When it comes to huge investors who buy mammoth blocks of Apple stock, there’s only one question: what have you done for me, lately? If you want to know why product launches are so important to Apple, it’s because the launch of a new product is critical to investors who believe Apple isn’t worth a plug nickel without its latest and greatest products.
Unlike the analysts who make daily pronouncements about Apple’s ecosystem or the wisdom of Tim Cook versus Steve Jobs, so-called ‘buy-side’ analysts who own 70 percent of the tech giant’s stock think the Cupertino, Calif. company is only as good as its latest product. In other words, after the heat from a product unveiling cools off, big time investors are nowhere to be found.
Asymco’s Horace Dediu recently talked to several of these usually tight-lipped analysts and found when Apple released the iPod in 2005, company stock shot up. By 2006, Apple stock was down again. When the iPhone was unveiled in 2007, institutional investors snapped up Apple stock, but dropped it in 2008 and 2009.
Seeing a pattern here? For big rollers on Wall Street, there are no warm and fuzzy feelings about Apple; just cold, hard calculations.
“Apple is a rather small collection of product bets,” Dediu wrote yesterday. “Owning Apple meant riding the iPod or the iPhone or the iPad as waves of growth. As soon as one growth wave was seen to start to fade, investors would say the same thing: Apple is done,” he added.
Which is ironic. Apple has always wanted to be seen as a media company, rather than a computer maker. Indeed, Apple dropped the word “Computer” from its corporate name long ago. Now, Apple is being judged like a Hollywood studio on its latest products — and it had better produce more Titanics and fewer Ishtars.
But that sort of investing with a short memory undervalues Apple’s long-term goals, placing more pressure on Tim Cook to announce big new products, rather than incremental changes or decisions that do not quickly produce a visible result. Great for the huge investors who jump in when Apple is scalding hot, then vanish in a puff of smoke (along with a few billion dollars profit) once a product starts to cool off. But such here today, gone tomorrow sort of financial planning doesn’t serve Apple or its loyal following well at all.Related