It's that time of the year again, when magazines begin dishing out their retrospectives on the year that was. Even though we still have two months to go, the current issue of Wired is kicking the tires of 141 hot gadgets that are bound to sell briskly during the upcoming holiday season.
In the introductory column, Steven Levy singles out the three products that "generate the most passion in the gizmosphere" this year. I'll play the spoiler by telling you that they are Nintendo's (OTC BB: NTDOY.PK) Wii, Activision Blizzard's (NASDAQ:ATVI) Guitar Hero, and Apple's (NASDAQ:AAPL) iPhone. The products weren't introduced this year, but they did rise to fame and rocked the zeitgeist in 2008.
"What do they have in common, besides creating happy shareholders and long lines at stores?" Levy asks. "They all integrate the digital world into the physical world in a straightforward way."
This is where investors can shake their heads at the gizmosphere. Happy shareholders? How early did Levy have to file this story? 2007?
Truth be told, it's been a brutal run for investors in some of this year's hottest products.
|
11/3/08 |
52-Week High |
Loss | |
|---|---|---|---|
|
Nintendo |
$40.06 |
$78.50 |
49% |
|
Activision |
$11.89 |
$19.28 |
38% |
|
Apple |
$106.96 |
$202.96 |
47% |
The companies clearly have their pulse on what consumers want right now, yet their shares have shed nearly half of their values. If these are "happy shareholders," I don't want to see the irate ones.
Snatching defeat from the jaws of victory
Nintendo, Activision Blizzard, and Apple aren't the only companies being punished for their competence.
- When Take-Two Interactive (NASDAQ:TTWO) sold $500 million worth of Grand Theft Auto IV in its first week on the market back in April, it became the fastest-selling video game of all time. Take-Two's reward? The stock is trading 56% off its 52-week high.
- Robotic surgical-arm specialist Intuitive Surgical (NASDAQ:ISRG) has beaten analyst expectations every single quarter since the fall of 2002. Its treat is a 49% haircut since peaking in April.
- Despite several consumer-oriented affronts, Research In Motion (NASDAQ:RIMM) remains the fast-growing leader in the smartphone market. What's the BlackBerry maker worth these days? Would you believe a whopping 64% less than its 52-week peak?
Look around, and you'll find quality companies putting out hot products with cold share prices. The disparity is relevant. What do you trust: Wall Street or the gizmosphere?
Over the long haul, it's hard to bet against the gizmosphere.
Growth stocks at value investing prices
I'm not suggesting that these companies will be on top of the world forever. Take-Two clearly has a tough act to follow, despite the promise of higher-margin digital delivery in the future. Intuitive Surgical may have simply been bid up to a frenzied state at its peak. The BlackBerry is being challenged by both the iPhone and the new push in smartphones powered by Google's (NASDAQ:GOOG) Android.
Revolutionary products push out older ones. That's just how technology works. However, when Wired is giving Apple, Nintendo, and Activision Blizzard a nod, it's because the companies are still quite relevant in the near term. There may be a bit of hesitation in how the next few quarters will shape out for these leading companies in this iffy climate, but the fundamentals certainly haven't deteriorated by 38% to 49%.
This may not be enough of a reason to buy, because an irrational market can always head lower, but it certainly is reason enough not to sell. The quality names are the ones that will bounce back -- in quantity -- when the favorable market sentiment returns.
Happy shareholders? Oh, that Wired! It's always the visionary, even when it's looking back.
Other ways to go back to the future:
- Tim Beyers went through with his plan to buy Apple shares last month.
- This is what I think Apple will look like in 2010.
- The Best Company I've Ever Seen
