Is Apple Going Soft?
Mary is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
If there was ever a company that inspires strong feelings, it’s Apple (NASDAQ: AAPL). Those who hate them, hate them. And those who love them, well, it’s often an affection that borders on religious fervor.
But what about investors? Apple reported lower than expected earnings recently, which may prompt some investors to consider their Apple holdings or reconsider buying the tech giant. Apple blames the miss on a soft European market, along with owners holding off purchases ahead of this fall’s expected release of the iPhone 5.
People in technology have speculated that with the death of CEO Steve Jobs’, Apple’s best days may be behind them. They’ve compared Apple’s position in electronics to Sony (NYSE: SNE). Children of the 80s remember Sony as the benchmark in consumer electronics. Shares of the former electronics giant closed around $11 per share yesterday, a far cry from Apple’s $567. Is Apple headed the same way?
Slow European sales have certainly hampered Apple sales. Yet rumors already about the upcoming iPhone release (rumored to be the iPhone 5), with tech junkies rushing to compare the iPhone 5 to popular rivals such as Samsung’s Galaxy III. Even if some reviewers think the latest offering from Cupertino is not likely to measure up, such early news coverage only whets the appetite of diehard i-device owners.
Apple has also set a release date for its next version of iOS, which offers some intriguing features - perhaps most significantly the ability to make FaceTime calls over 3G. FaceTime was previously limited to WiFi connections. Pushing this feature to 3G means that every iPhone, iPod Touch, and iPad now can do video calls. While video calls are available on other systems and applications (for example, via Skype), a number of reviewers have praised the high quality of Apple’s video and sound when compared to rival services.
iOS 6 is a free update, of course, but has the potential to make Apple devices that much more attractive to consumers.
Not all analysts are bearish on Apple and investors would be wise to keep that in mind. Few other companies have as fervent a fan base as Apple. Most people expected last fall’s release of the iPhone 4S to be a dud, yet Apple reported record sales and lines formed early at Apple stores everywhere. Even some folks who had purchased the iPhone 4 the previous year went for an upgrade.
Analysts also point out that Apple is more than the iPhone. Sales of the iPad continue to be brisk. In fact, numbers released from Canalys show Apple jumping ahead of rival and longtime tech giant HP (NYSE: HPQ) for control of the PC market based on surging sales of the latest iPad. Tablets are rapidly surpassing traditional PCs as the device of choice for consumers. Canalys counts tablets as part of the PC market and reports that one in five devices shipped last quarter sported the Apple logo.
Mad Money’s Jim Cramer remains bullish on Apple, citing it as one of his favorite stocks, calling Apple “the best retailer, best manufacturer, and best technology stock money can buy.” Raymond James downgraded Apple, but only to “strong buy,” indicating that now is a good time to buy Apple.
Current investors shouldn’t dismiss Apple because of one bad quarter. Apple is hardly in the same category as Facebook (NASDAQ: FB). The wildly popular social network has reported quarter over quarter losses and the stock has lost over forty percent of its value since the IPO. That’s a company with problems.
Chances are Apple stock is going through a normal dip in price, but will continue to show strong performance when compared to the overall market. In short, if you have Apple shares, think twice before you sell. And if you’ve got the cash for a few shares, give serious thought to buying.
Don’t let one bad apple’s worth of earnings spoil your whole bushel.
MarySutton has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Facebook and is short Sony (ADR) and has the following options: long JAN 2013 $22.00 calls on Sony (ADR). Motley Fool newsletter services recommend Apple and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.