This week Apple announced their highest quarterly earnings in the history of the company. Sounds like a typical Apple success update doesn’t it? The stock probably went up, yet again, right? Actually, no, it didn’t. And for the most ridiculous reason.
It’s one thing to fear Apple’s future on the recent loss of their co-founder Steve Jobs, therefore causing a dip in stock price. It’s one thing to question where the innovation will come from. These can cause valuation decreases in a company’s shares.
However, this rather significant 5% drop is due to something more Wall Street manufactured. AAPL dropped over $20 in one day because Apple’s highest earning quarter was a tad shy of analyst’s precious quarterly projections, and for the first time in history, Apple missed its own guidance, which has historically been rather conservative.
So, does this warrant the fear and abandonment of the stock? Does this slight, but unprecedented miss justify the panic? I don’t think so. A success story like Apple missing their own guidance for the first time, while simultaneously having their best quarter ever is hardly ‘material’ enough for me to run for the exit.
The real issue is that the stock’s devaluation may be justified for other reasons. It’s no secret that Apple’s non-stop success for the past decade was the sole result of the leadership and vision of the late Steve Jobs. And it’s no secret that everyone is wondering where the innovation for the next 10 years will come from.
It’s almost certain that Steve left not only a great corporate culture and legacy, but also a road-map, at least for the near future. A few more significant upgrades to the iPhone (NFC Near-field communication for mobile payment, larger screen, pre-approved form factor changes), iPad (Retina display, additional smaller screen model, lighter, faster), etc, etc. But what happens after that? Who will invent the next super-cool thing that we didn’t know we needed but have to have? Tim Cook? While a very nice guy, and very capable of leading Apple through the existing road-map, is he capable of world changing innovation? Scott Forstall? Phil Schiller? A great team, a world class team. But, I don’t think so.
And it is for that reason, Apple’s monumental rise will, at some point, level out. Hopefully, the legacy, culture and pre-laid plans are enough to get Apple through the next 5 to 10 years safely and securely. At least until the next Walt Disney, Henry Ford or Steve Jobs emerges.
