Look closer at Apple and its numbers: Its obituary is being written by Wall Street and a myopic tech media -- not by its own customers
Apple's quarterly results this week drew a flood of reactions - almost all negative. Given how well the company did under almost any absolute measure, this is odd, though, for Wall Street, not necessarily surprising.
But the arc of Apple's rise and temporary fall tells a more troubling story about our current inability to maintain positive momentum about any aspect of our culture. We slay our heroes with casual abandon. Then we wring our hands about the absence of positive catalysts in our world today.
Apple's stock, already in relative free fall from an all-time high of more than $700 a share, plunged nearly 12 percent on the news. The company has now lost 35 percent of its value in four months - which represents an astonishing $235 billion. This decline alone is larger than all but three companies in the S&P 500, and larger than the gross domestic product of more than 140 countries.
That equity collapse was echoed by deeply pessimistic analysis of the company in the financial and tech media. Jim Cramer of CNBC railed against the post-Steve Jobs management under chief executive officer Tim Cook for failing to communicate a compelling vision. Others were less kind, dismissing the company as having no pipeline, no vision and little growth. "I think this is a broken company," said noted investor Jeffrey Gundlach.
Apple matters on multiple levels: it is still (barely) the world's largest company by market cap; it has been cited as a beacon of American innovation, led by a rare visionary, Steve Jobs, who resurrected the company he'd founded in the decade before his death; its products have been more than just hardware devices - consumers view them as a talisman, defining identities and allowing people to manifest their personal and professional lives as they chose. In the past few years, its stock price has been a proxy for that enthusiasm.
So what happened? What's most stunning about Apple's stunning and sudden fall is that it is unfolding in the context of still stunning actual results. Not only has the company not ceased growing, it is expanding at an astonishing clip. Its revenue in the fourth quarter of 2012 was $54.5 billion compared to $46.33 billion a year ago - which is a rise of 18 percent. Eighteen percent in a world economy that is barely growing 3 percent. It sold 47 million iPhones in the quarter compared to 37 million a year ago, and 23 million iPads compared to 15 million a year ago.
Yes, Apple earnings were flat, and stock market mavens point ominously to declining margins and shrinking earnings as telltale signs of trouble. But that isn't a sign of shrinking market share - which has been nearly fatal for former leaders such as Blackberry and Nokia. No, Apple increased its global share of smartphone sales in a market that is hardly robust - as Samsung, Apple's main competitor revealed as well. And issues of tight margins and spending more money to produce and market the same products are hardly Apple-specific and often given a pass by investors for companies such as Amazon or LinkedIn.
Still, Apple is not just another story of the bizarre way that Wall Street can value a company. It is that, but it's more as well. It seems like only yesterday that Apple was being hailed as the great company of our age, with its dying founder lionized in a best-selling biography as a genius not just of our time but of any time. It seems like only yesterday because it basically was only yesterday.