Jim Cramer: Why Did Apple Disappoint?

This article originally appeared on Jan. 28, 2014, on RealMoney.com. To read more content like this plus see inside Jim Cramer's multimillion-dollar portfolio for FREE... Click Here NOW.

I have always marveled about how the stock market has so little memory from day-to-day. Take Google (GOOG) as an example. At one point on Monday morning, this stock was down 39 points. Now, admittedly, it's a $1,000 stock, so that's not the end of the world. But still, I sprang into action, along with my charitable trust partner, Stephanie Link, to find out what the heck was going on with Google. We hit up about a dozen people -- everyone who was in a position to know. And no one knew a thing. The best we could get was "Hey, there's word about how Twitter's  (TWTR) numbers could be too high." It had nothing to do with Google. Nothing.

Where did those sellers go? What happened to them? What were they thinking?

There's an answer to that: They weren't thinking anything. They were reacting or they were looking at the chart and the chart broke down. This is one of the reasons why we spend so much time on Tuesdays analyzing the charts. You caught a swing of 30 points if you took advantage of that naked emotionalism. Now, maybe, you don't trust the market. Well, then tomorrow's the day you want to sell Google. Tomorrow's the smart day. Yesterday's the dumb day.

Or let's take Netflix (NFLX). The stock rallied 50 points last week on a much better-than-expected quarter. It was a thing of beauty in every single way. I said I thought you should buy the stock on a pullback if you are lucky to get one.

On Monday, we got lucky. But did you do it? Where the heck have all of those sellers gone? Did they think something had changed at Netflix? Were they afraid of giving up the gain? Or did they just buy high, not know why they bought it and then kick it out? Buying on weakness, buying on a pullback, that's how big money is made.

Now let's go to Amazon (AMZN). What happened between last week when Amazon was at $407 and yesterday when it fell to the low $380s? How about this: nothing except more extreme cold weather, as this encourages, more, not less Internet shopping. Where have all of those sellers gone?

The pullback comes and what happens? People freak out. These are precisely the kinds of issues I spend 100 pages on in Get Rich Carefully, how to use the pull of the S&P 500 futures and the panic of others. Use their pain to start a position or buy more of a stock you just couldn't get into before. They let you in and you are scared to get in. They open the door and you think that there's something wrong when the door swings open. These are all market related sales that are not based on anything happening to the companies.

Of course, if you think the whole market is high, then so what? I am just spewing authentic Wall Street gibberish: pullbacks, correction, opportunity, blah blah blah. But if you want to get into a stock at a lower price than it was because you think that there has been good news or there is good news ahead and the stock doesn't reflect it, you buy, not sell. You take advantage of that fear and you use it to your own advantage.

All of this brings me to Apple (AAPL), which is the big story of the day. This stock, which is down 43 points today, isn't part of a broader market selloff -- far from it. The company reported sales and earnings that the analysts, many of whom downgraded or cut price targets on the stock, simply didn't like.

So whose fault is that? Is it Apple's for not inventing a new category of goods? Is it the analysts for expecting too much? Is it the individual investor who listened when Carl Icahn said the stock was a no-brainer -- and then got brained? Is it the big momentum investors who expected so much from the company?

Now here's a situation worth sinking your teeth into. This is the narrative: Last quarter Apple set out some sales objectives and ranges on its conference call.

You know what it did? It actually beat those numbers, which is why management started the conference call with incredible bullishness. Was it arrogance? I think it was confidence -- the confidence of beating your own numbers.

Now, the company did not lay out how it was going to hit the numbers. It never said it was going to sell 56 million iPhones, which was the estimate that the analyst community set. I repeat, it never gave you that number.

However, when analyst after analyst put out that number, Apple did nothing to refute it. Apple didn't think that was its job. This morning, I said Apple overpromised and under delivered but what it really did was allow the analysts to get well ahead of what the company could do with iPhones. That was the real culprit. So, that was one issue. The company did not stop the bullish onslaught in some way that would have tempered enthusiasm.

The second issue? Carl Icahn has gotten people whipped up into a frenzy about the financial possibilities of the company, and how management can distribute the cash hoard to the faithful shareholders. He doesn't think it is business as usual. He thinks that it is time for a bold move with its cash.

I have felt that it is time for Apple to make a bold move -- buy a company like Netflix or even Twitter before the big run so it could either own the living room or be huge in social. It did neither. Management talked about being a consistent buyer of stock instead of doing something. I love when CEOs come on "Mad Money," and say, "If this stock drops to $500, we are going to buy it hand over fist." That would have been a huge call and Tim Cook could have done it. He didn't. So that stuck a knife into the Icahn-led bullishness

Finally, there are the momentum guys. They need to hear of a new product right now, or else. They need to hear outrageous projections about China. They didn't get either; the hint of a mobile payment plan wasn't enough, either.

The iPhone sales (not the company's), the lack of a new urgency or statement that the AAPL's a bargain at $500 and the lack of Chinese sales projections and a mobile payment initiative combined to send the stock back to where it was before the China Mobile contract was about to be signed. That is where the bargain comes in. You are now able to get the stock of this company for a price that doesn't include the Chinese upside. It's been de-risked.

Now people will listen to what I just said and take it as a table pounder. I table pound when a stock is laid low from something that has nothing to do with the company. But, now, when the company lets the analysts down, it doesn't seem to matter if it is the analysts' fault.

Look, I like to buy stocks when they are on sale and sell them when they are overpriced relative to the moment. Apple was definitely put on sale for legitimate reasons, and I wish management had been able to sort out before they got out of hand. They didn't. I say "When will they ever learn?" and then buy low and sell high, Apple included.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long Google.

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