The reaction to Apple's record results announcement last night shows that if Wall Street ran the planet the planet would be in a mess -- which, unfortunately, it actually is.
They used to say Steve Jobs delivered a brand of reality distortion, but whatever he delivered is nothing in comparison to the truly flawed reality analysts, bankers and investors are creating in their negative reaction to Apple's record quarter yesterday.
In every segment, Apple is performing strongly. iPad sales may be shy of some expectations but is that really surprising when it is glaringly obvious the product is heading to upgrade, perhaps toward the end of March. We've seen this pattern before.
History will show the investment community poured cash into Apple when it was the only game in town, made a boatload of money and then invested that new cash into jam tomorrow business plans from firms with better marketing, PR and lobbying networks.
Pros and cons, in brief:
Some pros: Apple's retail stores continue to outperform others on the high street; the company rakes in the biggest profits in the smartphone industry on a relative fraction of smartphone sales; Mac sales are exceeding PC sales, at least in the consumer markets…the list goes on.
Some cons: Sales dipped in some regions in response to the economic turmoil that is impacting customers; iPhone 5C sales didn't meet expectations; Apple didn't break out China Mobile sales figures, instead pointing out the devices are only available in 16 cities on the carrier at present; gross margins shrank and the company clearly isn't expecting to ship any breakthrough products within the next quarter, as guidance was conservative.
Reaction: Apple stock fell 9 percent while the usual critics muttered their usual cant about "innovation" while pouring investment dollars into the hot air of future product innovation promised by other firms.
Thinking inside or outside the box
I'm with Rocco Pendola in seeing Wall Street's reaction to Apple's news as a perfect illustration of the kind of short-term thinking that's not helping a planet on which economic, social and environmental ecosystems are under historically high stress. Rather than assist in building sustainable solutions, the investment community remains focused on short-term gain above long-term improvement.
This short-term thinking drives a pervasive sense of nihilistic pessimism that currently infests everything; it underscores a worldview in which market share without profit is seen as more meaningful than any sustainable business plan. When it comes to smartphones, while other firms sell millions of devices for little or no actual profit, Apple sells fewer devices for good profit -- and it's devices actually get used. Which of these two businesses seems sustainable? Don't ask Wall Street. It doesn't know.
In the UK, this kind of short-term thinking means government slashed flood defence spending even as meteorological experts warned of increased danger of flooding. Those slight savings on flood defence have been quickly used up (and more) on flood relief spending. Who benefits? No one.
Short-term thinking is bad for business. It skews reaction, undermines innovation, imperils future implementation and demoralizes those in the business of attempting to make something positive.
Wall Street's demand that Apple gives shareholders even higher dividends should tell you everything you need to know. Investors don't want to invest in the profitable company, but still demand their mercenary tithe of the profits it regularly creates.
Apple's cash would be far better spent providing free education for future generations than a free lunch for privileged investors, but I bet you can guess how investors would react to a plan like that.
Tomorrow's children need long-term thinking far more than they require short-term gain, but until Wall Street thinks different the song will remain the same.
RIP Pete Seeger.
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