Sunday, October 30, 2011

Jeff Matthews Is Making it Up... on Apple

I like Jeff Matthews, he is an interesting guy and I followed him for awhile.

However, his recent post on Apple appears to be very poorly thought out and ignores fairly obvious facts. In the article "Apple: For What its Worth", Mr. Matthews suggests Apple is having a retail traffic problem based on his following observation:
"For example, from the December 2009 to the June 2010 quarter, retail visits rose from 51 million to 61 million.  This year, visits from December 2010 to June 2011 did not rise at all—from 76 million to 74 million."

Mr. Matthews willfully ignores the different release dates for key Apple products between 2010 and 2011, hopelessly undermining any possible point he was trying to make. Apple is driven by a few key products, with current best-sellers being the Ipad 2 and Iphone 4S (released Oct 4, 2011). In fact, the Iphone 4S has had one of the strongest levels of demand (at-launch-date) of any product Apple has ever released.

Apple products are big events that draw huge crows for opening-day release. The previous Iphone 4 version was released June 28, 2010, thus fell within the bounds of Q2 2010. The recent release did not occur until Q4 2011, so why would Jeff Matthews believe Apple investors should focus on Q1/Q2 foot traffic in Apple stores?  Perhaps Jeff Matthews believes investors visit Apple Stores simply to enjoy the aura and vibe of older Apple products (which they likely already own at home?)

The only relevant comparison is demand at-launch for relevant product releases. Jeff Matthews may be shocked to learn that consumers only wait in lines at Apple Stores for new Apple products, not old ones. Hence the difference in foot traffic. Ironically, Mr. Matthews post was reblogged by fairly prominent people from Josh Brown, to Barry Ritholtz and Herb Greenberg without making this fairly obvious observation.

A rare shortcoming for Mr. Matthews, but pretty silly one all the same.


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