Is Apple the Beacon of Light In This Dreary Recession? 14 comments
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In my last post I left off as I sped on my way to Walmart with a short, but important shopping list. Well, sped isn’t the right word. I kind of puttered around a bit and eventually got around to it. The problem was the list. There wasn’t a sexy thing on it. Nothing to rev my engine. Just a few of life’s little essentials. Yawn.
Does a recession have to be boring? I’m craving a little pizzazz - I’m hunting for a sexy brand story to be my beacon of hope as these financial waves keep crashing.
So who has a little sex appeal and makes a strong brand promise? Who gives you what you expect every time? Who never fails to captivate, always commanding our attention? You could call him Mr. Aurum, but ask OldGoldBug and he’ll tell you… it’s gold! Shiny, shiny gold.
Oh you can argue about how it will perform at any given moment, you can argue about when to get in and when to get out, but we can never quite get gold out of our collective imagination. Gold happens. It is like a force of nature. But is it really the brand story that I’m looking for? I mean, who controls gold? We get on board, and ride the ride, but we don’t have the reins. We don’t have a hero. There’s sex appeal, but where’s the role model?
Gold may shine, but it is not a beacon.
So maybe we need more than sex appeal. Maybe the hunt is for a brand that sets expectations and consistently meets them.
What about Coke? Coca-Cola (KO) is like gold you can drink, right? In a world of choices it is one we love to choose. Small players will flounder, experimental flavors will come and go, but Coke will endure. It has all the comfort and nostalgia of gold - we can taste it in our minds before we even pour a glass. You can’t do a much better job of turning expectation into anticipation than that. It’s refreshing even in a recession. But where’s the new? Coke hasn’t been around as long as gold, but it is older than you and me.
So here I am in Walmart (WMT) cool-hunting for a brand that might have a story to tell despite the economy. An”it” brand - a “brand that can” in the shaky days ahead. I know you’re thinking “cool” and Walmart… might as well look for a contact lens in a bubble wrap factory, but their might be a glimmer of hope. The rumors are flying about a certain brand phenomenon making its way into the world of “always low prices” – the iPhone.
Yes, I’m picking Apples over Blackberries this season. The iPhone promised fun and great design and usability and cool. And it delivered. RIM (RIMM) doesn’t know what it is promising anymore. It is slipping into the purgatory of “me-too” when it should be trumpeting its difference and focusing on context.
Now there are some who might argue that putting the iPhone in Walmart will dilute the perceived value of the brand, but at this point all the cool kids and early adopters are already on their second iPhone. The allure of the iPhone is now moving through the mainstream middle and starting to convert some late adopters. And they’ll find plenty of them at Walmart. But that’s only part of it. You see Apple (AAPL) gets the idea of context. Steve Jobs understands alignment. The iPhone exists in harmony with iTunes, the App Store, and a continuity of experience with Mac OS X. The iPods and iPhones are gateway drugs for a Mac experience.
Apple is a beacon and the iPhone is their bright light, and even in a recession we’ll be following that beam towards new and better designs, and consistently (and insanely) great brand experiences.
Disclosure: no positions.
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This article has 14 comments:
It's a shame and the useless SEC has nothing to say about it.
Cox out -- now!
I totally agree that Apple will continue to generate new and better designs and constantly superior brand experiences. However, if this was all that drove their stock price, we would not have seen it drop from $170 in September to less than $90 now. So irrespective of superior designs and customer experiences, Apple's stock has dropped 47%. If you chart Apple and Dell, their stock prices have moved in a similar fashion. This does not mean that Apple and Dell's products are similar, it just means that during the melt-down both companies stocks moved downward at a similar rate.
So the question is, will Apple's stock price increase, go sideways or decrease in the next six months? I don't see any reason for its stock price to significantly increase, but I see a lot of reasons why it would go sideways or even decrease a bit. IT budgets in businesses are way down, and people are spending less too.
By the way, I am long on AAPL, and have been a Mac user since the beginning back in 1984. It is a great company, but in today's financial environment, I think investors need to be thinking dividend yields. I suggest putting Apple, and stocks like it in a wait and see category and put you investment money into solid stocks that offer good dividends. That way your money works for you while we wait for a recovery.
or super for that matter.
Jobs is definitely not in control and you can imagine Apple with out Jobs..recollect old silver days when Jobs was not there. Everyone thinks in
Apple as if he is as good as Jobs but no one does the job without Jobs guidance....Let us wait and see.
More updates in the next post...keep watching.
BY Apple Light
I'm long Apple since 2004, but this wonder stock has lost it's luster and very unlikely to return to it's former shine any time soon regardless its reserve cash or incoming revenue.
quote*Wal-Mart firmly believes in local procurement. We recognize that by purchasing quality products, we can generate more job opportunities, support local manufacturing and boost economic development. Over 95% of the merchandise in our stores in China is sourced locally. We have established partnerships with nearly 20,000 suppliers in China. *end quote!
Now! if there be 182 country's making items for the world to buy and they have only 5% of the pie in China...duh! This company makes the nice people of China support their currency(yuan) by keeping it in their country working for the people there.... but with the "yuan" going up in value and the US dollar going down...all the foreign items that the American consumer buys thinking it is cheap has went up in price.
People...its all about the currency and to keep a currency strong you got to keep it floating around the country you live in so it can work for you. For the past 12 years all them US dollars are being shipped overseas to a foreign bank and with the American worker not making anything for the foreigner to buy the "we the people" have to turn to the "second" largest employer in America(Uncle Sam) to sell "we the people" debt in order to get all them dollars back!
50 years ago a foreigner would had given their left nut for a US dollar or a Hershey's chocolate bar and today the same foreigner has got Uncle Sam and the American consumer by both all the while Hershey is moving the chocolate factory to Mexico. Wake up! America and think "MADE IN AMERICA."
Certainly there is a lot of upside potential. Apple is just breaking 10% market share so there is a lot of room to grow even in a flat market. Apple has no debt and huge pile of cash and a history of aggressive innovation during recessions.
Now its just a bunch of traders, killing themselves and everything else for a couple of share points. No value is implied in a Stocks value today, just a point for it to rise or fall so someone can make a buck.
If the stock market ever gets back to a companies value, on that day, Apple will hit over 300..
Just a thought.
en