January 23, 2009 8:35 AM PST
Video: Apple: Recession-proof?
Is Apple recession-proof? It's possible. Oh, and sorry about the date -- I taped this the other day and forgot to post.
Even better news: you can now subscribe to this show. Just add it up right here!
And as always, drop me a line or follow me on Twitter!
Don Reisinger is a technology columnist who has written about everything from HDTVs to computers to Flowbee Haircut Systems. Don is a member of the CNET Blog Network, and posts at The Digital Home. He is not an employee of CNET. Disclosure.
Jobs claims to have been crafting minds to be his predecessor since day one of Apple's existence. Will Steve Jobs' potential death or permanent absenteeism affect the innovation of the company? Heck no. Apple prides itself on hiring the most innovative and creative minds and with that hiring strategy there is nowhere to go but up.
Without Jobs at the helm, Apple will continue to be innovative and groundbreaking, but with a new, foreign face trying to fill the shoes that Jobs left, many will ditch Apple for Linux distributions. I know I would.
Apple now has 28 Billion in the bank. An increase of 48% YoY.
- by Infinite_loop January 25, 2009 8:19 AM PST
- Don,
- Like this Reply to this comment
-
(6 Comments)EPS is not effected when the stock price is lower. EPS is diluted following SPO's. EPS is a multiple of Earnings and the Stock Float.
A lower stock price only affects the companies ability to borrow/create capital. But we all know Apple has no need to borrow or create capital, so it's a moot point. The reason AAPL's PPS is lower is due to an increase in overall market risk aversion. All stocks are "discounted" to reflect a new level of homogeneous market risk tolerance. It's most easily noticeable in the contraction of the P/E multiple, even when E is rising in Apple's case. Investors are less willing to put their money at risk which drives prices lower until a market equilibrium occurs in supply/demand.
The reason Apple continues to grow so significantly during this recession is due to consumer sentiment towards Apple, and downshifting of consumer purchasing from homes and cars to computers and iPod Touches. For any number of reasons Apple has become a viable alternative to Microsoft in the mind of the consumer. And that same consumer had spent the past 5 years buying new homes and expensive cars.
Now that cycle of consumption is temporarily over, now consumers are looking for cheaper alternatives to satiate themselves. Many people argue that Macs are too expensive compared to PC's, but they are making the wrong comparison. They should be making the comparison to costlier items people have been buying over the past decade. This is the why there is a conundrum regarding Apple's growth over the past year. Think about it this way. After I had just bought a $250,000 house and furnished it for tens of thousands of dollars more, maybe stuffed a few new cars in the garage, and don't forget the big screen TV's as well - doesn't a $1300 dollar Aluminum Macbook sound cheap by comparison?
Analysts are forgetting about "product sector substitution" in their hypothesis. As a human, and a consumer I have a fundamental need to feel good. If I cannot fulfill that need with cars and houses I will fill it with something else. If a PC is not going to give me the same level of satiation a house or car will, maybe a Mac can? It certainly offers a better user experience than a PC. It looks like a sleek sports car. All my friends want one, or I see them on TV all the time. They are status symbols that can be had for a lot cheaper than my new Escalade cost me.
Socioeconomic trends are easy to spot, but many times analysts struggle with the psychology driving the trend. In Apple's case it all comes down to growing positive consumer mindshare towards Apple/growing negative mindshare towards Microsoft, and a shift in consumer demand for cheaper alternatives to the "costlier products" they have been buying. Apple provides higher satiation than a PC, so Macs are quite viable in the minds of the consumer.