Apple: For What It’s Worth

Something’s happening here

What it is ain’t exactly clear

—Stephen Stills, “For What It’s Worth”

Something’s happening at Apple. We’re not sure what, but something’s happening.

Yes, everybody knows Apple’s quarterly earnings report disappointed Wall Street’s Finest. And yes, everybody knows Apple managed to calm the disappointed herd, mainly by using the phrase “we’re thrilled” seven times during the call while pointing out that the big miss in iPhone sales was likely due to everybody waiting around to buy the new iPhone 4S.

But not one of Wall Street’s Finest—not one—asked about the most disturbing pattern coming out of Apple’s earning release: the measly 1% year/year revenue increase at Apple’s retail stores, the 26% year/year profit decline at Apple’s retail stores, and the mere 4% year/year growth in visitors to Apple’s retail stores.

Certainly, there was an impact at the retail stores from the Apple Faithful waiting for the new iPhone. But even before this quarter’s jaw-dropping sequential-quarter momentum collapse from up 36% in June to up 1% in September—a downshift we can not recall seeing at any retailer, ever (please come up with one, and we’ll highlight it here)—the Apple retail stores had been losing their mojo.

For example, from the December 2009 to the June 2010 quarter, retail visits rose from 51 million to 61 million. This year, visits from December 2010 to June 2011 did not rise at all—from 76 million to 74 million.

Something’s happening here. What it is ain’t—exactly—clear.

Author “Secrets in Plain Sight: Business and Investing Secrets of Warren Buffett”

(eBooks on Investing, 2011) Available now at Amazon.com

© 2011 NotMakingThisUp, LLC

The content contained in this blog represents only the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. Also, this blog is not a solicitation of business by Mr. Matthews: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.

NOTE ON COMMENTS: We abide by one rule on the comment pages here, and that is NO “Yahoo Message Board-Type Language.” So whatever you write and whether or not you agree or disagree with something, spell it correctly and keep it clean, and no personal stuff. And if you think we won’t enforce that, well, we have over 300 comments that never appeared because they were sloppy, obscene, or personal. —The Management