Apple's management presented a confident, reassuring message to securities analysts who cover the company following its earnings release. But it didn't give investors an inspiring enough message to halt a stock stampede.
Chief Executive Tim Cook told analysts on the earnings call Wednesday that he was "incredibly pleased to report an extraordinary quarter" and he had the numbers to back it up. He gave a gaudy display of Apple iOS phones selling at "a staggering 10 per second last quarter" adding, "it's simply phenomenal." He talked of stock buybacks, cash management, and the kind of attention to shareholder issues analysts usually love.
Then Apple's stock dropped more than 10 percent, bewildering some analysts and financial writers. Shares continued their descent Thursday, extending the 30 percent decline since September as the tech giant tries to convince the market it will keep growing at its heady pace.
Cook has been firmly at the controls of Apple for more than two years now, managing effectively after Steve Jobs departed, with results that made it the most valuable company in the world. Apple still pumps out millions of high-quality gadgets each month, and Cook dismissed rumors that arose last month about manufacture supply problems, saying, "It's good to question the accuracy of any kind of rumor about build plans."
[Read: The Outlook for Dividends in 2013.]
He has followed the product roadmap handed to him by Steve Jobs so faithfully it's like a company on cruise control. But Jobs was someone who didn't like to use cruise control. He was more like a hard-driving NASCAR racer, prone to crashes (remember Lisa? Just one of his forgotten flops) that can accompany big risks. Indeed, he banged Apple up so much he was tossed out by the board, and came back to lead its recovery.
Part of the mythology surrounding Jobs is that he could sit alone in a room and spin out one insanely great idea after another, but that image belies the real Steve Jobs. He was an innovator and a visionary, a maniacal boss, and, possibly most important for a chief executive fending off rivals, an insanely driven competitor.
Skeptical? Compare the way Jobs handled his last earnings call in the fourth quarter of 2010 to the one Tim Cook just gave. Jobs' Apple was flush with success from the wildly popular iPhone and earnings growth that would soon make it the world's most valuable company. But he didn't gloat. Far from it, he hogged the stage from his managers to give an incisive view of all of Apple's toughest competitors.
On that call, Jobs listed the big threats. "What about Google?" he asked without prompting. He spat out numbers and data on the Android system. "Unfortunately, there is no solid data on how many Android phones are shipped each quarter." He talked about RIM, even though it was falling fast, and Nokia, the vulnerable No. 1 back then. "We admire them for being able to ship the number of handsets that they do. But we don't aspire to be like them. They're good at being like them. We want to be like us. And we want to make the best ones."
Competition matters even more now that wireless carriers have a large say in product marketing based on switching and stealing customers. Apple's stock began its steep drop in September when it became clear that its biggest rival, Samsung, was gaining an inside track with high-end products. The Korean company is a fierce competitor that has passed Sony, Toshiba, Sharp, and others.
[Read more about Apple's competition.]
Cook's only mention of the competition came in a question he was asked about "larger-screened" telephones. Samsung's Galaxy Note sales have surged with the big format. Cook saw this as no worry because "customers love" their iPhones as they are. "We put a lot of thinking into screen size and believe we've picked the right one," he said.
It's not that Apple necessarily has to Think Different. There's hope for it to regain the lead with its still-enviable brand loyalty and more new products flowing. But if it doesn't find motivation by watching the other fast drivers on the track, Apple products risk becoming an also-ran.
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