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TheStreet Open House

Buy Apple on Sale This Holiday Quarter

Stocks in this article: AAPLGOOGRIMMMSFT

NEW YORK ( TheStreet) -- The market turned on Apple (AAPL) almost as abruptly as it did Facebook (FB).

Since hitting an intraday high of $705.07 on Sept. 21, AAPL, as of Monday's $542.83 close, is off 23%, shedding more than 14% of its weight in the last two weeks.

Separate myth from reality.

AAPL languishes, by and large, because of profit taking.

Concern over the fiscal cliff and its attendant capital gains tax hike drove AAPL down. That selling merely intensified when President Obama won reelection.

With the steady decline comes demand for answers.

That's where the real irrationality enters the picture.

Save a few exceptions, the hack collective of analysts and the media decided to settle on the Tim Cook can't replace Steve Jobs after all hypothesis.

I buy into that contention. In fact, I'm one of its originators and biggest proponents. But the Johnny-come-lately types have it all wrong. They're not timing this thing correctly. And they're going to get burnt.


On this weakness, AAPL became a screaming buy in the holiday quarter, for several reasons.

First of all, nothing has changed. The media treats the Cook/Jobs hypothesis like it's something new. It's not. But it needs time to mature.

Second, that relatively weak quarter we just saw from Apple? It was expected. I called it in August.

Third, Apple traditionally offers weak guidance. It's a well-designed bear trap.

Still No Competition

But the bigger reasons have to do with the fact that the company remains in a class by itself.

Apple will crush the holiday quarter (results come January 2013). Do you really think consumers will flock to devices other than iPhones and iPads?

Research in Motion (RIMM), for instance, will not release BlackBerry 10 until the end of January. Don't expect modest sales of Microsoft's (MSFT) Surface tablet to explode even when the company broadens distribution.

Consider the dynamics of this "competition." Apple dominates the consumer mobile market against companies such as RIM and Microsoft. Microsoft doesn't want to become RIM and lose to Apple in enterprise as well.


Simply put, both companies, particularly RIM, are focusing on business customers with their new products. That's not as sexy to investors as the consumer and we tend not to hear about reports of enterprise success as frequently and fast as we do consumer traction.

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