Is The Apple Watch Already A $30 Billion Flop?

Hard to believe, but $30 billion is the value that was wiped off Apple’s market value in the few hours after CEO Tim Cook unveiled the latest iPhones and the company’s “next big thing,” its Apple Watch.

At 1.58 pm on Tuesday, moments before the big Apple event began, the shares were as high as $102.91. By the afternoon’s close they were down to $97.99, a loss of $4.92.

As there are six billion Apple shares in circulation the fall in price amounts, in round numbers, to $30 billion – more than the entire market value of a lot of major companies. The cause of the fall was disappointment at the new iPhone and the new Apple Watch, which seemed less dramatic than many had hoped they would be.

To put this in context, the amount wiped off Apple’s market value was twice as much as the entire market value of Tiffany & Co. No, really. Tiffany is valued at $13 billion.

Thirty billion dollars is also about 5% of Apple’s gross value – and a higher percentage of the net value, if you set aside the company’s cash pile.

Are these calculations silly? Sure.

And is it far too early to call the Apple Watch a flop? Of course – at least, to you and me.

But most financial “experts” these days – probably including your money manager – believe these movements in paper values have great meaning. The stock market, goes the belief, instantly, efficiently and accurately processes all new information about each and every security. One implication of this belief is that the “price is always right.” Another is that Apple really has did lose $30 billion in true, meaningful value when Tim Cook unveiled the iPhone 6 and the Apple Watch.

Make of it what you will. You’d be amazed at the number of Nobel Prizes handed out to people who believe this stuff.

Apple’s Watch doesn’t look any more stylish to me than some of these other funky watches, most of which will cost you a fraction as much, but that’s just me. Meanwhile isn’t it extraordinary that Apple still drives so much attention? A technology company just unveiled a slightly larger smart phone and a wristwatch. Hold the presses.

The screen will be pretty small, but maybe people will like that. I tried to start a rumor on Twitter that Rovio were planning to launch a tiny version of their “Angry Birds” game for the Apple Watch. No takers so far.

There again, if I want something to count my steps I don’t need a $350 watch with a fancy “accelerometer.” I can use a $10 pedometer from a drugstore.

Call me a Luddite.

read more : http://www.forbes.com/sites/brettarends/2014/09/09/is-the-apple-watch-already-a-30-billion-flop/

Brett Arends

I blog about how to succeed in business without really trying

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