Here’s another example of analyst and media bias against the maker of one of the best-selling consumer items in history. An article was just published online that compares headlines and media buzz in the periods immediately after the release of two competing products.
One of them was the iPhone 5, the latest version of the iconic smartphone from Apple Inc. (NASDAQ:AAPL). Last September it went on sale and the company reported it had sold 5 million units during the first weekend it was available, a record for the company. However, the financial media quoted several analysts that said the numbers were “disappointing.” Some were expecting 7.5 million units to be sold. That helped trigger a swoon in the stock price. Apple has lost more than a third of its market cap since.
It wasn’t until Apple Inc. (NASDAQ:AAPL) announced it was returning some of its cash pile to investors in the form of an enhanced stock buyback program and a 15% dividend increase that the share price stabilized a bit.
“Good” Galaxy data
The latest model Galaxy smartphone from Samsung , the S4, was released in mid-April. The company, which usually doesn’t provide information on individual products, estimated that 10 million units will be shipped in the first four weeks after release.
Analysts and pundits gushed over the news. One financial publication had a headline that blared that the results were “strong.” Another said “impressive.” The blogosphere lit up like Samsung was a rock star that released its latest in a long line of Grammy-winning albums.
A few analysts have gone against the grain. Walt Mossberg called the S4, Samsung’s answer to the iPhone 5, “a good phone, not a great phone.” Another article I read about the Samsung device used the word “underwhelming.”
Apple Inc. (NASDAQ:AAPL) sold about 12 million units, 2 million more than the number of S4s that were shipped, in the first four weeks that the iPhone 5 was available. I didn’t hear the Samsung gushers say much about that.
The 10 million S4 shipments aren’t really sales, yet. The figures are just the number of phones that wireless carriers, not end-users, have obtained. Some are still sitting on shelves.
Lack of innovation?
Still other recent pronouncements claim that Apple Inc. (NASDAQ:AAPL) has lost its mojo and is not very innovative anymore. After all, it’s been three whole years since the iPad first came out. The people making the claims seem to be saying “what have you done for me lately, Tim?” That is in reference to Tim Cook, Apple CEO.
There are reports circulating that Apple Inc. (NASDAQ:AAPL) has several new products in the works, including iTV and a smart watch. The naysayers never say anything about that.
Other companies seem to be a lot more innovative to these people.
For example, Google Inc (NASDAQ:GOOG) has developed prototypes of its Internet-enabled eyewear, Google Glass, and has plans to formally release it in 2014.
I admit it is very innovative. However, analysts have not commented on the feasibility of actually transforming it into a product that consumers will purchase in droves like the iPhone. Over 300 million of them (one for every man, woman and child in the U.S.) have been sold generating $180 billion in revenue and $90 billion in profit so far for Apple.
Note those figures apply just to the iPhone. Doesn’t even include the various Mac, iPod or iPad offerings, or the 50 billion iOS apps that have been downloaded so far, far exceeding the number for Google’s Android operating system, which is used on most other smartphones, including the S4.
There are several issues with the Glass technology right now, including the fact that people that need prescription lenses can’t use it yet, although there are indications that versions for regular eyeglass wearers are being tested.
And there are some privacy concerns. Some people may not want to be recorded by the camera-ready devices.
Did bad press hurt Apple investors?
So how does the bias affect investments in any of the stocks?
I’m not implying that the bad press was the only thing contributing to the decline in the price of Apple stock. The company did report results in three different quarters that were below its usual level of performance, including the first actual decline in earnings in several years. Apple Inc. (NASDAQ:AAPL) is probably in a transition from a high-growth company to a value-orientated, dividend-paying stalwart.
However, I believe that the negative publicity probably influenced many investors and kept them on the sideline although things aren’t as bad as indicated in the press.
In addition, the reporting of only good news for Samsung and Google, warranted or not, most likely resulted in investors buying their shares and pumping up the price.
I don’t think think Samsung puts out a product that much better than Apple Inc. (NASDAQ:AAPL), or Google is more innovative. All three companies could be considered for your portfolio.
I have no problem with the success of products provided by competitors of Apple. I actually think Google Glass is a great innovation and that the S4 is probably a solid phone.
I do have an issue with analysts and the financial media that exhibit obvious bias against a company and minimize their accomplishments, which tends to help drive down the stock price.
Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.