Earlier today, we reported that the Wall Street consensus was that Apple’s profit in this last quarter probably shrank for the first time in a decade, and that results will be even more dire next quarter, with iPhone sales units being extremely low.
But Wall Street’s pessimism in regards to Apple is, as usual, nuts. For Apple to perform as low as Wall Street thinks it will next quarter, Apple would have to show zero growth in the iPhone market compared to the same spring quarter a year ago. This would rank it as one of the smartphone industry’s worst disasters ever. Which is crazy, because Apple’s selling more iPhones than ever.
In a thoughtful piece on Wall Street skepticism over at BGR, the absurdity of Wall Street’s negativity is well spelled out: for Apple to do as poorly this quarter as Wall Street anticipates, it would need zero volume growth during a time in which smartphone shipments have soared by 30% year-over-year.
It’s seemingly impossible that this could happen, and as BGR spells out, the only way it could happen at all would be catastrophic mis-management of Apple’s brand… something there are no indications is actually happening.
Looking at the worst debacles in the handset industry history, Motorola’s RAZR bust stands as perhaps the best-known example of disastrous mismanagement of a brand. Motorola delivered extraordinary growth of its RAZR model range in 2005 and 2006, strip-mining the franchise and degrading the premium brand by dropping pricing too rapidly. Then followed the epic bust of 2007. Motorola shipped 40.9 million phones in the Christmas quarter of 2007, down 37.7% from Christmas of 2006.
Another spectacular blow-up happened in 2011. Nokia’s new CEO blurted out in February that he intended to phase out the Symbian OS rapidly, strongly implying that it was an uncompetitive mess. Nokia’s smartphone sales started tanking immediately, resulting in Christmas 2011 smartphone volumes coming in 31% lower than in Christmas 2010.
In other words, what goes down must go up. Wall Street pessimism has reached such an extent that Apple soon won’t be able to help outperforming the Street. Let’s hope, when that happens, Wall Street get bullish again on AAPL.
Source: BGR
