Apple’s Bull Expected to Maintain Its Market Stampede

Apple

With the announcement of its second quarter results Monday, the robust profitability bull of Apple, Inc. is expected to maintain its market stampede over valuation records. In February, Apple became the first $700 billion company, at a value more than the gross domestic product of Switzerland. There is much speculation that Apple might eventually win the ultimate prize of being the world’s first trillion-dollar company.

It is truly remarkable to contrast current bullish circumstances at the tech company, when one considers that Apple’s prospects were believed to be rotten at the core in the mid 1990’s. The company had gone through several leadership struggles after forcing the storied Steve Jobs out of the driver’s seat. Jobs overwhelming vision for Apple ingenuity was always consumer driven – making products that reached a broader base of technology users. Others in company directorial capacities drove design toward higher-end products that came in tandem with higher profitability. With the heart and vision of Jobs gone, the “Apple” slowly started to decay. A series of release flops and deadline failures had damaged brand reputation. By 1997, facing record-low market activity and a series of financial losses, Apple was forced to bring back its beloved creator, Steve Jobs.

The next four years that followed the return of Jobs to Apple paved the way for the company that, today, is characterized by its bullish stampede over market records. The introduction of the marketing campaign, “Think Differently,” during the 1997 Super Bowl, that featured iconic visionaries from the 20th century from Albert Einstein to John Lennon, marked a turning point in the company’s history. Jobs then brilliantly teamed with his old Microsoft adversary, Bill Gates, in a new version of Microsoft Office, designed exclusively for Macintosh. In true cunning style, Jobs collaboration with Microsoft even brought a $150 million investment by the company in Apple non-voting stock. A series of software and marketing innovations would follow, including the introduction of the iMac, the Apple Online Store, iPhoto and Garageband. However, there is no product release that would change the face of Apple or its portfolio, as well as pop culture as much as the storied iPod and its companion software, iTunes.

In 2000, Jobs acquired a fledgling MP3 player system called SoundJam MP. Jobs believed digital music would be the medium in which consumers would collect and listen to music in the new millennium. He knew that the key to this transition would be getting record companies to distribute music digitally and ensuring that there was a mechanism for their profitability. Illegal music-sharing websites like Napster were costing labels and artists millions in royalties and sales. The landscape was prime for a hero to ride in and seemingly save the day. The solution would put labels back in the profitability driver’s seat with consumers still having easy access to digital music and a smooth way to legally purchase the music.

With the 2001 introduction of the iPod in its new retail locations in California, and the soon-to-follow introduction of the iTunes Music Store, Jobs changed the way music lovers would love their music. Offering complete digital albums for $10 and individual MP3 tracks for a mere 99 cents, Jobs and company would revolutionize the music sales industry. Within 10 years, MP3 sales would top 1.4 billion units, surpassing CD sales by a factor of 7. At the crest of this behemoth wave of digital music sales was the darling of all MP3 players – the iPod. In this same digital decade, Jobs would sell a mind-boggling 304 million iPods. Apple’s stock would soar from $8 billion to $80 billion. The bull stampedes on!

The iconic brands that begin with “I” and end with “$” continue to captivate the hearts and bank accounts of consumers from Cupertino to Khartoum and Boston to Beijing. As current corporate torch-bearer, Tim Cook, announces his company’s second quarter profits, the market bull of Apple will undoubtedly continue to stampede toward record valuation and into true American capitalism history.

By Chris Marion

Sources:
Reuters
The Motley Fool
Rolling Stone

Photo by Andy – Creativecommons Flickr License

Your Thoughts?