Don't Panic!

Can I really be writing this column again? Just the other day I was joking with some of the Macworld editors that the time had come to delete that "Why Apple Isn't Dying" column template. Finally, I 'd told them, people could see that Apple had a sustainable business, that whatever fluctuations in the market might come, the Mac had clearly carved itself a space--in both the consumer market, with the iMac and the iBook, and the high-end market, with the G4--and that soon Apple would be able to tie them both together with a robust, easy-to-use, modern operating system. Really, all that remained was for Apple to sustain momentum and, well, not make any major mistakes.

Then Apple's stock took a 50 percent nose dive in one day. Why? Because the company announced that its profits for the latest quarter were not going to meet Wall Street's projections.

Let me stress this point: Apple didn't say it was going to lose money; it just said it wasn't going to make as much money as everyone thought. And in that moment, the sky started to fall.

So, here I am, days after bragging that I could finally trash that template, dusting it off again.

Don't Panic Reason No. 1: Everybody's Doing It.

Although it would be hard to tell based on some of the predictions of Apple's demise (see "Don't Panic Reason No. 3"), Apple wasn't the only Big Tech firm to get slammed in September. A number of hardware companies got hammered, including the un-sinkable Intel, which dropped from about $85 at the beginning of the month to $40 by the end of the quarter. It was a bad month for hardware. The anticipated surge in education sales didn't materialize, and the average consumer, so overburdened with debt and the sheer exhaustion that can be brought about only by unchecked avarice, took a break when the analysts predicted they'd be spending.

And, in case no one noticed, the entire tech sector has been bleeding for months now. Even Microsoft has been hemorrhaging. Last I checked, Microsoft stock was selling for just a little more than $50, down from about $120 at the beginning of the year.

Don't Panic Reason No. 2: This Is Not Amelio's Apple.

Despite what some are saying, there are almost no similarities between Steve Jobs's Apple and Amelio's Apple just three years ago. For example, using industry standard calculations, Apple stock is currently trading at less than a third of its intrinsic value. (Want to see for yourself? Use the stock-evaluator function of The company's debt:equity ratio is the lowest it's been in four years--it was at it's highest under Amelio's stewardship--and by every measure of growth, Apple is performing at or above industry standard.

Sounds like a company on the brink to me.

Don't Panic Reason No. 3: Read with a Grain of Salt.

I know this is going to sound a little paranoid, but there are some journalists who have been just waiting for Apple to stumble.

This may come as a surprise to you, but Apple is not the most beloved of technology firms in the media corps. The reasons for this animosity are complex and long-standing, but the result is that some folks in the mainstream media would like nothing better than to stick the knife in, given a chance.

Now, I also believe these folks are in the minority. But combine these with those journalists who remember John Sculley's Apple, when they wrote glowing reports on technology promise after technology promise (remember the Newton?), only to feel like they'd been had. You'll get the sense that there is an undercurrent of distrust when it comes to Things Apple--and perhaps a tendency to be a bit quick on the panic button when anything negative happens.

Don't Panic Reason No. 4: There Are Quick Fixes.

Apple is no longer in the computer business; it's in the style business. It has successfully managed to become the Gap of technology. And the problem with the style business is that nothing tanks worse than last season's fashion.

The iMac, for all its innovations, is three years old. And no matter how refined the latest design, in today's style-conscious marketplace that's too old. It's time for Apple to come up with something new for consumers. Before you say it: the Cube's not it.

Get something new out for consumers, update the PowerBook line (the latest iBooks make it really apparent how badly Apple's high-end portables need an update), get the Cube down to a more reasonable price, and you've got what amounts to a nice, quick fix.

It's true that, in the long run, Apple will need to expand its product line into new spaces to continue growing. I'm hoping Apple will apply what it's learned about style, functionality and ease-of-use to a new line of wireless Internet devices, preferably with a partner in the cell phone business. The possibilities boggle the mind. But then again, my cell phone is practically grafted to my ear.

Don't Panic Reason No. 5: It's Just Too Soon.

This point is so important, it's worth repeating: Apple is still making money. It's got money in the bank, its stock is hugely undervalued, and it still builds some of the most desirable products in computerdom. It's simply too soon to consider the company's latest results anything more than a stumble. And let's face it, the company's got a lot on its plate: the first major OS transition since the Mac shipped, the G4 in need of more megahertz or a worthy successor, a much more complex product line, and a marketplace with a serious case of attention deficit disorder. That's a lot to juggle. It only makes sense that we'd see a few missteps. But one soft quarter is not a disaster.

Let's give Apple at least until next summer. If OS X hasn't shipped, if the company hasn't made some significant updates to the product line, if developers haven't signed up for the new OS, and if Apple hasn't at least given some indication of new directions for the future, well, maybe then it'll be time to worry. 

Andrew Gore is Macworld's editor in chief. To comment on this column, please visit the Vision Thing forum at

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