Strategic Intuition – by Kunaal Arya

 

It has achieved success that almost all companies wish they had. I have been watching, studying, living Apple since the 2nd Generation Apple iPod. When the the iPod started to take off, I remembered wanting to buy Apple stock at a mere $20. I watched it climb year after year to $200 in December 2007. A lot of that was due to over reaction, over speculation, over hype on how great of a company Apple Inc. is. 

Yesterday, Wednesday January 21, 2009 Apple released their Quarterly earnings for the period of October – December 2008. While almost all companies were releasing negative results, Apple surprised everyone with surpassing their YoY Revenue and Profit, and setting a new company record. This was during a period of economic instability. This was from October – December when over a million people lost their jobs in the States, and we were in a global recession. There were less customers, the median salary decreased, and the government and corporations decreased spending. The Christmas season held one of the worst retail sales ever. But still, at the end of it all, Apple increased their profits and revenue.

Apple has created near perfect products, which combined with one of the world's greatest brand, has propelled them where very few companies have gone. Their computers, and operating system has a cult-like following. When people trash-talk about a Mac computer, they stand up and fight in support of it. They have the iPhone, the iPod, and all other accessories which can go with it, because Apple has created a synchronization between them all. Customers find an ease of use. This is a big reason why a lot of companies face problems. 

Apple has introduced exception design, with ease of use, and synchronization of product lines.

So far they haven't made too many mistakes. The Apple TV being their closest, and that was hardly a failure, just not a success. They have retained over $25 Billion in earnings, and with zero debt are one of the most equitable consumer tech companies in existence.

All this was done largely by the leadership of Steve Jobs. Over the past few weeks, there has been question over Apple continuing it's growth without the leadership of Steve Jobs, and while I think Steve Jobs is a major influence to the organization, I believe they can succeed and grow without him. Apple has some of the best minds in the industry on their team, and they have the knowledge and leadership qualities to lead Apple through the next 10-20 years. Steve Jobs had cancer a few years ago, and I'm sure has focused on molding his colleagues to be capable of running the organization ever since.

I've been wanting to own Apple stock before I've been wanting to own any others. But I'm still waiting for the right time. I honestly didn't think Apple would meet their expectations, let alone beat it. Apple's big boost this last quarter was their new Macs, and continuing sales of the iPhone. Their iPod sales increased as usual. There won't be any big launches of Mac products in this quarter, and the iPhone sales are decreasing after everybody and their mother purchasing them the past two quarters. I can see Apple's revenue being slightly lower than the same quarter last year, which will hurt shares, and as the new iPhone is released in June, and new iPods, Macs and their new OS throughout the year, their revenue will pick up. This quarter is just the one I cant see beating previous records due to the recession and lack of new products.