You Can't Blame Me for Worrying About Apple

 | Jan 14, 2013 | 7:15 AM EST  | Comments
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Apple (AAPL) is a terrific company. I have been behind the stock for ages. There will be people who question my "devotion" to Apple. Some are critical that, after Steve Jobs died, I said it was just another stock -- as if it could actually be the same company without him. No one in business ever says it's the same after a founder dies, but that's what I have been criticized for endlessly, because the stock climbed after his passing.

It was as if, when I said Apple was "just another stock," that this meant to sell and short the stock.

That's what happens when a cult surrounds a stock -- a cult of the lesser-informed. I am sure, as well, that the cult will be plenty angry about the stories involving Apple cutting orders for iPhone 5 parts, something that had been in the air just last week.

I want to talk about something else, though: a change in sentiment that may be behind the order-cutting.

Not long after that, we had begun to hear issues with the new iPhone and Apple Maps. I am always willing to consider an upgrade, even though I love my 4S. However, one of my favorite iPhone features is the blue-dot-red-dot, the map software that shows where you are vs. where you are going -- which Google (GOOG) provides to Apple. I hadn't wanted to lose that functionality -- which, at the time, would have been lost in an upgrade to the new iOS 6 operating system. I am also stuck, every day, carrying a heavy power cord for my Hewlett-Packard (HPQ) machine that The Street provides. I also keep a lighter charging cord for the iPhone and my iPod. The heck with carrying still one more power cord.

So I passed. But I defended Apple on air as a good company, because it owned up to its mistakes not long after, and that's what good companies do.

Then, soon after the flap, I met with Walter Isaacson, the great Jobs biographer, at a fundraiser for Bucknell University in the fall of last year. I wrote here that, one year after Jobs' death, Isaacson was worried there were no more "OMG" products on the drawing board -- that Jobs had left some good ideas behind, but nothing "wowing," and that this might crimp Apple's development over time.

Given that Isaacson spent hundreds of hours with Jobs in that last year of his life, I regarded this as meaningful insight.

It was especially eye-opening when Walter was asked about the coming of the Apple TV. He said an Apple television with voice-command precision would require the cooperation of cable companies, companies that are strong and very profitable -- quite different from weaker companies that Jobs "rolled with," like Sony (SNE), when he was building out iTunes.

To me that was enough. After sharing this view with Action Alerts Plus subscribers, we sold some Apple and cut the position in half.

This was the moment I started feeling the real wrath of the cult of Apple. Suddenly I was no longer the guy who liked it at $50. I was the guy who hated it at $480, after Jobs' death, when it became just another stock, and then loved it at $700 because of the new iPhone, and then didn't like it at $600.

Suddenly I was an Apple fool.

To me it all seemed a little ridiculous. I had a fabulous gain for my trust, and I kept it even after Jobs died, despite my recognition that Apple couldn't be as good without him.

Then I was enthusiastic about the iPhone launch, but was made less enthusiastic by the Maps flap. Then I felt gut-punched by the Isaacson meeting, and felt the need to cut it in half and play with the house's money, just as my rules always say to do.

During this period Apple missed estimates for two quarters in a row and, in rather dramatic fashion, Samsung exceeded it in overseas smartphone sales. I was willing to overlook those quarters and the Samsung surge. As we all know, Apple's stock is inexpensive, and the company is hugely profitable, even if it doesn't beat the estimates.

Here, and on the air, I have always say the same thing. You can't trade Apple. I own it as an investment. It is too hard to trade, too caught up in emotion.

That leads me to why I am talking about this at all.

On Friday night, my daughter -- one of the big drivers of why I ever liked the stock in the $50s -- texts me and says, "You have to go to someone at Apple. I hate the new iTunes software." I text her back saying that I, too, hate it, and that I'd ask her for help with it. Then she texts back, "All my friends hate it."

Hmmm.

I thought that I'd better keep that to myself -- the Apple cult will kill me, because they will want to know why I didn't say anything about this at $700 or at least $600. I even thought about the idea of time-stamping my daughter's complaint so I could defend myself against the cult's anger.

I had already been lambasted on Twitter @jimcramer for nodding my head when David Faber, after a return from Europe, said he saw Samsung phones everywhere. 

Then, this Saturday, I decided it was time to get my new iPad mini hooked into a Verizon (VZ) plan so it wasn't bound just by Wi-Fi. Yes, I still love the products -- and I love this device, love its size.

I always use the same Verizon reseller in the city. Sure enough, I tell him about my daughter's comments. He knows we are huge Apple fans. He says more people now want Samsung because it is a better product, that it has better specs.

Now, he knows, one, that I have an iPad mini and an Apple iPhone. Two, he knows I am not out to buy another phone, that he has nothing to gain by telling me this. Three, he knows I am a huge Apple supporter on air.

I tell him Apple is still a great company. He says Samsung is now better, and that it's so much easier to deal with. I know the sales incentives are better for Samsung -- I've seen that enough times in testimonials on Twitter. But my guy simply says, "Look, Apple's got some great features, but it is not so much better than Samsung all around anymore. It just isn't. Not for the price."

I won't identify him for fear of the Apple cult. You can't be honest; the cultists could wreck your business.

So now I am thinking, what do you do? There were so many buyers in the $500s and $600s, and in that brief spike to $700, who now are hanging on -- furious at themselves, furious at me, furious at anyone who for a minute says anything negative. There are other people who insist on asking, almost daily, "Jim, so would you trade it? Would you sell it? Would you short it?" and I hear their questions and I think: What's the point? I own it for the charitable trust, I am playing with the house's money and I am not going to trade it. Period.

I know that, if Apple misses the quarter, it will be the third straight miss. I have a personal rule not to stick with a company that misses this much. But if it does miss, the stock will go to the $400s, and if I invoke my personal rule it will be, "He told us not to trade it or sell it at $520, and now he says sell it at $420," where I bet it will go. If they make the quarter, or blow it away, it might go to $580 and people will say, "Why didn't he tell us to buy it?"

Frankly, at this point Apple's become too hard to fathom. It is gigantic in market capitalization, far more than others. It has to do things no other company could possibly do to keep up that growth, including investing in OMG products, without the man who invented so many of those products that are still there.

Who needs this pressure?

I can stand here and say I wish I'd said to sell it at $700, but that was before some of the most important things that could happen at a company: (1) The ramifications of a second quarterly miss; (2) the Maps flap and (3) the Isaacson revelations. I didn't have those things in hand -- like (4) the hated iTunes release -- things that I don't believe would have happened if Jobs had lived.

In my view, I've handled this wild tiger of a stock about as best as I can. But the cult has been murderous. So I sit back, content to play with the house's money.

But I'm worried -- worried that Apple just isn't as good as it used to be, and that my formerly Apple- loving, now Apple-hating daughter wouldn't have texted me that she's furious at the company and is wondering why it's making all of these stupid moves. "They are arrogant, Dad. And I just don't like them anymore," she lectured me at dinner Saturday before returning to school. That's coming from someone who convinced me to recommend the stock seven years ago. So let's just say this: Cultists, and non-cultists, you just can't blame me for being critical, worried and, alas, less positive on the stock that defined the market for oh so many years.

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