Analyst Laura Martin from Needham & Co. called Apple an ‘arms dealer‘ to ‘the wealthiest‘ consumer whereby the consumers themselves are ‘creating a new global distribution network over connected mobile devices.’
Say what what?
What. Is. Apple?
Therein lies a difficulty that customers, analysts, and members of the technorati elite politburo have with Apple. What defines Apple. How does one– customer, analyst, or critic– define Apple’s stature within the various industries where its products cross.
Shakespeare would insist that Apple should not be valued like a hardware company if its fundamentals are better than world-class content and Internet companies
Apple, it seems, is an anomaly when compared with other technology giants. Samsung is a conglomerate (from air conditioners to fridges to CPUs to smartphones and tablets) because it attaches itself to companies in various markets.
Google is an advertising company but gets a free ride from Wall Street because technology. Forget the fact that Google– excuse me, Alphabet– is more dependent upon one source of revenue and profits than Apple, where everything in every corner of the company’s limited product line is hugely profitable.
Amazon is a seller and reseller of goods but gets a free ride from Wall Street because technology. Forget the fact that Amazon doesn’t know how to make a profit. So long as investors enjoy the ride up the stock price escalator and collect profits along the way, all is good.
The aforementioned Martin lauds Apple’s financials, the customer base (very low churn compared to any competitor), and how the company’s valuation compares well against any company in any industry, content, distribution, or technology.
The Emotional Buy
The phrases ‘arms dealer‘ to ‘the wealthiest‘ consumer is a good catch phrase and embodies both the technical merits of how Apple operates and the relationship the company has with its customers.
Critics often decry Apple’s so-called hold over customers as almost cult-like. Apple has more than a billion customers with active iPhones, iPads, and Macs. That’s not a cult. Call it what it is. A phenomenon. Apple would more accurately be defined as purveyor of finely crafted technology which resides in a curated Disneyland-esque ecosystem; something more of a real world Hotel California (‘We are programmed to receive. You can check-out any time you like, But you can never leave!‘).
Wall Street trends come and go and just a year or two ago Apple was a darling because growth. Even a lack of growth with iOS devices does not reflect just how well run and profitable the company remains, and how dominant Apple’s products are within their product segments. Apple’s treatment on Wall Street increasingly points out what should be obvious. Many segments of the market are run, controlled, influenced by manipulators who often create a herd mentality for a specific stock, specific industry, or trend (Damn the profits, growth rules!), and then bow out and move on to other territory leaving behind those who followed, but didn’t follow long enough.
For now, Apple is Apple. That means Apple is a unique company that should not be judged or valued the way traditional technology companies are viewed. How is Google a technology company? What technology does Google sell? It sells ads. How is Amazon a technology company? It sells products made by others, but uses a fancy technology system to make it happen, and then rents some of that technology and storage capability to others who do not want to create their own. What Amazon has is available elsewhere.
AAPL will do better on Wall Street when Wall Street re-learns how to value a company, instead of promoting what amounts to a legalized gambling system where the house always wins.