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Apple: The Sell-Off In Shares Still Makes No Sense

Thursday, 28 Feb 2008 | 11:03 AM ET
CNBC.com

Has the long, "national nightmare" for Apple investors finally come to an end? After reading comments from Apple chief operating officer Tim Cook addressing the crowd at the Goldman Sachs tech conference in Las Vegas yesterday, it appears so. And not a moment too soon for the Mac faithful.

Cook's bullish comments were flying fast and furious. Amid concerns recently that Apple won't be able to meet the original forecast to sell 10 million iPhones in 2008, Cook re-confirms it. Amid concerns recently that iPod sales have begun to slow, and significantly, Cook remains extremely optimistic saying there is no slowdown, that the market is not saturated, that lower prices on the Shuffle and strength in the Touch point to more robust sales.

Amid concerns that AppleTV isn't catching fire, Cook says the recently re-vamped device shows "enormous potential." On iPod, he re-iterated what was discussed on the company's conference call, but apparently ignored by just about everyone, that iPod unit sales grew 5 percent year over year, translating into 17 percent revenue growth. A data point he mentioned, that I have not seen before: 40 percent of iPods sold were sold to new iPod customers. That's a big deal.

But wait, that's not all: Mac sales continue to be strong too, with Cook saying, "The ceiling for the Mac is nowhere in sight." The Mac platform jumped an astonishing 44 percent last quarter, and surpassing Dell as the top supplier of portables to higher education for 2007.

But let's get back to the iPhone for a second: customer satisfaction, Cook said, is the highest the company has ever seen for any product it has ever shipped. Cook also said what I have been saying for weeks in connection with ongoing reports of those "unlocked" iPhones, indicating that the trend proves there is enormous demand for the product and that consumers aren't waiting for an iPhone release in their country; or are buying the phone even if they don't want to use it on AT&T.

Most interestingly, I thought, was that Cook indicated Apple was open to a number of different business models, that an exclusive arrangement might not be in the company's best interests, even though he seemed pleased with Apple's relationship with AT&T so far.

The bottom line is this: seems to me that the Shorts have owned the Apple story these last few months. And that for some reason, the media has spent a lot of ink and bytes and air time accentuating the negative. Whether the negatives are legit or not. Cook had few new things to say, but by and large, his message is the same we heard from Steve Jobs at Macworld, the same we heard from the company on its conference call with analysts and media after earnings, and the same general trends we read in the Steve Jobs email to employees addressing the company's steep stock slide. Maybe this time Wall Street will hear the message.

Apple's metrics remain strong; the company remains optimistic, both short and long term. I have written for weeks, and still maintain today, that the sell-off in Apple shares makes no sense, that it's overdone; that the outlook remains robust. And now we have confirmation from Apple's number 2, just in time for next week's annual shareholder meeting, that all is rosy out here on the western front.

Questions? Comments? TechCheck@cnbc.com

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