Apple for the day

Brian Chen has an article in The New York Times about Apple's stock value:

Last week, Jim Cramer, the boisterous host of CNBC’s Mad Money, had a company called Skyworks Solutions on his show. The company, a chip supplier for Apple, said its sales were strong in China, but its stock plummeted afterward anyway, following the global markets into the red.
And that gave Cramer an idea: what would Timothy D. Cook, Apple’s chief executive, say about iPhone sales in China, a crucial component to Apple’s future growth?
He sent the question to Cook by email. It read: “Dear Tim, Just trying to do my best to cover Apple, as always, and I keep running up against ‘China fears’ and ‘China worries.’ We are in a tough moment in the market, and any clarity I might be able to get before Squawk on the Street at 9 Eastern would really help.”
Cook, who is known for being an early riser, sent his reply around 8 am on Monday, 5 am in California, where he lives.
“I get updates on our performance in China every day, including this morning, and I can tell you that we have continued to experience strong growth for our business in China through July and August,” Cook said in the email to Cramer. “Obviously I can’t predict the future, but our performance so far this quarter is reassuring.”
The email gave Apple a short-term reprieve, helping lift its stock from ten percent down to positive territory. Apple ended the day down only 2.5 percent. The email also spoke to the amount pressure that companies, even blue-chip brands like Apple, face in the recent market turmoil.
Jan Dawson, an independent technology analyst for Jackdaw Research, said Apple’s stock had taken a beating largely because of growing concerns about China. A simple solution was to send signals of positive performance in China to Cramer, he said.
“I’m sure Cook was well aware that Cramer would share it with his viewers, and it would therefore quickly become public,” Dawson said. “Apple stock has certainly risen sharply since the email was made public, so it’s arguable that it worked.”
Cramer said he was surprised to get a response. In March of 2015, the Apple chief called in to Mad Money to congratulate Cramer on the tenth anniversary of the show. Beyond that, Cramer said he had not cultivated a personal relationship with Cook, though the television host noted he had long been an advocate for holding on to the Cupertino, California company’s stock. Cramer is the co-manager of a charitable trust portfolio, Action Alerts Plus, which holds shares of Apple.
“I’ve been a stalwart in saying ‘Don’t trade Apple’,” he said. “I think it’s a mistake to trade it. I think you should own it.”
China has become an increasingly important market for Apple. The company’s growth has slowed over the last few years in mature markets like the United States and parts of Europe, where the smartphone market has become saturated. China, however, remains a huge untapped market where plenty of people are still buying smartphones for the first time.
Apple has long laid the groundwork to reap big sales in China and revenue growth from the region has steadily gained momentum. In late 2013, the company struck an important deal to sell iPhones through China Mobile, the world’s largest phone carrier. Apple is also expanding its operations in the region, planning to increase its number of stores to forty by mid-2016.
Some analysts have raised questions about whether Apple, the most valuable company in the world by market capitalization, can maintain its overall torrid pace of growth. Shares in the company are up about 45 percent in the last two years. But in the last six months, the stock has fallen over eighteen percent.
Cook also wrote to Cramer that he continued to believe “that China represents an unprecedented opportunity over the long term.”
On Monday, some regulatory experts raised concerns about whether Cook’s email to Cramer had violated the Securities and Exchange Commission’s fair disclosure regulations. The rules, commonly known as Reg F.D., require companies to share material information to all investors at the same time.
In previous financial earnings calls, Apple had said it was bullish about its strong, long-term growth in China. But the SEC has signaled that reaffirmation of financial guidance, in some contexts, could even lead to a full-disclosure violation, according to Thomas A. Sporkin, a partner for Buckley Sandler and a former SEC enforcement official. In 2005, the commission charged the Flowserve Corporation, a manufacturer, with violating Reg F.D. for reiterating its guidance to a group of analysts before sharing the same information with the public.
Cook’s reaffirmation to Cramer of Apple’s performance in China was softer and more generalized than when Flowserve shared specific numbers, Sporkin said. But he added that it was unclear whether Cramer could have a different interpretation of the email based on his relationship with Cook.
Apple, CNBC, and the SEC declined to comment. In response to questions raised about potential violations of the SEC’s disclosure rules, Cramer would only say: “I got what I got. I got an email from Tim Cook.”
Bill Singer, a regulatory lawyer, said he expected the SEC to investigate the context of the email and provide guidelines as to whether companies can disclose financial information this way to selected news reporters.
“I can see here that Cook is literally dancing on the edge of a razor,” he said. “At the end of the day, it’s one of the largest companies in the world telling one reporter via a private email that our ongoing quarter is actually going to surprise people, and I consider that material.”

Rico says it's not like it was a big fucking surprise...