Russia’s favourite CEO should have been terrified as stocks in China fell like a free-fall team of elephants who have forgotten to pack their parachutes. After all Apple is banking on Chinese interest in its shiny toys to make up for the fact that the rest of the world has worked out that they can get better for much cheaper.
Cook however proved he had the power to make the problem go away by actually talking to shareholders and telling them that everything will be OK.
Cook took the rare step of commenting on the health of Apple’s business midway through a financial quarter. He wrote that iPhone activations in China had accelerated over the past few weeks and that the App Store in China had its best performance of the year over the past two weeks.
“Obviously I can’t predict the future, but our performance so far this quarter is reassuring. Additionally, I continue to believe China represents an unprecedented opportunity over the long term,” Cook wrote.
In two hours they reversed those losses to trade up 2.25 percent at $108.12, adding around $85 billion to Apple’s market capitalisation from its earlier low.
This is a little weird given that any iPhone activations would have happened long before the Chinese sharemarket crashed. However owning shares in Apple is a religion based on faith and not common sense.
The Tame Apple press rushed to find analysts to back up Cook’s pronouncement and sure enough there were a few who agreed. This seems to prove to us that it is probably better to ask the cat financial advice than Wall Street Analysts.
Fortunately there are some on Wall Street who were a little more sensible. After the rebound, Apple’s stock was still down about 19 percent from its record high close set in February.
Cowen and Company analyst Timothy Arcuri said that no one has seen the extent of any Apple slowdown in China. Last week Gartner report said smartphone sales in the country fell for the first time ever in the previous quarter.
In short, Cook and Canute have something in common. No amount of pronouncements will stop the rising tide.