Yikes. I feel sorry for anyone who bought Apple stock back in July — losing 66 percent of a stock’s value in about less than 5 months has to hurt. A CNET story on Apple’s latest earnings warnings included both the usual Apple problem plus a shocking revelation.
The old news is that Apple simply isn’t making a dent with Windows users.
“Why would they be any immune to these problems than anybody else?” PC Data analyst Stephen Baker said. “If people are not willing to upgrade, that hurts Apple more than some of the other makers. A big part of the iMac business and the PowerMac business is people buying new machines. Apple on an overall basis is not taking share from the Windows guys.”
When the iMac first came out, I thought Apple had a pretty good shot at picking up sales from people disappointed at the complexity of maintaining a Windows system. I suspect the dirt cheap prices on low-end Windows machines is simply erasing any advantage the iMac had. I’m amazed at what I can walk out of Best Buy with for only $600 or $700.
The really shocking thing is that Apple is sitting on a ton of cash and Jobs was bragging about it to analysts.
Jobs noted that Apple has about $11 per share in cash and short-term investments, compared with Gateway’s $3 per share and Dell Computer and Compaq Computer’s approximately $1.75 per share each.
“We have an Arnold Schwarzenegger balance sheet,” he said, “with over $4 billion in cash.”
If I were an Apple investor I’d be wondering why? How is sitting on $4 billion in cash getting Apple any closer to achieving the sort of growth in computer sales that it needs (the last time I checked, Apple was still in the business of selling computers rather than hoarding cash).
In fact if its revised fiscal year revenues are correct, Apple’s cash holdings are 66 percent of revenues. Way too high for a company having the sorts of problems Apple is having.