By DAVE KANSAS
Apple Inc. is crushing it, but its success is disrupting the technology sector in ways that could hurt the stocks of many other players -- friend and foe alike.
Last week, Apple's (AAPL)
Shares of Apple surged after the report, briefly clawing above $400 before falling back. Apple now trades around $390. After the earnings announcement, several gobsmacked analysts rapidly upped their 12-month price targets above $500 a share.
Often a hot company helps drive its sector higher. For instance, Apple's 1980s success with the Macintosh sparked a personal computing revolution that spawned many successful companies. But the present iteration of Apple has become so dominant that it's becoming more of a threat -- rather than a sentiment booster -- to the large, non-Apple portion of the technology sector.
To be sure, plenty of companies, such as Qualcomm (QCOM)
Unlike most companies, Apple seems to be living through a sort of "Field of Dreams" period. Whatever it makes, the people come. In the last quarter, the company sold every iPad it could make. Its iPhone? A whopping 20 million units in three months.
Superlatives dance around Apple like angels on a pinhead. Perhaps the most remarkable is the company's cash pile. It grew by $10 billion in the last quarter to $76 billion. To put that in perspective, the 20th largest company in the U.S. by market capitalization, Bank of America, is worth about $100 billion. Apple's cash hoard is the equivalent of New Mexico's gross domestic product.
Apple, with a market cap of $358 billion, is also the second-biggest company in the U.S. after ExxonMobil (XOM)
But as Apple roars ahead, many competitors have failed to maintain pace. The company's phone business has run roughshod over previously powerful incumbents.
Research in Motion (RIMM),
Tablet makers aren't faring much better. CLSA, a research shop, estimates that Apple sold about 9.25 iPads for every Google Android tablet in the most recent quarter. This came about despite a proliferation of new tablets coming from Research in Motion, Hewlett-Packard (HPQ),
Perhaps the most disruptive aspect of Apple's strategy is the way it is reshaping the personal computer space. Apple's various Mac products are selling decently, but the rapid emergence of the iPad has changed the PC calculus.
Intel, which reported strong earnings on Wednesday, remains upbeat about PCs (which use its chips). It pointed to 70% sales gains in Turkey and Indonesia during the quarter. At the same time, it trimmed back its overall forecast for PC sales. Mobile devices, chiefly the iPad, are rapidly eating into the segment.
And that will likely continue, perhaps faster than expected. The company said after its earnings release that 86% of Fortune 500 firms are "testing or deploying" the iPad. PC backers had counted on the notoriously conservative corporate IT gatekeepers to move slowly on the iPad. Of course, "testing" could mean a few iPads in the executive suite, but Apple is clearly signaling that it is making headway with the biggest companies, the stronghold of PCs.
Unsurprisingly, PC-centric stocks have struggled. Intel's (INTC)
As Apple races to become the biggest stock in the land, it is swiftly becoming a sector unto itself. The non-Apple tech world is on its own.