Three Thoughts on Apple's 'Antennagate'

|
Includes: AAPL, BBRY, GOOG, HPQ, MSFT
by: Jason Schwarz

Steve Jobs did a great job of putting ‘antennagate’ into proper perspective. As we officially put this in the rear view mirror I have three parting shots:

1- Traditional media outlets got duped. The wild west of the blogosphere had a few isolated reports of iPhone 4 antenna issues and then Consumer Reports released a suspect report that was contrary to majority experience and big media everywhere jumped on board. False perception overtook reality. Kudos to Steve Jobs for putting the small minority in its place. Big media outlets should have done a better job of filtering this news for their customers. Actual statistics show 0.55% of iPhone 4 users have called AppleCare to complain about antenna issues and only 1.7% of buyers have returned the phone. The media created a crisis that did not exist as I explained in this week’s CNBC interview.

2- The iPhone 4 might sell 20 million units in a single quarter. Antennagate will not hinder sales at all. On July 30th 17 new countries receive the phone and later this fall another 60 countries will be on line. The big question is how will Apple (NASDAQ:AAPL) meet the demand? In the U.S., consumers still wait two to three weeks before getting their phones. The iPhone 4 had the largest sales opening of any smartphone in tech history and has already sold over 3 million units. The current quarter promises to be Apple’s first to crack the 10 million units sold threshold. International sales could propel the holiday quarter to crack the 15 million units sold threshold. And if Verizon (NYSE:VZ) gets the iPhone in 2011, Apple could have a 20 million iPhone unit quarter. Do you think the stock will remain at the $250 level if Apple sells 20 million iPhones in a single quarter? Future sales of the iPhone alone, not taking into account the success of the Mac and iPad lineup, will push the stock toward our $500 a share forecast.

3- The free bumper promotion will be inconsequential to Apple’s bottom line. This is when $45 billion of cash comes in handy. The company is so profitable because the executive/engineering team is so good at what they do. Google’s (NASDAQ:GOOG) Nexus One came out without any customer service. Microsoft (NASDAQ:MSFT) and HP (NYSE:HPQ) are delaying production of a Tablet because they can’t get the touchscreen operating system to work. Research in Motion (RIMM) still can’t get the touchscreen to work right on the smartphone. These other companies are great in their own way but none of them offer a collective ecosystem of seamless software/hardware integration like Apple. Consumers are fiercely loyal to the company with good reason.

The bottom line is that sentiment is important for investors to gauge in the short run but in the long run it all comes back to fundamentals. I’d like to watch Steve Jobs give a press conference in which he presents the fundamentals of Apple’s current earnings along with the future growth forecasts as compared to competing companies in the tech sector. Does Wall Street need Steve Jobs to tell them everything?

Disclosure: Long aapl