So Now Apple Controls the Stock Market

June 22nd, 2010

Say what you will about Apple, it’s clear we can’t stop talking about the company, even if a few facts have to be stretched, or totally twisted out of shape, to make a point.

Take a recent column from an online commentator notorious for trying to raise a little hell in his efforts to be provocative. In the past, he’s explained why you must upgrade to Windows 7 pronto, while also claiming to be a devout Mac user. He also purchased an iPad, sold it soon afterwards, and then decided to buy another perhaps due to seller’s remorse.

This week, he’s telling us how Apple deliberately manipulates new product announcements — or even the expectations of such announcements — so the stock price will rise. Now consider the implications, one of which is the possible questionable legality of such a practice, and what it all means.

You see, regardless of whether Apple’s stock price is $270 per share or $70 per share, that probably won’t stop people from buying their products. In the end, it’s all about profit and loss. While it’s nice to have a higher stock price and the attendant increase in a company’s perceived worth, at the end of the day if they can’t sell products and services, thus generating cold, hard cash, it all amounts to window dressing.

This insidious stock price manipulation scheme is supposedly demonstrated by Apple’s strategy to spread out new product announcements. So we had the WWDC and the official launch of iPhone 4 and iOS 4. The following week, Apple released a new Mac mini.

Anticipation about the new iPhone soared when Apple and its retail partners received over 600,000 pre-orders June 15, the very first day it was actually offered for sale.

On Monday, the iOS 4 upgrade was released, as Apple’s servers were predictably slammed, while the real event comes Thursday when iPhone 4 goes on sale. But wait, some pre-orders might actually be delivered the day before.

Can you see the clever stock manipulation scheme implicit in these events? If you do, you have powers of insight far beyond mine, or perhaps a more active imagination.

There’s actually a very sensible reason why the iOS 4 upgrade went live several days ahead of the new iPhone’s release. Return to 2008, when Apple attempted to deploy a new iPhone software release, a major upgrade to MobileMe, and a new iPhone on the very same day. Nothing worked, or if it functioned at all, performance slowed to a crawl. It was an utter mess, and clearly Apple learned a lesson, that they should have separated these releases by at least a few days to allow server traffic to settle down before overwhelming them with yet another avalanche of requests.

Of course, Apple wasn’t able to handle the huge increase in traffic on June 15, where AT&T reported getting ten times as many visitors as they anticipated. More to the point, when it comes to servers, you can’t just add another 30 thousand or 40 thousand boxes overnight, and have them ready to function, seamlessly integrated into a network. Maybe you can rightly criticize AT&T for being unprepared, but it’s not as if any company would have fared much better.

What’s more, spacing out product releases not only reduces potential server overloads, at least to some degree, it also helps keep Apple’s name in the newspapers and online media. That fuels public interest in the new products, and helps to increase sales.

Although Apple’s legal counsel said otherwise, you can say that prototype fiasco, where a lost or stolen prerelease iPhone found its way into the hands of a media company that delivers an online form of tabloid journalism, actually helped Apple. For weeks, everyone who cared about Apple talked about little else.

Indeed, that story isn’t over. The authorities are still deciding whether to prosecute the alleged offenders.

It didn’t even matter that the real iPhone 4, although it looked pretty much like that prototype in many respects, has clearly become Apple’s hottest new product ever, days ahead of its actual release. Right now Apple’s biggest problem isn’t premature publicity, but whether they can build enough units to satisfy initial demand. Indeed, this gadget may be back-ordered for weeks until sufficient supplies are available.

If you take the iPad as an example, that may take months to accomplish. As of today, you still have to wait up to 10 business days to get one. After 80 days, Apple reports that some three million have been sold, with no letup in sight.

It’s clear to me that Apple’s strategy is deliberate, carefully calculated, but ultimately not designed to boost the stock price. The end game is clearly to increase demand and sales, and that’s what, in the end, not only helps the stock price as a reality rather than a fantasy, but keeps stockholders insanely happy.

But the reality won’t stop some bloggers from manufacturing silly theories in order to boost the hit count.

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5 Responses to “So Now Apple Controls the Stock Market”

  1. […] This post was mentioned on Twitter by Gene Steinberg, breizh2008. breizh2008 said: RT @macnightowl: Here's my latest Tech Night Owl commentary: : So Now Apple Controls the Stock Market […]

  2. DaveD says:

    Guess that I had been fortunate to not come across this unnamed blogger’s fantasy article. I keep a growing list of the must-avoid, crappy writers in my head. It’s a total of four with Joe Wilcox and Dan Lyons as the most recent entries. The first two are easily guessable (hint: R.E. and J.D.). When a writer put together an article that is so baseless and asinine, it is definitely best to avoid this person so to not waste your valuable time.

  3. Hairy Goomer says:

    I add Scott Moritz to the list of ‘writers’ to avoid.

  4. Constable Odo says:

    Scott Moritz is an idiot when it comes to predicting Apple product success rate. He called the iPad, the iFlop. He should have iFlop tattooed on his forehead as a reminder every time he pans an Apple product.

    Apple doesn’t control anything. The bloggers are responsible for all the rumors. All Apple does it make decent products that consumers like and charges more for them than most companies do. That’s just called good business. And I guarantee you any other (tech) company wishes they could do the same. Anyone who says otherwise is either a liar or in total denial of reality.

  5. dfs says:

    This writer overlooks the fact that very often after a new round of product announcements the value of AAPL goes down (maybe because Apple can never quite live up to the hype and unreasonable expectations in the days and weeks before such announcements)

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