive Apple shares this year. Apple is in the midst of a product transition on the entertainment side, but strong Mac shipments, favorable component pricing and other factors in Apple favor should more than offset softness elsewhere. The firm re-iterates a $185 target. Piper Jaffray sees slight iPod softness, but that might be good news since there were murmurs on the Street that iPod would come in far weaker than expected. The firm re-iterates its $250 target.
Yet all the press I'm reading, and all the folks I'm talking to, focus on all the negatives, true or not. Apple's losing business in China, but as I've written before, I think this is a red herring that actually harkens a longer-term positive for the company; Apple delays the release the of its iPhone software developer's kit because an event apparently scheduled for today--though NEVER announced by the company--isn't happening.
So a rumored event that isn't happening is a sign that Apple is delaying the release of something that it never really announced? Are you kidding me? Ipods aren't selling. Mac sales are falling. The iPhone isn't performing. Average selling prices are plunging. Once again, we're talking about a wholesale collapse of the entire Apple business model and I just don't see it.
Like Google, the Apple sell-off is overdone. Plain and simple. And those investors buying into the panic are missing the true buying opportunity instead. Larger forces seem to be at work here. Even if you believe there's a slowdown in Apple sales, or that the company is bumping its way through an iPod product transition, do you really believe these issues are enough to shave half the company's market cap away? Makes no sense to me. And a year from now, you gotta wonder whether this was the time when investors should have been buying.
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