Apple in 2012

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The future's a blast, my friend.

I spent most of last week trekking back and forth from 2012 to where you are today, taking a look at how several different companies are faring.

I'm hopping back into my time machine again this week, and I get back into the swing of things by taking a look at how Apple (Nasdaq: AAPL  ) is doing in three years.

Welcome to the iFuture
Apple is firing on most cylinders in 2012. CEO Tim Cook -- yes, CEO Tim Cook -- is doing a fine job growing the company. He certainly doesn't pack the same style and charisma as Steve Jobs, but his operational prowess is delivering the financial performance that investors expect out of a maturing growth stock.

Let's go over how Apple's product lines are doing, with a little color on the changes and acquisitions that happened along the way.

So many gadgets like cell phones, keychains, and e-wallets double as media players these days that the iPod itself isn't as ubiquitous as it used to be. Once even Apple and the rest of the music industry converted to the unshackled MP3 standard in early 2009, it really became a matter of latching media onto data storage. Apple's iPod is still the market leader, but as the shift became more player-agnostic, flash memory giant SanDisk (Nasdaq: SNDK  ) has grown into a worthy rival. Access to the App Store is the new "closed ecosystem" driving third-generation iPod touch sales, but Apple has quietly retreated from the low end of the mass market.

This doesn't mean that iPod -- or even the iTunes Music Store -- is fading away. Apple has evolved. It was able to pick up RealNetworks (Nasdaq: RNWK  ) for just a little more than the cash already sitting on RealNetworks' balance sheet in late 2009. The move led to the creation of an iTunes music subscription service. Sure, Apple could have launched it on its own, but it would be competing with both RealNetworks' Rhapsody and retail partner Best Buy's (NYSE: BBY  ) Napster. The dirt-cheap acquisition route let Apple snap up a niche leader while also expanding its multimedia software offerings.

Just as more devices go the Swiss-Army-knife route, iPod and its rivals do so much more. Microsoft (Nasdaq: MSFT  ) flopped with its Zune until it reintroduced the device as a music player that also served as a smartphone and video game player in 2010. It simply followed Apple's iPhone lead; now, the iPhone, Zune, and iPod touch are eating into the market share of the latest generation of PSP and DS portable gaming devices.

Apple's biggest growth since 2009 has come from the company's gradual growth in the lucrative wireless industry. Between juicy contracts with all the major wireless carriers, the high-margin income of the App Store, and the push by high-end video-game developers to embrace the iPhone with higher-priced titles, Apple's phone is the real growth driver.

Research In Motion (Nasdaq: RIMM  ) and Nokia (NYSE: NOK  ) have tried to ape Apple's success, but every passing quarter finds Apple taking larger chunks of the wireless connectivity market.

Apple's decision to bow out of the cutthroat netbook realm took its toll for a while. Starting in the fourth quarter of 2008, Apple began to relinquish market share, sequentially, in the computing sector. It didn't bounce back until the economy did in 2010.

Realizing that it had to choose between holding on to the high-end computing market or risking it all in pursuit of $400 laptops and desktops, it chose to stick to its knitting. That approach cost it market share through 2009, but margins recovered quickly when the economy turned upward.

Choosing to play a computing niche instead of taking on its larger rivals with mass-market pricing is a debatable approach, but it helped polish Apple's brand, and that helped magnify the stylish status allure of its iPhone and high-end iPod products.

Cook it up
Did it take some time for the market to warm up to Cook as permanent CEO when June 2009 came and went without Jobs' return? Sure. Did it take a year or two of ho-hum Consumer Electronics Show appearances before Apple returned to Macworld in 2012? You bet. However, Apple survived the economic downturn by keeping its street cred -- and amazing balance sheet -- intact.

Apple shares may have spent a good chunk of 2009 in the double digits. The company that routinely trounced Wall Street estimates definitely proved mortal with a few slips in 2009. However, even those who bought early in 2009 are still well ahead of the market in 2012.

The market rewards quality, even if it doles out the treats slowly.

Other views of Apple:

Best Buy and Apple are Motley Fool Stock Advisor picks. Motley Fool Stock Advisor is offering a special inauguration sale today! You can now get a 12-month membership to the Fool's flagship investment service for only $99 -- a more than 30% discount. Click here for full details.

Longtime Fool contributor Rick Munarriz really does find himself surrounded by more and more Apple appliances these days, but he does not own shares in any of the stocks in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. Nokia, Microsoft, and Best Buy are Motley Fool Inside Value recommendations. The Fool owns shares of Best Buy. The Fool has a disclosure policy.

Read/Post Comments (3) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 20, 2009, at 2:12 PM, Sinfest wrote:

    Warren Buffet and Charlie Munger like to think of everything that could go WRONG with a stock before buying it.

    The Fool always pays lip-service to sound investing but acts like any other irresponsible day-trading hedge fund.

  • Report this Comment On January 20, 2009, at 4:39 PM, SteveTheInvestor wrote:

    The markets..... the financial system....housing...the government.... the economy....the consumer....all are mess. I'm more concerned about 2009 being another disaster than I am about 2012 being a possible bright spot. Buying Apple today might mean waiting until 2012 just to break even.

  • Report this Comment On January 20, 2009, at 7:24 PM, tennnroof wrote:

    I'm into Apple long. I don't think they'll jump into the netbook market until they can own it. When they can sell a letter-size, touchscreen, wifi tablet with integral bluetooth-capable phone and onscreen keyboard that stays upright whichever way you turn it for under 2 pounds and $700, they'll be there, and I'll be grinning. My bet is it's already in the pipeline.

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