This past Monday, Apple Computer Inc. reported their earnings for the quarter ending December 31, 2013. The company's earnings and revenue beat estimates and they sold a record 51 million iPhones in the quarter. One would expect investors to reward Apple with a spike in their share price, but just the opposite happened after the analysts panned the company's earnings as missing their expectations of 55 million in iPhone sales.
A company's share price can be greatly affected to either the upside or the downside by analysts in the short term, which is why they have deluded themselves into believing that they are demigods of the financial world. But in the longer term, a company like Apple that continues to deliver record breaking quarters will be justly rewarded by investors. Billionaire investor Carl Ichon, who holds almost 4 billion dollars in Apple stock, recently said investing in the company is "a no-brainer."
The big knock on the post-Steve Jobs (the company founder who passed away in October of 2011) Apple is that they are not innovating. But Apple's success has always been one of perfecting innovation, not initiating it. Apple did not innovate the Mp3 player, that was Sony. They did not innovate touch screens and Wi-Fi enabled mobile devices, that was Palm. And they did not innovate the smart phone model, that was Research In Motion with their Blackberry device. What Apple did best was to repackage others' innovations in more reliable and mature technology that they made appealing to the masses. Besides, the first iPods were released late in 2001, the next "innovation" from Apple was the iPhone, six years later in 2007. Their last innovation was the iPad, which was released in 2010, so the claim that they are not innovating as fast as they use to, has no basis in reality.
Since taking the reins of Apple after Steve Jobs died, Tim Cook has presided over record-breaking quarters financially, a nest egg of cash that has topped 100 billion dollars, a share price that has appreciated thirty percent in two years, and additional share value delivered to investors in the form of a generous dividend. He has also recently inked a deal with China Mobilcom, which will make Apple's iPhone available to its 700 million customers.
The reason for the analysts' dour outlook for Apple has more to do with petty animosity than with the company's fundamentals. As a method of criticizing CEO Tim Cook, the analysts speak of Steve Jobs in glowing terms. The fact is they Hated Jobs as much as they hate Cook. But the analysts are like all those Democrats who hated Reagan, and now that history has proven him right, they want to attach themselves to that greatness by saying they "worked with Reagan on many issues." As long as Apple continues to make better and more reliable products than everyone else, and delivers value to share holders, I will continue to support them with my patronage of their products and investment in their stock.