Punishing the Wizard: On Apple and Steve Jobs

John Paczkowski of All Things Digital nails it in 'Apple Investors Are Wusses.' He wonders aloud how Apple investors can be so faithless in a company that in the last quarter reported earnings of $1.14 billion on sales of $7.9 billion, all the while growing their cash hoard to nearly $25 billion in cash.

Yeah, I get it. Consumer company with high-end products in a bad economy with a seemingly irreplaceable leader who is ill, and a less than transparent corporate culture.

Heck, I will go a step further and say that for planning purposes, investors should assume that what's gone from "common bug" to "hormone imbalance" which was easily fixed to something more "complex," and a formal medical leave, probably suggests that Steve Jobs isn’t coming back - at least not in a full time capacity.

Run for the hills!

But you know what; I think that something else is at play in the battering of Apple's stock (it’s lost ~60% of its value since peaking out at around $200 late last year).

For lack of a better term, let’s just call it the Yin-Yang of Apple's Reality Distortion Field.

On the one hand, Jobs & Co have taught us to expect magic, and when they deliver (iPod, Mac, iPhone), it's what we expect because there is no company like Apple.

Yet, when they merely execute, we hammer them because we expect magic.

It's almost as if they've lost their premium for wizardry, which is ironic since isn't the whole moral of the re-pricing of our financial markets about a return to quality?

And who looks better than Apple on a long-term basis in terms of differentiated products, diversified revenue sources, depth of product pipeline, quality/depth of management team, operating margins, profits, cashflow, cash reserves and absence of debt?

So go ahead, punish the wizard, but remember: who looks better against the "quality" template?

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1. iPhone 2.0 - What it Means to be Mobile: a detailed summary of my experience to date with the iPhone 2.0 platform.
2. Innovation, Inevitability and Why R&D is So Hard
3. Holy Sh-t! Apple's Halo Effect: how Apple has turned gravity into its friend.
4. The Chess Masters - Google versus Apple: why partners Apple and Google are without peers, and (seemingly) destined to become frien-emies.
5. Ringing Up Apple's Earnings Call: analysis of last quarter's earnings call.