Is now a good time to buy Apple shares?
Should you really have bought 10 million Apple shares last week? Alex Kidman, as always, has an opinion...
Last week might not have been the optimal week to own Apple shares -- unless you were of the opinion that the company was undervalued, in which case it was an excellent week to buy.
(I'll preface this entire blog entry by pointing out that I don't own any Apple shares at all. In fact, save for compulsory super, I don't think I own any shares at all, but that's a story for another day...)
Anyway, disclaimers carefully placed aside, back to Apple. First there was the general tech stocks crash, which saw about 18% wiped off Apple's basic share value -- and, by extension, the value of the company. Then later in the week, a consumer "tipoff" on CNN's consumer web site that suggested that Steve Jobs had suffered a heart attack led the shares to take a further 9% plunge.
Now, I'm not genuinely sure if Apple's any better or worse off than other tech companies when it comes to a financial crisis, really. On the one hand, they do have a small but growing cadre of exceptionally loyal customers, one of the surprisingly continually hottest music players on the planet, and a premium brand that undoubtedly brings them in better than average returns on their hardware. That's got to be good.
On the other hand, those enthusiastic buyers keep hold of their Macs for ages -- and the hardware tends to last a good long time -- and consumers can be fickle beasts. There was a time that you couldn't buy a Tickle Me Elmo for love nor money, too. Those factors could (theoretically, in a situation where consumer spending budgets were tight) lead to lower revenues for Apple, and perhaps justify the lower share price. That's got to be bad.
What I find more fascinating is the idea that Apple's fortunes ride purely on the health of just one bloke in a big shiny office. If big Steve happened to pop his clogs, it would all be game over, and everyone else would move onto buying Zunes. Actually, scratch that last bit -- it's simply too horrible to think about.
In any case, suggesting that Apple=Jobs in a shed seems overly simplistic to me. Not to mention historically inaccurate -- apart from the eleven years he spent not at Apple at all, it was at least at the beginning, two blokes in a shed. Still, as likeable as he apparently is, nobody's particularly watching Stephen "Woz" Wozniak's health with quite as much interest as they are Jobs' apparent demises.
There's an extension for Firefox that humorously keeps track of Abe Vigoda's health status -- you can also get the same thing for Facebook -- and I'm wondering if there isn't money to be made in tracking Steve Jobs' health as well.
There's no doubt that Steve Jobs is a potent advertising force for Apple, as well as the public face of the company, in much the same way that the public sees Bill Gates as the "face" of Microsoft. Sure, in Gates' case, it's not actually true any more, but there's a solid reason why you didn't briefly see Steve Ballmer trading witty bon mots with Jerry Seinfeld.
Still, Apple as a company employs over 21,000 people, with Jobs famously the least paid (technically) member of staff. Then again, he gets the rest of his money from stock options. After last week, perhaps he's rethinking that particular strategy.
Other Blog Entries written by Alex Kidman:
Thoughts on this article? Add a comment below.
Comments: 2
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M9ROC
Oct 7, 2008 2:17 PM
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So how about answering the question? Do you believe now is a good time to buy Apple shares? |
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Alex Kidman
Oct 7, 2008 5:33 PM
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(Not financial advice. Alex is a journalist, not a financial advisor)
However, it's quite probably as good a time as any. Doesn't standard financial wisdom go that in the long term, buying when the market is depressed is good strategy? If the shares shed 30 percent of their value (although I *think* they've recovered a lot) that would have been a killer time to buy. In theory, mind.
(repeat: Not a financial advisor. Don't send me letters when/if everything goes kablooey.) |