Somehow or another Apple CEO Tim Cook has managed to get Wall Street to love what Apple does. I call it the Bezos Effect. Amazon’s CEO, Jeff Bezos, who seems to want to be like Apple’s Steve Jobs, has had a similar effect on investors. Fair enough, but look at these numbers I found.
P/E And Shares
Historically, companies with a good price to earnings ratio where the ones most valued by Wall Street. That’s the P/E ratio. Apple’s is around 18 which is very low for a high flying technology company. Amazon sits at 165 or so. Microsoft is over 27 and Google a respectable 32-ish.
Because Apple sits on tens of billions of dollars it doesn’t know what to do with, it makes Wall Street happy to see some of that money go into, 1) stock buybacks, which reduce the number of share on the trading market, and, 2) pay dividends, which makes investors feel good about owning– and, therefore, holding (as in not selling) AAPL.
Cool numbers, right?
Except those are the numbers that investors, critics, analysts, and the rest of the Apple Watchers community, well, watch.
The single most popular number you’ll see when Apple is involved in marketshare. iPhone marketshare. Mac marketshare. iPad marketshare. Marketshare, marketshare, ad nauseam marketshare. Bleh. Meh. Enough already. Marketshare is a metric but it’s hardly an important metric, and most of the marketshare numbers you read about made up; they’re fiction. We at Mac360 call them guesstimates. From guesstimators.
Every quarter Apple announces new financials, and along with those big numbers are smaller, but important numbers. Actual sales unit numbers for iPhone, iPad, and Mac. That’s it, folks. Apple remains mum on most– but not all such numbers. Watch? We guess. AirPods? We guess. Beats headphone and earbuds? We guess. Apple Pay? We guess.
Apple Music? Every so often Apple will announce the new paid subscriber numbers; usually just to keep streaming music industry leader Spotify somewhat anxious about their future.
I’m here to tell you that marketshare numbers– particularly as they apply to Apple’s product line– are mostly worthless. They’re fiction. Worse. Fictional guesstimates. They’re made up numbers.
If that’s the case, and it is, then what numbers are important. From my perspective as an inveterate, certified Apple Watcher, the important numbers are these and in this order.
- Profits – without profits, not much new will happen
- Revenue – that tells us overall health of a company
- Gross Margin – what a company has to work with each quarter.
- R&D – research and development costs; they’re going up at Apple
Yes, there are many other numbers to look at, and some are important. Unit sales. Apple divulges some of those. But short of the bragging rights that come from customer satisfaction and J.D.Power Awards, those are the numbers that nobody pays much attention to.
It’s like the mantra from the Brady Bunch is caught in a time loop. Marketshare, marketshare, marketshare. Well, ignore marketshare because it’s a metric that doesn’t mean much when dealing with Apple. Critics and market analysts and bloggers tout marketshare, but it’s a nothing burger of metrics.