Mike Abramsky's bad Apple advice
A lot of Steve Jobs watchers were surprised three weeks ago when Mike Abramsky of RBC Capital Markets downgraded Apple (AAPL) to "underperform" and lowered his price target from $125 a share to $70. (link)
The stock, which opened at $84.3 that Friday, slid to $78.2 the following Monday, a 27-month low.
That bearish report — which cited Jobs' recently announced medical leave — was especially troubling to anybody holding Apple shares because Abramsky's track record is pretty good. He gets five stars out of five on Yahoo Finance's Star Analyst list, based on the accuracy of his Apple earnings estimates over the past two fiscal years.
And although he didn't do as well when the company released quarterly earnings the following week — Abramsky undershot Apple's Q1 revenue by $367 million and its EPS by a full 30 cents ($1.48E vs. $1.78A) — his estimates for sales of Macs, iPods and iPhones were uncannily accurate. See Apple Q1 earnings: Analyzing the analysts.
So how would investors who followed Abramsky's guidance have fared?
Not so well. The stock has been on a tear lately, climbing 27.5% in the past three weeks to close at $99.72 on Friday. Anybody who sold short the Monday after Abramsky's downgrade, hoping to cash in when the stock hit $70, would have lost his or her shirt.
Abramsky, for his pains, was a co-recipient of iPhone Asia's second Dean Wormer award, named for the "Animal House" academic famous for the quality of his advice (e.g. "Fat, drunk and stupid is no way to go through life, son.")
But he's certainly not the only expert out there advising folks to stay clear of this stock.
If you're looking for a healthy dose of Apple FUD (fear, uncertainty and doubt), you could do worse than to pay a visit to Paluxo.com, whose report Saturday on Apple as a short-term investment quotes Cabot Wealth Advisory analyst Timothy Lutts ("it’s highly likely that the stock’s best days are over") and TheStreet.com director of research Colin Gillis ("The good news is out, so what’s coming next? Most likely it’s going to be a bad." ). See Short Term Stock Trading: Should You Buy Apple (AAPL)?
Many long-term investors in Apple, on the other hand, have been richly rewarded. The same report notes that Apple’s gain from its 2003 low to its Dec. 2007 high was 3,090%.
Oh. A classic argument. I have used about 15 different operating systems. It comes down to absolutely needing to do work. the mac looks great. It costs allot – pretty people often have macs, etc. However – I cannot run LabView, SolidWorks, Etc. Etc. Etc. on a mac. I see allot of really bad arguments in favor of a 'mac supperiority', but the truth is, apple cabed – they put intel inside. Really – what do the mac users not understand about how their computer not only is the same as a PC on the insde(where it counts), but also cannot run 85%+ of software – much of it very important software(and games). They argue you can bootcamp – but that is not a good solution. I hear a mac runs windows 'fastest' – that is disingenous, there is no 1 benchmark for 'fast'. that is absurd. THE MAC USERS SOUND LIKE REPUBLICANS THESE DAYS. they really do resort to slander and lies, immediately. I am a professional digital artist. I use PC because I work with many programs not on mac. Why would I want to learn both? also, mac is a computer – to do advanced things takes an advanced user. IT people have nothing to fear from mac. Nothing.
I have heard many times the argument that Apple, like Starbucks, is a premium brand that will fall out of favor during these tough economic times. Personally I would not compare Apple against a Starbucks. Instead I would compare them against Honda. Companies like Honda and Apple do indeed charge a premium but its one that customers feel is justified given the quality of the products and the customer service from those companies.
The bottom line is that Apple makes great products and they have a great operating system. They also happen to make their products sexy and they also happen to be great marketers.
@ James from VA
Nice calm articulate post. Certainly a different tack than the usual mac zealot crap. Problem is it is the same crap. Mac fanatics rationalize spending 3 times the money on a Mac because they are less buggy and easier to use. Now you've added because they are more reliable? I have a room full of old PC's that still work just fine but are underpowered by todays standards. To claim that somehow Mac hardware will outlast PC hardware is crazy and just not true. Computers (Mac and Pc) use solid state electronics that rarely fail before they become obsolete. Nowadays Mac and PC is pretty much all the same parts anyways (think Intel). Computers are just means to an end and to be honest pretty much all the same. I have a Mac (mini) (I use for software testing) and a bunch of PC's. They all allow me to get work done. Just never understood the need to spend 3 times the money on a Mac when I can do the EXACT same things on a PC?
As to the economy I think many people had no clue how bad things were till last fall. Even now many, if they are still working, are in denial. Even the ones with money are cutting back. My guess is most of them that wanted them already have Mac's anyways. Many will make due with what they have.
Your company just upgrading to Mac is an N of one. It's not happening everywhere and is the biggest myth that macfans disseminate. In any case your company now has all macs so they will not be buying anymore this year unless your company is in a massive growth mode which is doubtful in this economy.
Bottom line is Mac is like Starbucks and Gucci. You pay a premium for what? People are scaling back. They aren't buying $1000 purses and they are drinking McDonalds coffee. In this economy my investments are staying way from companies that sell overpriced "premium" products.
@John from Chicago
First you say people aren't spending because were in a bad economy. Right and Wrong. The people with no money aren't spending, but those that are are buying MAC products. You see there is this thing called QUALITY that Apple brings which most US PC companies don't bring. Now to back this up, we've been in a recession since 2007 in all reality and it picked up steam in 2008, YET Apple posted more gains and profit in those years. Now how do you figure that using your logic? I mean we're in a recession, no one would be buying over-priced Apple products right?
Now again you site from here that Apple and Dell and MSFT and HP will go down because the economy sucks. Again, right and wrong. 3 of those 4 will go down because they are not streamlined, nor do they make INNOVATIVE products. Our company replaces every PC we have left with a MAC, in fact, I don't even know if we have any PCs left. I still see the APPLE stores packed and people leaving them with bags. I still hear about people who don't have a job but are buying a MAC because they need something reliable and to use while they are without work. I hear people talking about with the money they do save and with what little they have that if they are going to buy something, they are going to make sure it's quality and it will work and last and thats going to be an iPod or iPhone or iMac.
Remember this. 90%+ of the US is still employed. That's still a lot of people and $$$ and if they are going to spend it, it's going to be on an APPLE.
Apple will make it through this as the top computer company out there. As for Microsoft, Dell, HP, Google, etc…some of those will be down or gone in a few years.
@maddawg
Only the technically challenged require macs? Great comment, it shows your mindset. Let me correct you. Actually it's the most creative and efficient workers that require and want Macs. I actually want my programs and software to work along with any peripherals, cameras, HDs.
The rest are just using the PC excuse to hold a job that wouldn't need you if you used a MAC. Mainly you are scared about losing your jobs because if things worked well (like Macs) you wouldn't have anything to do (kinda like the Maytag guy).
Btw I've never heard anyone say they are going out and buying a PC. But I have heard people all the time going and talking about buying a MAC or iPhone or iPod.
A garbage collector in New York once said in all the years he's been collecting garbage, he's never seen an Apple computer being thrown out.
However, he can't count the number of PC machines piled in dumpters……
Wasn't Apple over $90 a few decades back? I forget, did it stay there? Maybe Apple will keep hitting home run after home run after home run. If not, Apple is over priced.
Yesterday I sold one of my old PC that was collecting dust for $250, I was like hooray, the iPhone is $199 and I can upgrade from the brackberry, which is ok I guess…
I go there and tell the sales person that I am an existing AT&T customer, I have a blackberry, but I am not happy with it and want the iPhone and I am willing to pay cash the $199 + tax to get it.
The sales person looks up my account (I have a 2 year contract) and says, because your contract is still going on the backberry, we can get you a iPhone but for $399 or $499.
I would have to open a account to get the iPhone at $199, end of story, sucks, you only get the $199 price is you sign a contract otherwise it's not that price at all, false advertising.
john the IT guy here. I think all the mac fanatics are missing the point. Apple (and Dell, MSFT and HP)stock are going to go lower from here. Why? Cause the economy sucks and individuals and companies are not going to be buying new PC's this year. ipods and iphone sales will be DOWN as well due to the economy. People are going to make due with the stuff they already have.
Now I need to go clean a virus off a PC here….you know job security…right. 
The only response I'll make to the rant by "maddawg" is that
(a) I bought my first personal computer in Oct 1978.
(b) I've used most flavors of Windows, most flavors of MacOS, VAX/VMS, several flavors of Unix/Ultrix/HP-UX, etc, and administered several of those machines.
(c) I've developed software on embedded platforms and Unix class machines, for mission-critical and safety-critical applications.
So if that qualifies as "technologically challenged", so be it…
haha pple taking over the world huh? haha yea right. Apple has been saying that for years and has of Q1 in 2009 Microsoft still has over a 90% market share. And whoever ever above said Apple had only one version of its O.S and not like all the windows versions…. need to look at the site because apple has a few versions also.
The last 2 years have also been reported that apple has a higher breakdown rate than a p.c. so ill be sticking to my p.c, im not going to pay 10 times more for something that breaks 10 times more and cost 10 times more to get fixed.
i absolultly have huge LOLs at the lamer comments such as:
"macs don't require the support resources. they can cut your support staff from 100 to 20"
YEA RIGHT!!!
which planet did you learn your data communications/networking skills on??
well, here on earth, a mac is a pc is a unix host is a server, when it comes to networking them.
they are all hardware, all their protocols must communicate with each other, they all require the configuration and they all require maintaining their network presence. so how does replacing a PC with a mac reduce support costs?
yea…i knew there wouldn't be an answer for that one.
being as i've engineered networks with macs and PCs for over 22 years, i CLEARLY can tell that support is support.
to have a lack of it would be wrong….to have a lack of it because you think your iTarded lemming users that require the use of macs because they don't really understand technology will not need the same support, well thats just setting you, your IT shop and the company that relies on it for failure.
good support IS ALWAYS required and with the world pumping out more iTarded lemming idiots every day, well support is only going to need to increase….NOT DECREASE!
to even suggest that a company can reduce support staff because their iTarded users use macs is a joke…..
i mean…you do know type of people that insist on using macs don't you?
oh you're one of them? well then let me enlighten you….
only the technologically challenged REQUIRE macs as their computer…
so, are you telling me you need less support because your users have LESS brainpower when it comes to computers?!?!?!?
i guarantee that equation can not work out!
Regarding mac inroads into mainstream corporate culture…
I think if you look at the sales increasing apple figures as a percent of PC sales, it's hard to argue that this is just a repeat of the 80's or business as usual. I think it's more of a tipping point argument at this point. The share of apple computers, combined with the prevalence of Ipods and IPhones has created what I deem to be a critical mass. Additionally, the impact of a internet which doesn't care as much about the specific computer accessing it, and the ability of Macs to run windows as smoothly as a PC are all factors in my feeling that apple has much room to grow going forward.
I respect people's difference of opinion, and I may feel foolish in 2012, but what I state above are my reasons for believing that this apple will outgrow (and has done so already) it's niche status.
Anyway. I just wanted to clarify my points.
MACs will not be replacing PC's anytime soon. The MAC is has a fancy UI slapped overtop of a UNIX derivative OS. MACs seem to be better suited and/or more popular for production of film, photography, music, and some graphic design. But please don't try to insinuate that there aren't viruses or errors with MACs, because there are. As PC's and WINDOWS are the most popular computing platform worldwide, the number of viruses for PC's and WINDOWS surely will outnumber the UNIX, MAC, and LINUX varieties. If WINDOWS does so many things poorly, why do MACs have to emulate so many of their functions? Having spent a long time working many types of computers, I can tell you that networking and upkeeping MACs isn't as easy as some people would have you believe, especially when there are multiple types of computers on your network. I have no problems with a home user choosing a MAC, but for a corporation, it just doesn't make sense to spend that much money. The notion that you won't need as many IT personnel is false. As MAC gains market share, and it will, due to the UI and the marketing, it too will face the same criticisms and viruses as its PC counterpart.
The support of Apple is surely beyond one of rational analysis of an investment opportunity, but this is the way Apple is perceived by many people – some kind of mission for the greater good. Apple may or may not be the greatest innovator on earth, but remember that religious belief and investment is not a good combination.
Always bet against the home team, the odds are better. Let's meet in a couple of months.
Let's assume
1. An IT guy makes $75k (fully loaded) per year
2. A Mac costs $1k more than a PC
If you can eliminate -1- IT (helpdesk) person, that'll pay for -75- Macs…
dave
As in all stock picking never hold on too long or you will eventually get burned. And that goes for ALL stocks. Apple may be having it's day now, but there will come a time when they will stagnate. The big question is when?
@john chicago" "I’m a corporate IT guy…Seriously are you going to tell me I’ll be more productive on mac? "
John from Chicago is the epitome of the John Hegeman character in the Apple/PC ads. I work in a university IT department. Slowly but surely the Mac population is increasing on campuses and companies across the counrty. It's not an overnight thing but, well, it's pretty much in line with Apple's overall growth over the past few years.
John will always have a job. If you want to use a computer you get a Mac. If you want to work on a computer (or maintain job security)you get a pc. ;^)
As someone else mentioned here, just look at the number of Apple "sightings" on TV and in movies. That's a factor not to be ignored either from an aesthetic or a commercial perspective. It does help increase visibility and interest in the company and equipment. My prediction is Apple will get to at least 15% or 20% or total market share in the next five to ten years.
Forget the bloggers and the analists. Just look around you and notice how often Apple products appear. There's your litmus test.
OK, here's a thought: Macs are a -threat- to Corporate IT departments. Most departments are measured by the size of their budgets, which is proportional to headcount. If Macs do require substantially less tech support staff (and that's at least anecdotally true in my experience), then companies that adopt Macs could see reductions in support staff.
That's good for the bottom line (IT is overhead expense), but bad for IT managers who will lose influence if their staff goes from 100 to 20 (or smaller…)
Do you think this is one reason why IT departments oppose Macs in the workplace? (I think FUD is a bigger explanation; most IT guys I've worked with know only the Redmond Way, and extrapolate that pain to alternatives…)
Hmmmm….Steve from Cupertino??? Can you say Apple fanatic. Mac's are great machines. Mac OS is nice but certainly not error free. The big myth is the "PC crashes every 5 minutes" speal that the mac zealots spew. It just is not true. My call is not about mac vs pc as much as a macro economic call. The economy is in the worst shape since the GD. If you think we will have a quick recovery by all means buy Apple stock. But I think right now Apple is in for a world of hurt as people (and companies!!) are not spemding. And they sure as hell are not spending on the "Gucci bag" Mac's when computers (and OS's) are commodity items.
"The Mac is now appearing in “mainstream” offices and the youth have made it pervasive at the colleges and universities"
Doesn't mean a thing… they've always been in schools and universities as long as I remember. I had an Apple 2C in junior high in '85. I'm on a PC now. My next purchase will probably be a Mac but only because of the Intel chip so I can run my PC only accounting software. If it wasn't for that, I'd stick with my PC.
And as far as the comments about them being shown in movies and TV… please, it's always been that way and who gives a crap what they put on a screen. Are you that brainwashed by hollywood and product placement?? Hollywood does not determine whether my computer is viable for my business or not.
At the end of the day there is a place for Macs and PC and they are both excellent at what they do.
Let's not forget the great, late, Zach Bass. He forecast an even worse scenario than did Abramsky. What I just love is that these shills NEVER cop to their own stupidity often spoken with such arrogance and surety. Blah, Blah, Blah to them all.
To the Corporate IT guy who buys $399 Dell PCs: Once recession-based cost cutting hits your department, paying a little more for a Mac up front will make brilliant sense. Everyone knows a Corporate network of PCs require lots of IT guys to maintain. Macs, on the other hand, don't. By the way… sorry about the job.
Its not all about the computers stupid (john in chicago); its about the Mac OS vs. Windows. For the computers its all about quality.
App in Waterloo, Ontario
umm why would you spend more on a MAC? Well let's see b/c PC's are the biggest pile of garbage. Non stop errors, viruses and the most non user friendly products out there.
Amazing that anyone with financial sense would cite Cabot Wealth Advisory for anything. Like his old man, Tim Lutts has never had a clue . . .
Would suggest that, from an historical perspective, when the old and frayed analysts and advisors predict doom for AAPL, it'll likely move on to new all-time highs w/i the year . . .
Please spare us the "mac is taking over the corporate pc space". I've been hearing that for 15-20 years. Still waiting for it to happen. I'm a corporate IT guy. Why would I spend $1K+ on a mac when I can buy a PC from Dell for $399? Seriously are you going to tell me I'll be more productive on mac? Same on the home front. People are pulling back big time. Last thing they will be buying are new $1K+ macs in this economy! Even if corporations were migrating to macs (they are not in any large scale) corporations are buying computers right now either. Short Dell, Microsoft and Apple they are all going down.
Have you noticed how many Apple computers show up in movies and on TV screens? Apple is becoming mainstream.
Apple will one day rule the PC world. At least I only had 1 version OS to chose from unlike Microsoft's 1,000 different versions. Slowly people are discovering how easy a Mac is to use. I run my complete Business using Mac, yes people all popular software is available for MAC!. Buy Buy and Buy stock. Too-Relaxed Media.
@John from Chicago: "With declining sales, revenue, and margins the stock has only one way to go." John must be a disciple of Abramsky's. In case you missed the report in Fortune Magazine, Apple happens to be ranked 14th in the top 25 fasted growing tech companies. That's easy to pull off if your a young, small company. When you are Apple's size this is truly remarkable. Yup. One way for Apple to go: UP. As for Abramsky, he's an employee of the Royal Bank of Canada, which is a major investor in RIMM. Also, RBC’s Chief Operating Officer, Barbaras Stymiest, is on the board of directors at RIMM. Cozy relationship, eh Mike? Conflict of interest? Naaaahhhh. Apple will continue to just fine on its way to taking more market share from Microsoft, et. al.
The problem is that advice doesn't reflect time horizon. Short-term there may be slowdowns and declines, but long-term, the landscape is shifting. The Mac is now appearing in "mainstream" offices and the youth have made it pervasive at the colleges and universities. What was once a minority, speciality computer, is now seen as the benchmark.
As the workforce turns, and decision makers move up through the ranks, and MSFT fossils like myself retire, the growth will be extraordinary.
Steve Jobs is a great man, but Balmer is a bigger idiot. Apple will be fine, no great. But in the near-term, who knows what the stock price will do? I doubled my position in the 80s and it may look like a stupid decision by April 2009, and brilliant decision by April 2012.
The products are great.
You fell for Palluxo? That site only exists to promote the agenda of Apple shorts. You need to do your research! There has never been a single article that had anything positive to say about AAPL. It is a clever but thinly disguised marketing tool for the shorts. They don't shy away from misreporting facts and they spread rumors with abandon. It is no coincidence that they're published in Canada, it is to avoid scrutiny from the SEC. Their reports are always carefully timed, they only pop up with comment when it is necessary to put a damper on things. Look into it! Expose it! But don't quote them quoting people who may or may not exist.
The quality of "analysis" from "analyists" is no better than the quality of comments from your average internet commentor…. or your average magazing reporter, for that matter.
Investors don't pay attention to them, and Fortune shouldn't either.
I have an iphone and LOVE it. I made lots of money on Apple stock on the way up as well. Unfortunately there is no way Apple grows or even sustains in this economic environment. Tons of Apple revenue and growth was a result of the HELOC mentality of the last 5 years. The tap is shut off and people are not going to be popping $1K-$2K for new macs and ipods. iphone is great but nowhere near the margin and profit potential of the former. Good luck with this one and be prepared for missed numbers and ever lower guidance this year!
$28B in Cash? Who cares about how much cash Apple has? This is not a question of can they survive (of course they will with that much cash) but where is the stock price going. With declining sales, revenue, and margins the stock has only one way to go.
Abramsky may have surprisingly gotten shipments of Macs and iPhones and iPods very close, but then how does he calculate Apple's earnings off by so much?
As far as getting shipments close to right, the fact is, Apple ran down inventories, and shipped less than they normally would if they kept inventories at normal levels. You can read the conference call transcript and see how many times they talk about inventory levels being run down. In other words, Abramsky being right on shipments was a bit of a fluke.
Throw Toni Sacchonacci and Huberty at Moron Stanley as two more "analysts" who follow AAPL but have NO CLUE WHAT IS GOING ON with the company.
I said 2 weeks ago, this guy is an idiot and I was right. He plays the RIMM game all the time becuase he's in bed with them and always rips Apple. His track record bites just like Apple just bit him AGAIN!
I wish more people would think in terms of investment instead of ripping a stock at every opportunity, to get, but not earn, a few bucks.
It gets a bit tiresome to read most "analyst's" crap.
And to you useless bunch of day traders; ESAD.
My guess is that the Titanic has finally hit bottom. Now comes the Great Separation, when all the junk stays on the bottom and all that's worthwhile floats back to the top. This is a great time for investment as it becomes clear that really good companies have been sucked down and greatly undervalued by the recent catastrophe.
Apple clearly leads the way as an undervalued "floater", and it wouldn't surprise me in the least to see it hit and maintain an all-time high later this year.
Well, it seems that some analysts frankly confuse the health of Steve Jobs with the health of Apple in general. It is an open question (one that I hope we don't get resolved any time soon) what the loss of Jobs would mean to Apple.
But until that happens, it's very clear that Apple chugs along, gaining market share and building a -very healthy- cash reserve. So at best, those analysts seem to be 'shorting' the stock based on a guess that Jobs will be leaving sooner rather than later. If you remove Jobs' health, there's absolutely nothing wrong with Apple and it's clearly in much better shape than just about any other company in its sector.
I resent that Dean Wormer Award! Mike Abramsky isn't drunk!
All kidding aside, Mr. Abramsky and Peter Misek, another AAPL-basher, do seem to have surprisingly warm hearts for RIMM. Could it be that Canadians like to support their one tech company, and are willing to dirty their hands to do so?
If you think that I am making this up, please Google what these analysts have said about both AAPL and RIMM. I can't find another way that it could wash.
This is the same RIMM, by the way, that has quietly put all of their BlackBerry phones on a 2-for-1 sale at Verizon.
Read it here at a website that masquerades as business journalism but is in fact, just like Abramsky and Misek, a complete shill for RIMM: http://www.thestreet.com/_yahoo/story/10462495/1/verizon-rim-run-2-for-1-blackberry-sale.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
"Apple will make it through this as the top computer company out there. As for Microsoft, Dell, HP, Google, etc…some of those will be down or gone in a few years."
Apple will never rule the market with the Mac computers as they are for one reason.
Money.
IBM running Windows is so popular because of upgrade ability and you don't have to buy an entire computer to go to the next generation of video, Processor, and in some cases, Monitors.
If Apple wants to take over the market their PC need to get into the game and away from the "full system" only people with money can buy macs, I don't own one for that reason.
They may be better, they may not be, it may only option. But until it cheaper to upgrade or buy a Mac they will never take over the PC Market.