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Tuesday January 28, 2014 4:13 pm

On Apple’s Q1 2014 performance

Tim Cook iPhone 5c

I was talking with my pal Dave Scherer from PWInsider today about Apple's performance, and he seems convinced that AAPL is no longer a good buy as far as stock is concerned. He basically believes that due to lower cost competition, Apple's higher-priced items won't sell as well, and that's why the stock was down after the earnings report. Of course, while I am no stock market expert, I definitely have an alternate view on how Apple will perform. My viewpoint, after the break.

First, that pricing argument is very old. Try to buy a comparable computer to the Mac Pro (or build it yourself which used to make it way cheaper) and you will spend thousands more, literally. Try to buy a comparable computer to Apple's $999 MacBook Air from a Dell or a Toshiba. They are the same price or more. The iPhone starts at $199, comparable Android phones usually launch now at $249 or in some cases $299. Apple computers certainly used to be much more expensive than their PC counterparts, but over the past 4 years or so, that has shifted and people don't look at what they are getting for the money.

As for their current performance:

  1. They just sold 51 million iPhones. That is more than any other quarter iPhone sales in its 7 year history. Previous was 47.8 million a year ago. That is 3.2 million more. Additionally, Apple just signed with China Mobile. the largest cell carrier in the world. They have 750,000,000 customers, and just started selling the iPhone less than 2 weeks ago, for the first time. That is tremendous growth potential.
  2. They just sold 26 million iPads. That is more than any other quarter in the iPads 4 year history. Previous year-ago quarter was 22.9 million. That is 3.1 million more.
  3. Mac sales actually rose, while the PC market continues it's downward trend. They sold 4.8 million Macs, compared to 4.1 million for Q4 2013, an increase of 700,000 Macs sold.

So, when someone says that cheaper alternatives are taking dollars from Apple, my argument against that is to point to the info above. The fact is that even with cheaper devices out there, Apple just had a record quarter for phones and tablets, and sold more computers than they did a year ago, unlike almost every single PC manufacturer.

Let's talk about innovating on new products for a second though. In 2001 Apple introduced the iPod, and it changed the game and has since been the biggest selling MP3 player, by far. In 2007 (6 years later) they introduced the first iPhone. Today, it is the single best selling phone in the world (and this was prior to the China Mobile deal.) In 2010 (three years later) Apple introduced the iPad - the first tablet every actually accepted and adopted by the mass market. Today, the iPad is the best-selling tablet int he world. It is now 2014, four years since the original iPad. As you can see by the gaps between major new product categories, these things take time. Apple (or any other company) can't release new, game-changing products on a yearly basis. They need to incubate, refine, do R&D. To those waiting for something new from Apple, 2014 is your year, and I think you'll be very impressed.

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