When Apple-is-doomed rumors don't match the math

When Apple-is-doomed rumors don't match the math

More on the dumbassery -- or manipulation -- that was the Wall Street Journal story this past weekend alleging Apple was cutting iPhone 5 orders in the face of weak demand -- namely the questions the WSJ should have asked, and the logic they should have applied, before slapping the headline under their masthead, usually one of the most respected in the business. Particularly, the rah-rah Samsung tone taken in the article, and on many technology sites as well, that reported doom-and-gloom for Apple in the same feed they bolstered Apple's competitors. Mark Rogowsky from Forbes elaborates:

First, we heard “good news” from Nokia, which reported shipments of 4.4 million Lumia phones in the year-end quarter. Never mind that we are talking less than 2 percent market share for Nokia or that sales were boosted by heavy discounting, often down to $99 at retail — less than half what competing phones sell for.


In other words, if we just compare the last two generations of phones, Apple sold somewhere around 35-45 million last quarter while Samsung moved about 23 million. It’s certainly true that Samsung has a number of less-expensive entry models and will outsell Apple in raw numbers. But when one looks at “profit share” and wonders why Apple will continue to earn more of it in smartphones than Samsung, those numbers tell the story.

Go read the whole thing.

Source: Forbes via Daring Fireball

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Rene Ritchie

EiC of iMore, EP of Mobile Nations, Apple analyst, co-host of Debug, Iterate, Vector, Review, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Reader comments

When Apple-is-doomed rumors don't match the math


The WSJ normally kisses Apple's ... Core ;)

Don't be so offended that they wrote about rumors reported by others and that also happened to mention a truth -- that Samsung DOES outsell Apple (margins completely aside).

if margins could be completely aside... DUDE... than anyone who would sell phones for a buck... would outsell Samy as well... U do just understand hamburgers... dont'ya?... Eric from MC'Donald

Column writers from WSJ... same as from BI and SAI are payed by Hedge Funds for those kind of" Reports" more then by those "journals"... which they are actually working for ... multiple times more... and all what the HF are after... is to sell tons of PUTS(sells options) and load tons of dirt cheap CALLS(buy options)... do not let them full you around... DUDES... there was a very similar article 2years ago... amazing how fast... do people forget and trust the same FUD again... Apple will report it's best QTR in history with over 60Bio in revenue... with over 30Mio iPads and over 40Mio iPhones... actually sold... and not just shipped... like Some Skunk !!!

BlackBerry and Nokia used to outsell Apple. The question of how something is reported absolutely matters, especially when it's the WSJ. People take the WSJ very seriously.

Man, all the fandroids came out yesterday blasting about this like it was something to be proud of. I even started hearing shit since I use an iphone lol! I wonder what they have to say now. It's to the point where it's becoming like a crazy sports fan. Ride or die. Ridiculous

Let's say it is true that Apple and the iPhone are headed for a huge slump and that Samsung will dominate in the near future. Who cares? I was an happy, loyal Apple customer before the iPhone and before the iPod and will continue to be. I remember when people used to make fun of me or criticize my choice in computers because Apple WASN'T popular. Now I get the same thing because they ARE popular. Guess the only thing left is for Apple to be smack dab in the middle and be fairly popular but not ubiquitous then will people be happy?

...but the WSJ sentiment is sort of "truthy" even if it's not well reported. The next iPhone will probably be the one where LTE goes from being niche early-adopter thing to mass market normality when all of the 4s and remain 4 users upgrade... but after that, smartphones will be like iPods and tabelts will be the big fat middle of the market cash cow. iPhone is going to slump eventually: circle of life.

Rene, if you believe in Apple why not bet the farm on the company and retire when it's proven that the stock has just been manipulated down? ;-)

But then again maybe you're already rich and don't need the cash.

I don't own any Apple stock, nor ultimately does it matter to me whether Apple succeeds or fails. What does matter to me, in this case, is dreadful reporting from what is often considered to be a highly trusted name in traditional journalism.

If this story hadn't have been in the WSJ, how far would it have spread? If it had been reported in context, and if it had been reported in proportion, how far would it have spread?

I run an Apple site so I post about Apple news, but this story wouldn't be any less bad if it had been about another company.

(BTW- Kevin from CrackBerry has to field this kind of stuff way more than I do, at least for now.)

Believe me, I am getting hammered by clients asking about selling the stock. When it was 700, they wanted to buy. Its typical. Buy at the top, sell at the low, and the brokers are the bad guy. You should have seen the rejections when I tried to sell some of their positions in the 500's and 600's. (note, many of my clients own it from around 12 bucks or so, when Jobs came back and they bought NeXt) Point is, if a person thinks it might go down, they should sell a part. If they think its going up, they should buy a small amount, and see what happens on Jan 23. Thats going to be a MOST interesting day, not only from the earnings standpoint, but especially on the forecasts. I hope they address these rumors, saying they are true or false, to slap some analysts and news reporters in the face.

I sold mine shortly before the time the apple execs were cashing out and it was in the 700s. It's a buy right now as I didn't think it'd ever get this low. Especially back then. (I bought some more Apple late last year after selling and taking the gain of some others).

I don't see a slump coming. IMO, the only barrier to entry for Apple is screen size which iOS and their (designed for a specific resolution) apps kind of limit. I anticipate Apple will be doubling the res later (next year) for iphone removing this barrier and allowing for a bigger iphone that's easily past 1080p. Still, even this would have critics crying about innovation and Apple's need for a new product.

IMO though, companies get off track with too many new products or dabbling in categories they shouldn't be in too quickly. Part of what makes Apple a great company is saying no to bad ideas and sticking to what they know. In a way, Maps and Siri was veering from this. I'd prefer Apple to not compete with those who are best at certain services such as Maps, search, etc. Let Google have that. In the end, investors want to see hardware sales and margins. Not some attempt at stealing revenue streams from competitors with half baked services in businesses Apple doesn't belong in.

Apple should be partnering with google to integrate google fully into iOS. Get rid of the Apple Maps. Let Siri operate the device. Apple should be courting MS with favorable terms for Office. It's no coincidence that the slump (and much more criticism) started when they started removing Google from iOS.

and you were right to sell at 700 and all the people saying different would forgoing the profit you got. you can buy back in at a lower price now. That's how the market works. Far to many phone fanboy posts confuse a reason to lighten a stock position or reallocate money with the fanboy tone of "Apple sucks." Take Microsoft, It's stock didn't move for years. That didn't equate to the company was gonna fail. This is hysteria to me. I think it's an over reaction. It's taking every wall street correction as a personal slight. Even the title is sensationalistic "Apple is doomed." I mean seriously who actually said Apple is "doomed?" And isn't that so unrealistic that it doesn't need response? And honestly the opinion that demand is falling is just one guys opinion like the opinion of the Forbes article is a competing opinion. In fact i think really what Rene should have done is what the Forbes guy did, write that article, not this one linking to that article. If it's wrong, and demand isn't falling just write the article and destroy that claim. That's what i want to read. But this stuff is kinda petty to me.

I can't believe that 2nd paragraph. they counter themselves in the very next sentence. who approves that stuff to get posted...

The problem of rumors and how these rumors game the stock market does not just have an affect on the price of a companies stock. It has a knock on affect with sales. This is especially so when it comes to companies like tend to have a limited range of products such as the iPhone. In the case of Apple, we see it every time it becomes obvious that a launch of an updated model of the iPhone is imminent people hold off purchasing a new iPhone to replace their older model.

In the case of this rumor it has an effect of implying that they are cutting production of the iPhone 5 when the facts are that the yield of 'good parts' has been far higher than anticipated and they were able to get through the ramp up of production far faster, rather than have a glut of purchased components it is not good practice to carry a huge stock of parts, these are an effective loss as any product that is tied up and not sold is not a profit. It is merely good business practice to lower the orders and reduce this overstock of components.

The a reduction in the order of parts has little bearing on the actual sales of a product and the Wall Street Journal did, in true News Corp fashion, sensationalized the story and connected the two without gathering all the facts. Something that comes from the Heritage of Rupert Murdoch and his Tabloid background.

Having the next 'big thing' from Apple won't fix this issue. For many Analysts if a company is no longer in their favor they don't even have to supply factual information to the news media they can take the slightest rumor and utilize that to push the price down. It's also in their interest to make Apple more appetizing for the people they report to and having share prices pushed down and then have a footnote that says that the stock is a very good buy at the new lower price and that it will recover giving a great return on the purchase of that stock.