Apple Inc.

Apple was considered the 'Darling of the Wall Street' in the year 2007. Analysts, investors and people in general couldn't stop raving about the company, the stock, the products and of course the CEO, Mr. Steve Jobs. Apple more than doubled in the year 2007 and towards the end of the year crossed the $200 mark. This is year 2008. Apple is down to $130 as I type this. It's value on NASDAQ dropped by a whopping 35%. So, what changed suddenly? How did Apple suddenly become the stock that a majority of investors wanted to get rid off? Did the company's fundamentals dwindle? Is Apple not capable of making superior products anymore? Has the iPhone and iPod mania faded?

NO. Are you kidding me? Apple is still the same great company it used to be three weeks ago. It still makes awesome products and is capable of doing a lot more. Apple is still synonymous with style, innovation and quality products. Then why the sudden sell-off? Well, there are a few reasons for that. First of all, the overall condition of the economy is not good. Face it folks. Our economy is definitely not healthy. I don't think we will hit severe recession but we might already be in the middle of a mild one. The housing market is definitely in a serious recession. But the overall US economy is very robust and it has the stamina to weather bumps like these. The economy might grow slowly for the next few months but we will be fine. The government and the Federal Reserve have (finally) understood and digested this grim situation and are trying to take the necessary steps to avoid a severe recession. But the slowing economy and the growing fear of recession have definitely created a panic in the stock market and investors are running for shelter. What happens when there is panic on the Wall Street? Many investors start selling the best stocks in their portfolio. This panic has but naturally caused a serious sell-off in the Tech sector and all growth stocks (Apple, Google, Research in Motion, etc.) have been hit really hard. People fear that Tech companies would falter given the deteriorating economy. Investors are so panic-stricken that even on slightest "not good enough" news, they just do a massive sell-off. That's the main (and in my opinion only) reason that Apple has lost 35% of its value.

There was absolutely nothing wrong with the Macworld 08. Steve Jobs announced some great new products like the MacBookAir, iTunes Rental service, Apple TV 2, iPhone firmware update and Time Capsule. The numbers were absolutely amazing. 4 million iPhones in 200 days, 5 million Leopard OS sold since its release less than 3 months ago – those numbers are brilliant. What were some of these experts expecting? Another iPhone? That's insane. The tragedy with Apple (and Steve Jobs) is that year after year the company raises the bar higher and higher and people's expectations increase multiple folds. Given the current conditions nothing from the company was enough to satisfy the expectations of investors and Apple fans. Even if Steve Jobs had announce iPhone 2 or said that the company sold 5 million iPhones, the stock price would still have taken a beating. How else do you explain the panic that Apple's guidance for Q2 08 created? When has Apple not given conservative guidance? Apple reported marvelous earnings reports and as usual gave a conservative guidance. That's it. That conservative guidance led to the most brutal sell-off in Apple's history since 2001. Unfortunately until the street finds its sanity back, the stock might continue dropping lower. I hope I am wrong on this.

But, look at the bigger and brighter picture. This is the best time to start building your position in Apple slowly. Again, I am not saying that the stock has bottomed out but it is very close to forming a bottom. You do not want to try and find a bottom. No one can. If Apple still goes lower, you can always add some more. In a few months from now, Apple should start rising steadily again. I am still predicting that Apple will at least cross $250 before the end of the year. Apple cares about the people who invest in the company and the users who love the products. The Apple CEO takes a $1 salary. His income is the Apple stocks. Of course Steve Jobs has a few million Apple shares but relying solely on the stocks as income shows his own confidence in his company. This should be a good confidence booster for the investors. I am positive that Apple will continue doing major product enhancements and building global partnerships. In February Apple will be releasing the iPhone SDK to third party developers. This means that outside developers would be creating fantastic new applications for the iPhone and of course Apple will continue doing a great job with the iPhone firmware. Every firmware update for iPhone keeps making it a better product. For e.g. the latest firmware (1.1.3) has enhancements for Google Maps with 'locate me' feature (useful GPS-like feature), new Webclips feature, multiple home screens, etc. The best part is that these firmware updates are free for iPhone users. There is also a possibility of a 3G version and a 16 GB model of the iPhone. Apple will definitely be announcing new partnerships with wireless service providers around the world and we might soon see iPhone in China, Canada and other Asian/European countries. Apple's future is brighter than ever before and it just keeps getting bigger and better.

People also tend to forget that Apple is not just about iPhones and iPods. Apple is much more. Apple is also about computers (iMacs, Mac Pro, MacBookPro), operating systems (Mac OS X, Mac OS X Server), network and server products (Xserve RAID, Xsan, and Xserve), etc. It's run by a very smart management team which is headed by a brilliant CEO. They know what they are doing and they know it better than all the experts sitting out there commenting about Apple's slow down. Ever since Steve Jobs has returned to the helm of affairs, I don't remember Apple ever disappointing its fans, users, investors or people in general. They are known to revolutionize any industry they set their feet in – be it personal computers, portable music or mobile phones. I believe that Steve Jobs will keep continuing this trend.

One of the arguments that people make about Apple is that it only has a very small market-share compared to Windows based PCs. That's true. But Apple's market share has been consistently increasing and there seems to be no stopping ahead. Apple designs in the personal computer space (iMac, MacBook, Mac Pro) are phenomenal. Leopard operating system is certainly the best and fastest operating system I have used. Now you can run Windows OS on a Macintosh using programs like VMware Fusion. Why do I need a non-Apple PC anymore?

Another negative opinion about Apple is that its products are not nearly as widely used in the enterprise arena as compared to the consumer market. That is absolutely true. But it might be changing sooner than many people expect. Apple is doing its best to make an impact in the enterprise world. First of all, Apple's licensing is very simple and straightforward in desktop as well as server operating systems. You do not have 10 different variants to choose from. You have one strong operating system which provides all the functionalities. Leopard OS X Server has all the features like file sharing, mail services, web-hosting, directory services, calendar, wiki, etc, all built into it. It supports both Windows and Mac clients. Apple has got rid of Client Access licensing. That's right. It has a 10-user license ($499) and an unlimited user license ($999). This could mean huge savings for large enterprises. Apple has also changed its virtualization policy and Leopard OS Server does permit virtualization.

Never invest in a stock; invest in the company. There are immense possibilities and hi-tech innovations that Apple can and will explore. Amazing technology coupled with awesome management led by one of the smartest CEOs should be enough to bolster your confidence in the company. Stocks go up and down depending on the overall economy but as long as company fundamentals are strong your investment should be safe. Apple is one company with very solid fundamentals, superior technology, international presence and remarkable innovation. If you are a long-term investor in Apple, you will surely be smiling in the years to come.