Hey, who doesn’t like to tell our favorite sports team players, coaches, or managers where they go wrong? I can be as good an armchair quarterback as anyone. Becoming an actual quarterback seems to be more difficult.
So it is with business analysis. What we read about our favorite technology companies these days is less on insightful analysis and more on undue and inaccurate criticism. Hey, I can do that, too. Take a look.
Armchair vs. Reality
What is an easier sport than being an armchair quarterback? All you have to do to succeed is criticize a player, quarterback, pitcher, coach, or manager– or, in the case of Apple, CEO Tim Cook and his executive management staff– for what obviously are blunders of magnitude, and then use comparisons that do not match the situation.
Witness Ben Thompson, Monday morning’s armchair quarterback extraordinaire:
As rare as last week’s Apple revenue warning from CEO Tim Cook may have been — the company last issued a revenue warning in June 2002 — the company has had other bad quarters in the iPhone era. Look no further than the stock chart.
OK, I took a look at the chart and came to a quick and accurate conclusion. This is not a chart of Apple’s financial performance, as Thompson implies.
If that is not a chart of Apple’s financial performance, and it is not, then what is it?
It’s a Monday morning armchair quarterback’s initial salvo of criticism aimed at various and sundry decisions from Apple’s Tim Cook and executive management team and how said decisions may have impacted Apple’s stock, APPL (which does not benefit Apple Inc).
One more time:
The company has had other bad quarters in the iPhone era. Look no further than the stock chart
The chart is not Apple’s financial performance. It is a chart of Apple’s stock price– APPL– going back to about 2009 or so. As with many stocks since then there have been ups and downs, peaks and valleys, but we need to understand what should be obvious.
Apple’s financial performance and well being is not always reflected in the stock price, which is more of a response to investor sentiment (emotion) and expectations (undue emotion), and has little to do with revenue or profits or product diversification, and certainly does not match how well the company is performing in the technology market.
Apple’s financial performance during the past 10 years or so is unrivaled. Take a look at this chart which goes back to just after Steve Jobs took over Apple.
Same peaks and valleys, right?
Yet, there is a marker for when Tim Cook took over Apple from about the time of Steve Jobs’ death in late 2011.
Thompson would have you believe that Apple’s financial performance as a company is the same as APPL’s stock market performance. They. Are. Not. I submit that Apple has gained nothing from APPL’s performance through the years. In fact, APPL– via stock buybacks and shareholder dividends– has cost Apple Inc. more than $100-billion.
Thompson, as did many of Apple’s Monday morning armchair quarterbacks, details a few errors the company made which caused the precipitous drop in Apple’s stock price.
- Error 1: China and ‘S’ Cycles – Thompson wants to take credit for pointing out that China is a volatile market. Duh. China has impacted Apple’s financials but to what degree? 7-percent? Apple says iPhone sales are doing fine nearly everywhere else that counts.
- Error 2: Non-Flagship iPhones – Thompson seems to indicate the iPhone line has too many models. Yet, Apple sold, sells, and will continue to sell a wide variety of iPhones and if China and market saturation are the main factors, then what’s the beef? More choice?
- Error 3: iPhone Destiny – Apple has a list of bona fide accurate reasons for the adjusted financial guidance– about 7-percent off revenue targets, mostly attributable to a volatile market in China– but the handwriting has been on the wall a few years already, and the iPhone maker has done a superb job of milking the cow better than any competitor.
Yet, where are the criticisms of Samsung’s failure to match or even compete with iPhone’s revenue and profit share? Where is the laughing cynicism due Google for the Pixel smartphone failures (everywhere, in every important business metric except in the imaginative minds of anti-Apple critics and Monday morning armchair quarterbacks)?
Thompson seems to indicate that Apple is abandoning hardware sales to focus attention on Services. Remember, Services is nothing without hardware, and every Apple hardware product– as has been the case for a long time– maintains an oversized proportion of revenue and profits relative to the meaningless marketshare metric.
Armchair quarterbacks have one thing in common. Reality. They don’t play the game. They only watch the game and show the quarterbacks, coaches, pitchers, and managers the error of their ways. In the end, reality rules, not citizens of the armchair.
Nothing will match the iPhone, but that’s ok; the sky is not falling, only the stock.
Apple is doing fine, thank you.