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Apple Stays Resilient In a Turbulent Financial Environment

In an extremely turbulent financial market, Apple’s fundamental business remains resilient. The company has positioned itself to withstand the current economic recession better than many of its competitors, and has continued to deliver promising numbers.

apple_manhattanIn a tough economy where headlines have been dominated by layoffs, cuts and downsizing, Apple has remained focused on securing its bottom line and treading lightly with product announcements. In terms of marketing Apple has maintained a mystique around the company and its products. Even though swarms of people are demanding cheaper devices, smaller notebooks and tiny iPhones, Apple has steered clear of entering new product categories. Which in terms of volatility from a shareholder’s perspective is a good thing. There’s no reason to gamble on a new product, or revolutionizing a new product category, when consumers just are not spending money.

As we’ve explained before, and as seems to be the case moving forward so far in 2009, Apple is focused on fundamentally securing its bottom line. Diversifying the iPhone product lineup by adding higher-end models, more storage and new features, while at the same time increasing global positioning and availability, remains high on Apple’s priority list. Most recently, they have announced that they will be bringing the iPhone to the United Arab Emirates around February 15th.

In regards to the other prongs surrounding Apple’s business initiatives, pent up aggression, if only from devoted users is surmounting. The Apple TV and Mac mini have both been left dangling for some time now leaving many wondering when an update or refresh is coming, if at all anytime soon. Inevitably, due to their lower price points, most of Apple’s less expensive products seem more in tune with the current economy. Even still, this won’t sway Apple’s product roadmap as they are not developing products or scheduling releases based on current conditions. “Innovating out of a recession” is something Apple continues to believe in, not innovating for it. Their guidance doesn’t seem out of place, as Apple recently announced a record quarter posting $1.6 billion profit based on sales of roughly 23 million iPods.

While dealing with massive speculation regarding CEO Steve Jobs’ health conditions, the stock has recently taken a beating. Over the past week however, Apple shares have remained strong after falling to new 52 week lows hovering in the high seventies. Uncertainty surrounding how the company will be run once Jobs officially retires, coupled with Apple’s relative, yet understandable confidentiality while broaching the subject, keeps the stock’s volatility rate higher than it should be. The way they’ve handled the situation leaves the media entangled in endless speculation, with some analysts demanding a public appearance from the CEO himself.

Undeterred by the media and demanding tech industry, Apple has kept its secrecy at high levels. As we move forward, Apple is positioned perfectly to trek through the next 14-16 months while methodically releasing products at its own pace. They have pulled out of weighing trade shows, and are now able to retain control over another facet of their business, when and how products are released.

Perhaps Apple’s fundamental business practices will never be reflected properly through Wall Street. But if the way Apple’s stock has been behaving over the past week is any indication as to what may come when CEO Steve Jobs finally retires, it may not be as bad as most people anticipate.

Disclosure: Long AAPL

Comments [1]

One Comment to “Apple Stays Resilient In a Turbulent Financial Environment”

T B @ February 6th, 2009 at 3:24 pm
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very very very smart people are working for this company :)

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