Wall Street analysts, after watching disappointed investors sell-off some Apple shares, Wednesday attempted to remind consumers that the iPhone 4S maker is still a rock star, pulling in profits like nobody else on the planet.
Hyped to expect a raft of rumored design changes, investors came away from yesterday’s Apple announcement somewhat disappointed, a mood reflected in an early 5 percent sell-off of Apple shares. “Investor expectations were high heading into the event and Apple did not meet some of them, e.g. multiple new phones,” acknowledged Morgan Stanley’s Katy Huberty.
Deutsche Bank’s Chris Whitmore seemed to be the lone analyst who shared consumer confusion over CEO Tim Cook’s presentation. In a reference to the danger of allowing too much time between iPhone refreshes, the analyst writes “We believe 15 months is a long time to wait for a processor speed bump and higher resolution.” Additionally, the absence of “a more aggressively priced mid-range iPhone misses a significant near-term growth opportunity.”
However, the majority of analysts took the position of trying to talk a jumper off a ledge, reminding investors Apple’s success is not all about shiny exteriors.
“The market tends to forget that software is what differentiates Apple from the competition, and that was the case again [Tuesday] with iOS 5, which featured Siri intelligent assistant and iCloud content management,” notes Huberty.
Others built on the software argument. “Clockwork-like refinements in software is key to Apple’s success, writes Merrill Lynch analyst Scott Craig. “Apple continues to make refinements to the OS, which we view as critical for constantly improving the user experience and extend Apple’s leadership in the space,” he adds.
As for the software upgrades, all of Wall Street could not say enough good things about the Siri voice-activated personal assistant. “Once investors dig into Siri, we think its addition will overshadow the lack of full iPhone form factor change,” weighs in J.P. Morgan analyst Mark Moskowitz.
Siri will convert the iPhone “from what was before a fairly dumb phone even though it was dubbed a smartphone,” concludes analyst Charlie Wolf of Needham’s.
Although speculation before the event included whether or not former CEO Steve Jobs would appear, the iPhone 4S announcement was pure Tim Cook, showing the change in stagecraft. Where Jobs was all about wowing the audience with the thinness or the smallness of an items exterior, Cook, the former nuts-and-bolts guy highlighted the internal coolness of the iPhone. In advertising lingo, Jobs sold the sizzle, while Cook focuses on the steak.
