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- Monday, June 22, 2009

Not Even The Return Of Steve Jobs Can Stop This Correction

As the Dow hemorrhaged 200 points today, the staff at tech:stocker would like to remind everyone that last week we said a correction was taking place. Need further proof? Every so-called “market expert” who has been touting a bull rally over the last few month is no putting the word “buy” in every sentence they utter.

Bank of America (BAC:NYSE), Citibank (C:NYSE), and JPMorgan Chase (JPM:NYSE) all have been big winners since March and each took a big hit today. With people predicting an 11 percent unemployment rate in the U.S., it’s going to be very difficult for banks to find qualified buyers, let alone people that will actually pay back the money they lent. And let’s not forget how a higher unemployment will affect credit card defaults.

Today should have been a rallying point for Apple (AAPL) as Steve Jobs announced in a press release that they sold over 1 million iPhones over the weekend. Two great pieces of news couldn’t prevent the stock from shedding 1.5 percent today. We had a hard time deciding which was better: the better-than-expected iPhone sales or the fact that Steve Jobs was back at work (our contacts at Apple confirmed that the CEO was on the campus today). Both pieces of news should have posted a gain for Apple today but we are experiencing a correction. Gains are not going to be plentiful for a little while.

Even though the return of Mr. Jobs and the small quote from him in today’s press release couldn’t save the market today, we still believe this is great news for the company despite the rough economic times. COO Tim Cook has proven over the last 6 months that he is perfectly capable of running the day-to-day operations of the company. All Mr. Jobs really needs to do is sit in his office and dream of game-changing products and occasionally put his name on a press release so investors realize he is still the visionary behind the company. Simple.

But getting back to the tremendous iPhone sales over the last three days. Over 1 million in sales was not only great news for Apple, but also good news for Research In Motion (RIMM:NASDAQ). As we’ve said many times before, smart phones are the phones of the near future (anyone who doesn’t believe smart phones are the future of cell phones is probably walking around with a pocketful of quarters in case they need to make an emergency call). And even though Apple may have the hottest smart phone right now, RIM and the Blackberry line are still the king of this growing market segment.

RIM still owns the corporate market. And with the economy still struggling, most corporations are not going switch from a Blackberry to an iPhone so that there employees can have access to a compass or can edit video on the fly (although many employees would probably thank their bosses if they did). That’s why owning both RIM and Apple is a smart play. Apple covers the consumer smart phone segment while RIM controls corporate users.

And if you had any further doubts about smart phones being the future of all cell phones, look at T-Mobile trying to steal some of Apple’s thunder by announcing today that they will be shipping a myTouch 3G phone with Google’s (GOOG:NASDAQ) Android software in August. Is the phone going to put a dent in RIM and iPhone sales? Probably not, but it does show that smart phones are the hottest area in tech.

And as for the correction currently taking place, even though the mighty Steve Jobs couldn’t stop it, we’re not overly worried. Anyone who is invested in the long term will be fine. If you need your money in 6 months or less, sell immediately. With the summer doldrums returning and volatility rising, the market is no place to be for investors who need their money this year.