Stocks across the globe have been on a recent downward slide. China twice devaluated their currency last week, hitting companies like Apple hard with worries their products would no long be affordable to the Chinese consumer. This morning the DOW Industrial Average started with a 1,000 point plunge, and AAPL sank to $94.05 a share at the opening bell, leading the massive fear-based sell off. Then Apple CEO, Tim Cook, did something unheard of for the Cupertino-based company.
Cook emailed CNBC's Jim Cramer stating the following: “Jim, As you know we don't give mid-quarter updates and we rarely comment on moves in Apple stock. But I know your question is on the minds of many investors.”
As you know, we don't give mid-quarter updates and we rarely comment on moves in Apple stock. But I know your question is on the minds of many investors.
I get updates on our performance in China every day, including this morning, and I can tell you that we have continued to experience strong growth for our business in China through July and August. Growth in iPhone activations has actually accelerated the past few weeks, and we have had our best performance of the year for the App Store in China during the last 2 weeks.”
“Obviously I can’t predict the future, but our performance so far this quarter is reassuring. Additionally, I continue to believe that China represents an unprecedented opportunity over the long term as LTE penetration is very low and most importantly the growth of the middle class over the next several years will be huge.
Tim Cook’s comments have caused Apple's stock to race from $94.05 to over $108 a share in current trading. Cook’s comments not only turned Apple’s fortunes around, but turned Wall Street’s panic sell off on it's head. How powerful is Apple and CEO Tim Cook? The stock market, which shed hundreds of billions of dollars this morning is now likely to end in positive territory with Apple leading the way.
One thing is now abundantly clear. For all of Apple’s talk of just wanting to make great products while letting the rest of the chips fall where they may, somewhere within Apple's core also lies the clear understanding that it also exists to make money for its shareholders. Cook’s comments this morning just put tens of billions of dollars back into his shareholder’s pockets. But can Apple stave off other dramatic market events in the future?
I have argued in the past that Apple should follow Dell’s (for completely opposite reasons), and take itself private. Doing so would allow Apple to remove itself from Wall Street panic and stock manipulation, causing Apple’s leadership to take its eye off of making great products, spending time on accounting spreadsheets and investor pet peeves. Apple would be well served going the way of Bose, focusing on product and leaving the rest behind.
An Apple move to go private is not likely to happen, or at the very least, is not likely to happen any time soon. Until then, Apple will need to mind it’s investor's moods and wants. Perhaps Cook’s comments this morning has caused the company to discover how powerful they truly are? Did Apple’s CEO just learn how effective making occasional guidance can actually be? Perhaps so. And it is comforting to know that Apple not only understands how to make great products to delight their customers, but also understands it exists to delight it's owners also.
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