Wednesday, February 16, 2011

More Apple Stuff...and Why "Social Networking" is Trendy Shlock

Paparazzi jackals have invaded Steve Jobs' privacy and published photos of him looking upsettingly frail. The stock price dipped in after hours trading, and may come down further tomorrow.

As I noted
here, Steve Jobs health, even in a worst case scenario, would not impact Apple's profitability for at least a couple of years. So while I still think selling at $375 - 400 is the smart thing to do, wise guy short term traders (I'm not one) ought to buy tomorrow, and then sell when it pops back up.

A factor I failed to discuss last time is Apple's $60 billion + war chest, which could cushion them in the event of any of the potential negatives I cited
. In other words, if bubbles burst or markets crash, Apple has better survival odds than most companies. But that's no reason to hold the stock at this level (I'd buy, however, if it ever plunged below $200 again).

looking like Apple's next move will be in the realm of social networking. I believe this will be deadly for them. First, it's not their strength. The new "Ping" social networking feature in iTunes is a miserable graft-on, almost completely ignored by users. And I'm not sure even a smart play on conventional social networking makes much sense.

Here's why: People don't want to do lots of stuff with their friends on the web. They just happen to like Facebook, which happens to be about doing stuff with their friends on the web. Facebook amply satisfies this urge for most people. Yet its success makes every tech company accept as gospel that to remain current, they've got to incorporate a "social aspect". It's sort of like how after The Matrix, Hollywood decided we want science fiction movies, when, in fact, we just wanted
that science fiction movie. Businessman often have trouble distinguishing between genre and iteration.

So Apple is being reactive to a trend, instead of starting one. Mistake. Again, it's getting towards time to sell.

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