Is Wall Street still smoking dope when it comes to Apple?
Is Apple really recession-proof?
American Technology Research analyst Shaw Wu upgraded Apple today, roughly two weeks' shy of the end of the company's first quarter. Nothing unusual there. But checking in with his supply chain, Wu came away so impressed that he wrote the following:
Jobs: What recession?
(Credit: Dan Farber, CNET News.com)
"So far, our sense is that the Mac business appears to be recession proof. We were already looking for robust Mac unit growth of 38 percent Y/Y, but now we think it may be closer to 42 percent."
Wu's as good a stock analyst as any in his segment but can any tech company be recession-proof--especially considering all the upset on Wall Street? That would be a first. When I speak with tech executives to find out how things are doing, caution is the byword du jour.
That even extends to something like Business Intelligence (BI) software, an area you would normally think would qualify as close to being recession-proof. But even there, companies are being "very careful" about what they're buying and want to "make sure they get the most from what they already have," according to Bill Hewitt, the CEO of Kalido, a BI provider with a global customer list.
Back to Apple.
The announcement of native Microsoft Exchange support for the iPhone along with a software developers kit will ultimately open up more doors into Corporate America. But that's in the long term.
In the short term, Apple's fortunes still depend on the consumer. Here's where it's getting interesting. Wu claims the following:
• Thin is apparently in with MacBook Air sales picking up momentum. When I visit the local Apple stores, I keep finding crowds of goobers drooling over the units. This is all anecdotal and obviously may not be worth the price of tea. Still....
• Recent iPod shuffle price cuts are working and iPod unit sales are on the "upper-end" of 9.5 to 10 million units.
• Despite a "pause" in advance of the June shipment of the iPhone 2.0, Apple's on track to reach--and surpass--its 10 million unit target by the end of 2008
He also believes Apple is receiving favorable benefit on what the company now pays for NAND flash, DRAM, and HDDs compared with the previous quarter. That could help bump up profit margins a little, a development, which if true, would be received by the Wall Street crowd as manna from heaven.
Can Apple pull it off? Count me as a skeptic, but Steve Jobs has proved me wrong so many times before, maybe here's another one to add to the list.
Charles Cooper has covered technology and business for more than 25 years. Before joining CNET News, he worked at the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet. E-mail Charlie. 
While Apple has some pretty good fundamentals, the stock price was more a reflection of Apple's current coolness and the recent price corrections are indicative of that.
Investing on something other than fiscal fundamentals is the realm of the day trader.
The "real GDP" has increased, but is almost level right now (increased 0.6% last quarter, refer to http://www.bea.gov/national/index.htm#gdp). However, real GDP calculation doesn't directly account for the devaluation of the dollar. If you take that into account, we've had a slightly negative real GDP for the past 2 quarters (and it looks like 1Q2008 will also be negative -- GDP is flat dollar-wise, but value of the dollar is going to be off 5% or so). So, yes, technically, we are in recession, but not a big one (yet - we'll see).
I clearly stated negative GDP growth, which means that from quarter A to quarter B that the GDP went down. This has not happened yet, much less three straight quarters. You cannot cook the numbers by saying if you compare our economy to another economy that we did have negative GDP growth, it simply doesn't work that way; you could make that argument at any time that another currency is gaining value faster than our currency. Go ahead and continue listening to the media; if they say we're in a recession then we must be in a recession. I mean, who are we educated people to challenge the veracity of the statements made by a media that has publicly admitted its allegiance to leftist forms of government. What better way to achieve that goal than to persuade the American public that capitalism is bad, we're always in a recession, their bigger paycheck means nothing because tomorrow is going to be doom-and-gloom unless you vote for the current leftist Presidential candidate du jour.
- by biobot March 20, 2008 11:37 PM PDT
- As a recent mac convert I find myself visiting the Apple store in Atlantic City ane that place is always hopping. Apple does seem to know how to hook customers much better than the Wintel folks.
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(10 Comments)As for recession proof, that is just bull. But I would not count them out for growth that exceeds all others in the pack.