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Apple and the Bullies of Wall Street
By: Greg Dorn
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We’ve heard these words again and again: Apple is doomed! Given the fact that the tech giant has and always will remain under the sharpest microscope, that phrase is most likely to be uttered many times over the next 10 years. Anxious investors need only look at Apple’s plummeting stock price. Since it reached a record high of $705.07 a share back on Sept. 21, the stock has plunged over 30% to $458.29 at the time of publication. However, contrary to popular belief, company revenue and earnings don’t actually move the stock market. Only public perceptions by “reputable” sources cause such a decline. Case in point, the “all powerful” Wall Street Journal.
 
Back in mid-January, sources from the WSJ reported that Apple had cut orders for certain parts essential to assembling the iPhone 5. More specifically, screen orders diminished for the January-March quarter, or Q2 for earning reports (despite the post-holiday quarter always seeing a decline in sales). Naturally, investors saw the masthead of the WSJ above the report, freaked out, and quickly hit the sell button. Yet, the highly regarded financial news source failed to give any context surrounding the report. Perhaps if people paid close attention to the facts, the frightened bears would have remained confident bulls.
 
So let us put things into perspective. Before earning reports are released, the so-called “analysts of Wall Street” chime in with their knowledgeable estimates. If earnings miss the mark, all hell breaks loose. But why? Apple reported numbers of $54.51 billion in revenue ($13.81 EPS) and a profit of $13.1 billion for the October-December quarter (Q1). This milestone in revenue is the largest in Apple’s storied history. Not bad for a company that analysts deem to be headed for trouble.
 
Let us take an even closer look. Apple sold 47.8 million iPhones in Q1. In comparison, Samsung’s Galaxy series (I, II and III), the phone that most see as the main competitor to the iPhone, has sold 100 million devices...ever. We are talking a span of three months for Apple versus years for Samsung. Furthermore, Apple sold $22.9 million iPads this past quarter, barley missing the Street’s estimate of $23 million. However, the iPad mini accounted for about half of iPad sales, diminishing the number of the more expensive iPad maxi. Given the lower cost of the mini, this puts an obvious strain on Apple’s profit margins. But with $137 billion in the bank, Apple can afford to take this cut if it means bringing new customers into the ecosystem. Apple is obviously looking long-term into customer acquisition, hence the brilliance of the company’s game plan.
 
There also exist the Apple bears who misinterpret the market shares of both the hardware and software of the one and only handset. Let me break it down into simple numbers. Google’s Android operating system powers a countless number of phones produced by a plethora of hardware makers. Hence, of course Android is going to be the top platform at 53.7% of the market share. Apple’s counterpart to Android, iOS, runs on only ONE phone and still commands 35% of the market share. People have a tendency to forget that Apple is the only hardware device running iOS, while Google contains Samsung, HTC, Motorola, etc.
 
So for those who continue to only read headlines and gaze at the diminishing number of Apple’s stock, you’re going to be in for a rude awakening. Apple is doing just fine. And if you want a bargain, I’d put on my horns and hit the buy button.


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About the Author
Greg Dorn is a blogger, writer, and obsessed with everything technology and social media. Greg is absolutely captivated with the recent advancements in mobile gadgets, making our world more seamlessly connected. You can learn more about him on his own blog here
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