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Shorts Might be Short-sighted on Apple

Betting against Apple has become a kind of bloodsport on Wall Street, and following the company's earnings earlier this week, it bears repeating just how stellar these numbers were, and how extraordinary the opportunities are that lay ahead for this company.

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All of which apparently completely disregarded on Wall Street today.

So what's happening? As near as I can tell, with the lukewarm reviews of the iPad, and so much wait-and-see going on, some investors might be worried that the tremendous revenue stream they were counting on may not be nearly as robust as they hoped.

But wait a second, it's not like Apple is Palm or something. iPad might be exciting, and important, and intriguing, and someday even compelling, but while we wonder and wait, Apple's got plenty of other ways of making money.

Mac sales last quarter were tremendous: 3.36 million Macs sold soundly beat estimates. The 21 million iPods contributed to the Steve Jobs factoid earlier this week that Apple has now sold 250 million of these things. iPhone might have been a little light, sure, but 8.7 million is nothing to sneeze at, and what other company can boast of a 100 percent jump in year over year sales for such a key product line?

Earlier this week, when AT&T said it activated 100,000 fewer iPhones then the previous quarter, there was instant worry that there was some kind of slowdown, that somehow that was some kind of surprise. But didn't we get that news earlier when Apple itself told us of its iPhone unit sales? Surprise? What surprise?

Today, Apple shares are in wholesale retreat. So apparently investors have turned up their noses at the company's monumentally huge cash position, or its enviable retail strategy with 284 stores now, and an eye-popping 50 million visitors last quarter. Yes, you read that correctly. (As a comparison Disneyland, hosts something like 25 million visitors a year)

But you know all this. Yet these shares continue to tumble to the tune of a 4 percent haircut as of this writing on very heavy volume. I heard some analysts talking about the lack of catalysts left in the Apple playbook, now that we have an iPad to consider. The classic of buying mystery and selling history.

Come on. If Apple were somehow trading at 20 (Yahoo's trading at 25x), 30 (Amazon's at 34x) or 40 times next year's earnings, then I'd understand a little pullback, a little taking-money-from-the-table. But Apple is instead at 15 times next year's earnings, meaning it's not only affordable, it's downright cheap when you consider this thing will do $11 or $12 a share in earnings for its fiscal 2010. And you know all that, too.

I'm no Pollyanna, and I don't want merely to accentuate the positive. But facts are facts. Fundamentals are fundamentals. Digital music, digital video, digital books, apps, Macs, iPods, iPhones, retail, software, and yes, the iPad.

Unlike Palm , or even Research in Motionfor that matter, when one thing isn't working for Apple, it's got five or six other things that are. It isn't a zero sum game for these guys. Over at its peers in the market place, if the Pre is a bust, so is Palm, plain and simple.

If BlackBerrys stop selling, or slow down significantly, RIM should get creamed. They don't have a safety net woven with the golden silk of so many compelling revenue streams. Apple does. If there are concerns over early sales about the iPad, that should do nothing to color the overall Apple story.

(Kind of like everyone going nuts that the iPad would be an Amazon Kindle killer, and Amazon shares began to quiver because of it. The Kindle is what, 5 percent of Amazon's overall revenue? Come on people, a little perspective here!)

After earnings on Monday, we witnessed a pretty significant upgrade parade on Wall Street. So many targets at $265, $275 or higher. Broad market sentiment might have changed for one reason or another this week, but Apple's fundamentals certainly haven't. Today's plunge makes no sense.

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