Genius is hard to recognize. The line between brilliance and dumb is far too blurry and much too thin to see at first glance. Banality on the other hand is obvious at first glance.
Steve Jobs was a genius. He proved it twice at Apple (AAPL). The first time he did it by leading a personal computing revolution. Jobs' second coming was about looking around the present and molding existing products (cell phones and MP3 players) into cash-spewing, dominant, singular products.
Between Jobs' first and second stints at Apple the company was taken over by conventional executives doing what those type of people do. Specifically, they optimized profitability by tweaking existing product lines. They also wrong-footed their great ideas and turned potential revolutions into failure. Witness the Newton.
Jobs time has passed and Apple is looking disturbingly like it's being run by MBA's. The Business School "Book" says if one product is good then selling it in ten different varieties is better. Eschewing the buzz and fanfare of big event releases in favor of updates and upgrades pumped into the market every quarter is how to avoid risk and keep the machine cranking. That's the way to drive down supply costs and get the most product into the most hands.
Brian Sozzi, chief equities analyst at NBG Productions is a cautious defender of the new Apple. He's concerned about the lack of apparent sizzle in Apple's hypothetical new products. The bright side is margin. "They're driving a lot of costs out of their system," Sozzi says in the attached clip. "I think that's important."
Cutting costs is important but not for the reasons bulls may think. The very fact of Apple wanting to the focus on margin is a red flag. It's what normal companies do. Flooding the market with a confusing array of the same underlying product is what Sony (SNE) has done for 30 years. That's largely why Sony shares are trading where they were in 1983.
Under Steve Jobs, Apple released magic and backed into margin through great execution. Now the man who drove that efficiency, former COO and now CEO Tim Cook, is running the whole company and seems to be doing it exactly as one would expect. The magic is gone, replaced by a focus on margins and old products in new colors.
Until Cook can prove Apple's prior success was a function of the team and not just Jobs, the stock won't get credit for being the Apple of old Old Apple. The stock will be given a low double-digit multiple as if it were just another consumer electronics company with nice stores.