George Soros is dead, so said Reuters for the briefest of time a few weeks back. The news service quickly pulled the oops of the held-in-inventory obit.
Many investors have been saying the same recently about Apple. Shares of the iPod-iPad-iPhone-Macbook-etc maker are down from $700 to as low as $390, down some 45%. Ouch!
However, Apple’s woes may be more temporary than the misplaced death notice of the billionaire investor.
A few weeks back, I had the experience of my laptop frying. Oh, the smell of the chemicals. Hmmm. Elizabeth, New Jersey or Sumitomo, Japan you say.
This is the third time in six years I have had to step up to the plate for a new PC.
After Googling who makes PCs these days, it was Dell (owned laptop, hard-drive crashed – pretty crappy), HP (owned laptop – went up in smoke – also pretty crappy ), Acer (got one and didn’t start after I took out of the box – that was really crappy). My kids and their two MacBooks – NO PROBLEM.
As Steve Jobs so eloquently said about competitors’ products: they’re “crappy”. And he was right. I used them all and they are.
I rushed up to the Apple store to buy my first Macbook. The store was packed with the faithful buying or learning something new about Apple’s products. This was in suburbia, not a city where tourists roam Apple stores to see all the cool products. The fad of visiting an Apple store for the sake of visiting an Apple store has long gone in suburbia. These were forty- and fifty-somethings buying stuff (kids were still in school). Everyone there I guess was tired of buying crap too.
As is well known in tech-land, when company sales start slowing, watch out. This leads to prices being slashed, margins coming down and a once virtuous cycle of a growth business turning often into a vicious one. Apple’s sales are beginning to slow, is the virtuous cycle now over?
Apple also now has a competitor who is getting stronger. Samsung is gaining share with its new offerings and Google is providing the android operating system. The Galaxy has a bigger screen and is a pretty sweet looking device. (The kids say these andriod products begin to break after a year.)
We’ve seen this device/software model before, Microsoft providing the software and Intel providing the chips and this combination crushed Apple in the 1980s and 90s. Deja vu all over again. Boy! it really looks like Apple’s fate is turning for the worse.
As the not-so-famous-anymore Peter Lynch used to say, invest in what you know. And people know Apple’s products. And for those who know Apple’s products, they are not going to buy other stuff unless Apple’s stuff becomes really crappy. Or, competitors get their act together to make durable, long-lasting, and intuitive products – which I am doubtful about.
Death of Apple? Not. I think investors can be pretty confident it will be a viable company for sometime.
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