You may love Bob Dylan, you may hate him – but no one who can argue that the man is a genius. And it is further indisputable that if you like almost any “popular” record made after 1962 that you owe it to him and the path that he paved for all who followed him. In 2012 he released an album, exactly fifty years after his first. The album was good — not thrilling, not fabulous, but good. In an of itself, it is an album worth listening to. That opinion isn’t based on a comparison to Blood on the Tracks or Blonde on Blonde, or any of his seminal works that laid the foundation of popular music as we know it. It’s just based on an evaluation in a moment in time. He’s not the man or the artist he was decades ago. It would be unfair to compare him to himself, wouldn’t it? It would be unreasonable. It would be unproductive.
For the last year I have been listening to the debate in the financial blog-o-spheres about Apple. Let me throw it out there right off the bat that I am not a Tim Cook fan. That being said, as a witness to Apple’s loss of market value and present valuation in the marketplace, I think that some of what the stock is enduring is the result of an unfair comparison of the company to itself. I say some because I agree that Apple has not been the innovative company it was under the great genius direction of Steve Jobs. It has recycled and facsimiled versions of existing products with new bells and whistles and some improvements at the margin; but, it has not given us the disruptive, cult like products that we learned to expect from it. And so some significant compression of its valuation is justified. As any stock transitions from “growth” to “value”, it will endure the same process. It is inevitable and wholly appropriate.
I really don’t want to turn this into a complex financial argument, so in the simplest of a terms I will point out that by most widely accepted measures Apple is valued between 30%-40% ‘cheaper’ than its peers. It’s not growing as fast as they are, it’s not perceived to be innovating as well, and its management team is not held in as high a regard. BUT — Apple’s profitability is enviable, its products are still extremely relevant, it has over $100B in cash, it has no debt, and we all still sit on the edge of our seats wondering what they might be giving us next. So I caution everyone not to make the mistake of comparing today’s Apple to it’s former self. Like Dylan, it may not be the genius we once knew, but that does not mean it’s not still great.