Apple Fails to Deliver, and the Rally Fizzles 27 comments
-
Font Size:
-
Print
- TweetThis
Now I’m not saying that Apple (AAPL) caused the stock market rally to fizzle, but I think a case could be made that as the de facto leader of Tech, Apple’s refresh of its notebook lineup did nothing to stem the tide of the rally. Maybe that’s a little unfair in that the rally lost steam only minutes into the market open, and Apple’s CEO Steve Jobs didn’t take the stage to hawk his new notebooks until about 1 p.m. EST yesterday.
Although Apple’s new notebooks are awesome pieces of engineering, the laser-tooled bricks really deflated my expectations, and I’m sure the expectations of many analysts and Apple faithful as well. Look, it’s really cool that the new case is a single piece of aluminum, precision manufactured with CNC machines, just like NASA gadgets and all, and I suppose the new glass track pad is a step into my Touch future. But the specs of the machines in this lineup are little changed from their prequels, and the pricing does not make me want to run down to my local Apple Store and empty my pockets. What happened to an $800 MacBook?
Let me make a full disclosure that I intend to purchase a 15 inch MacBook Pro sometime this year, but I would have purchased one no matter what the price or configuration, because I need a new laptop. Windoze-based laptops are simply not an option for me regardless of the price difference.
I’m sure that I’ll feel pretty good when I leave the store with my new MackBook Pro, in much the same way I felt with my current MacBook Pro, and for the scores of Macs I’ve purchased over the years. Only this one will definitely be prettier and sleeker, while not a whole lot faster, and definitely not cheaper either. You would think that with today’s economic climate, and Apple’s self-imposed margin reduction, that it was going to put that margin in our collective products and in the process incite mass market share hysteria.
So, getting back to Steve Jobs fizzling the rally… if you were watching the live blogging of the notebook event in one window, and your streaming quotes in another, It became apparent that not only was Apple’s stock price being affected by every utterance from Jobs’ lips, but so were the Nasdaq and S&P 500 exchanges. Either that or it was an incredible cosmic coincidence.
But let’s be fair. The market rally from Monday was in response to the Euro bailout, just like the rally we had right after the initial US Congressional bailout. Both rallies were artificially induced, just more dopamine pumped into our systems. Yeah sure, it was definitely necessary, as the alternatives are dire, and you have to do whatever it takes to keep from slipping into the abyss. However, isn’t it interesting that after the dope wears off, the market regresses back to the realization that we’re still hurting? The fact is that this rally, like the other rally, was born of shorts covering their behinds, not buyers pouring into the system.
And where do we go from here? My answer to that is unfortunate, but I see the markets going down from here, perhaps to test the next gap plotted late last week. Unfortunately, the last thing we wanted to see after Monday’s rally was black candlesticks, and that’s what we got in just about every sector except for banking and finance (no big surprise, being all doped up and all). A complete reversal of fortunes. Just look at AAPL, it opened above 116 and finished more than 12 points lower! And in a polar opposite move it closed very close to the low of the day, unlike Monday where it closed near the high.
Oh well… I think I’ll go to my Apple Store to check out the new 15 incher.
Stock position: None.
Related Articles
|
Find People on SA
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largest
increase in followers
in the last 7 days-
1
David Fry
-
2
Philip Davis
-
3
Bill Gross
-
4
Tyler Durden
-
5
TraderMark
Fastest Climbers » -
1
-
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most activeSee all
Instabloggers.
Top Instabloggers » -
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 27 comments:
A lot of what drives MAC sales is and has always been visually striking product design. It's a thing of human nature and Apple seized upon it long ago... that all other things being equal, most people will choose the pretty one, every time.
Let's just see how the river runs on this one.
Best,
VERONICA
Overall I love the new laptops, and I plan on getting a MacBook Pro all tricked out. But from a market perspective, Apple had a unique opportunity to catch far more market share simply by offering the new notes at a couple hundred dollars less. Also
By the way, answering @JackSparrow, I did watch the entire presentation, several times. And I don't need to be lectured on my Mac knowledge, I challenge ANYONE that they have more experience than I with Apple and Macintosh. I've been a buyer of Apple products for 30 years and have personally owned nearly 80 Macs. I have 8 in my home right now, and my entire family is iPhone equipped. I have sold macs and Mac based systems, I have developed Mac products both hardware and software, and I have been and still am a major advocate of the Macintosh and the Apple way.
-zach
The new designs are a significant step in the evolution of laptop construction. While Apple will suffer from lower margins on these initially (they are expecting that production costs will decline as the manufacturing process matures), the company has once again taken a step forward that other manufacturers will eventually adopt. The single piece chassis/frame means fewer parts, fewer manufacturing/assembly errors, lower assembly costs, longer MTBF, and increased durability. Yes, it's more expensive - but so were 15" widescreen LCDs, 17" LCDs, 1" thick designs, backlit keyboards, and touchpads, many of which are now standard fare.
Does it excite the masses? Not yet. But just wait until the Apple marketing machine starts running commercials. The "coolness" factor will count on this one; how much is dependent somewhat on the economy.
It wouldn't surprise me in the least to see a $100 price drop before Christmas, with Apple claiming "improved manufacturing efficiency" as justification (when in reality it's slower-than-expected sales).
They have the most advanced hardware ever, setting new parameters for others to try and follow and they have unique access to OS X and Zach idiot Bass says they don't deliver?
And no other manufacturer can compare with AppleCare. They fix anything, no questions asked, and you can even take it to the store and swap it while you wait. No other company comes close.
On what, exactly, do you base your opinion on this?
But YET, you say you are buying a MacBook Pro, regardless of the price, etc...? Why not apply your own 'logic' to the rest of us? In that case, Apple should b RAISING prices. You are all over the map here. The MacBook is MUCH cheaper and not that much different from the pro version. I have the pro version, two of them actually (and two of the older iBooks for the kids) but I am not complaining about the price. You get what you pay for, and that extra special 10% of features ends up costing the most. My position is it's worth it, that's why I buy it. Your position seems to be that it's not, but you buy it anyway. ?
I have a 'gut feeling' that CPU GHz isn't really going to be the finest measure of computer performance in a couple months. Snow Leopard is introducing two extremely high tech speed enhancements. The first, OpenCL allows mathematical operations to be rerouted from the CPU to the Graphics Processing Unit. For those that don't know (simplified), an Intel Core 2 Duo can handle 2 calculations at once, while a NVIDIA 9600M GT has the ability to process 32 calculations at once. They're also introducing something dubbed Grand Central which is rumored to simplify (and maybe even automate!) the ability for programmers to utilize multiple cores easier.
They didn't mention it during the keynote, but I think these computers (esp. the Pro) are going to get a big speed boost when OpenCL and Grand Central are introduced. If Grand Central is an automation system, all of a sudden, your little laptop is going to turn into a friggin powerhouse.
(Long AAPL, but would prefer if it dropped like a rock for six months. Purchased the MB Pro because my former MB Pro died.)
Paul R
Mr. Bass should take up the issue of the $800 notebook that neither he nor anyone I know will buy with whoever promised him that notebook.
And although it is true that many long time mac owners (such as myself) consider themselves experts on Apple, I am sure there are plenty of people - whose job it is to or run the company, design, engineer, and write software for those products that we love - with more experience than you or me with Apple and Macintosh. But if I were to name one, I would say any of those fellows who showed up on stage yesterday for the event.
2. Apple has no intention at this point to join the other computer manufacturers at the profitless, marginless bottom of the pit. It does not want nor need that business at this point. When it is selling its laptops at healthy margins and gaining market share every quarter, why on earth would they get distracted on low end stuff. Stupid.
3. Apple did put one laptop in a more affordable range to keep pressure on the lower rung losers.
4. Most regular Apple analysts applauded the new lineup, concur with Apple not racing down to the bottom, and also not getting bogged down in useless Blue Ray.
5. Don't believe the Apple bullshit about margin reductions. Their laptops will not lose any margin.
This guy keeps getting it wrong about Apple.
Zach is off in his expectations as almost all of the analysts.
It's funny the way a company stock gets hammered because someone that isn't in the industry has unmet expectations, it's even worse when it's a Katherine Huberty or somesuch who hasn't been right in so long that she should give her paycheck back.
The truth is that analysts are nice folks that aren't in the industry they analyze and write about.
Why they think they know anything is so far beyond me.
I'm one of the guys that get's analysts calls looking for information.
I never tell them anything of value, I do my best to avoid their calls but part of my job is to manage them. I could lose my job telling them anything of value, so I don't.
Sorry to say, I haven't met one that is really plugged in yet.
Oh yeah, and Zach, that's a challenge you really shouldn't make.
I'm surrounded by people with experiences so far beyond where you've admitted to being, myself included.
We're all all still in the industry, you just write about it.
Unlike most who are too young to have the experiences as you have with Apple, I believe that my experience would rival yours... yes, I'm over 50. I've also bought, owned and worked on more Apple products than you. So what! Experience obviously does not make you smarter or better than everyone else.
Furthermore, I think your expectations might have been a little unrealistic: 1.) Yes, I too expected a speed bump... at least a SMALL one on top of all the other improvements... and I got it it... to 2.8 Ghz. You see, my expectations took into consideration the thermal envelope vs performance considerations of an enclosure expected to be even more compact (which they did). You might have noted that Steve mentioned they had to turn down the performance on the MacBook Air.
2.) Expecting a 10-20% price cut across the board is very unrealistic based on Apple's past pricing practices. I'd agree that expecting a lower price point for a specific model is realistic though... like the $100 on the entry MacBook. I was only disappointed by $100 (expecting $899) because I never bought into the sub-$800 rumor because of the Mini's price points. Also, when you consider Apple's emphasis on ASP and Margins, I think it would be unrealistic to expect them to BOTH lower prices (as much as you expected) AND roll out the new features they did... which I'm sure cost more. Lets see what PC competitors price their solid aluminum framed laptops for... "if" they do at all. I say "if" because if it is truly a more costly method, they are unlikely to roll out mass product using it.
I guess this means my experience counts for more than yours.
Without knowing how much it actually costs to produce these solid aluminum framed laptops (at least to begin with), it is hard to say we aren't getting a greater value for our dollar. In fact, I believe that moving to the Nvidia GPU is a major upgrade... because it improves the performance where it counts for the things the average MacBook user might do. If speed counts so much, why aren't the many PC mfg's touting processor speeds in their marketing like they used to? NO, I think it's the user experience that matters... and the Nvidia GPU is a major upgrade over the previous integrated versions. Furthermore LED backlit screens? Come on. Even you must admit that's a significant feature upgrade for the MacBook. It and the new GPU are both VISUAL user improvements, not to mention they look even sexier on the outside.
OK, were there any disappointments? well, yes... lack of firewire on the MacBooks and I think the $999 MacBook should at least have been upgraded to 2GB of RAM (considering RAM prices lately... come on Apple!). Call me cheap, but I would like to have seen them include the video adapters instead of asking another $29 for it. I love the matte screen on my top of the line 17" MBP so it irks me that it isn't an option on the new MBP's.
The Bottomline: I think with all your experience, you should know better than all those other idiots to expect all that you did, thus creating the disappointment. If anything, you should have written about the positives that most people seem to overlook. Would I have liked all your expectations to come true? Hell YES!!!! But I didn't "expect" them. WHY? Because in MY EXPERIENCE with Apple, I've found it's wiser and better to "Hope For the Best... But Plan For the Worst".
- my 2¢
I ditto your post. It would be a smart marketing ploy to announce a price cut for the Christmas buying season rather than a big one now. Imagine the PR and psychological effect of a price cut during the buying season versus now! Hope you're RIGHT!
Zach... are you paying attention?
That's the point. All else recedes in importance. These will swell the already healthy demand for MacBooks.
I was following AAPL on the 1-minute MarketWatch chart, with the "Compare to NASDAQ" feature turned on. Starting just before the speech, and continuing for about 90 minutes, AAPL's line on the chart declined about twice as steeply as the NASDAQ's. I don't think this necessarily reflected the judgment of the market as a whole, but rather, probably, selling by traders looking for a quick price-spike from a spectacular price-cut announcement. Or maybe selling by those who figured that Apple's announcement wouldn't meet Wall Street's expectation (of a $900 laptop), and so there would be a dip.
What's impressive, BTW, is Apple's relative strength today. The NASDAQ at the moment I'm typing this paragraph is down almost 4%, but AAPL is only down a bit less than 1%. I think major investors recognize value at current levels, and that there's little downside risk. They'll get braver in a week, if the earnings report's guidance doesn't spook them.
On Monday, it seems to me that somebody knew (perhaps based on accepting a prediction posted by John Gruber) that there would be no major price cut or "spectacular" product feature, because once above 105 AAPL was unable to do better than the NASDAQ price-line on the MW chart. That seemed odd to me, given that there was so much anticipation of the upcoming press event.
I think Apple delivered more value in its lineup (for instance, faster memory chips, according to one post I read), and that this will become more apparent in the future with Snow Leopard, as a commenter above stated. When the dust settles from the disappointment about a few things (like no Firewire below the Pro line and no matte screens), I think that value will be recognized, in articles in the Mac-oriented magazines, etc. I'm hoping that Apple will come out with a matte screen in a few months, and also a $100 price cut on all items announced yesterday, after they've skimmed the cream.
Going forward, SJ's health will be less of a downside risk, given that he seems much the same as he was in June. Anyway, the worst has already been discounted--and more than discounted. (Disclosure: I'm long AAPL.)
I'm sorry if you fell for it. Steve Jobs didn't fizzle anything. Unscrupulous bloggers and their gullible audience pumped up expectations to an unrealistic level.
I for one (as a consumer) want Apple to make glorious products and (as an investor) want them to realize healthy margins. I think their strategy and execution are pretty much perfect.
And yes, I will buy a fully tricked out MacBook Pro.
Becoming just one more member of the razor-thin-margin crowd is the worst thing Apple could do.
However, even today's laptops are quite nice. People often look at just the raw performance numbers and ignore the rest of the machine. Apple makes lots of improvements that improve the overall usability of the machines. Nicer keyboards, better battery life, brighter and crisper displays, larger and faster hard drives, better sounding speakers, better video out all contribute to making these machines more productive.
I'll second Mr. Caruso's thought that when it is cool in the house a warm laptop is not a bad thing.
Finally, I'll Zach's disappointment a bit as he is just holding up tradition. Expectations are always high before an announcement and there is always the letdown that Steve didn't give us phasers, transporters and holodecks.