Value Drivers for Apple (AAPL) Aren't Always iPhones and iTunes; Many Miss This One - Analyst

December 21, 2012 10:52 AM EST
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When it comes to being a mrket leader, Apple, Inc. (Nasdaq: AAPL) generally shrugs and says, "we just want to make the best product that people will love." A thought process like that usually leads to good things.

Wells Fargo, which rates Apple at Outperform and has a valuation range of $710 to $730 on the shares, thinks Apple's commitment to quality goes beyond products...and it's a very under-appreciated aspect of the company.

Analyst Maynard Um notes Apple's premiere customer service (CS) is a "key differentiator and value driver," which many don't take into consideration when talking about Apple's better qualities. Um comments, "The ability to turn unhappy customers into happy ones is as strong a marketing tool as Apple's logo and commercials, in our opinion. While innovation is a critical element to a product's success, CS, in our opinion, is critical to driving customer retention, lifetime value, and new customer acquisition."

Um thinks Apple's CE ranks first among its peer group, a feeling that is reaffirmed among at least five publicly disclosed surveys.

Key items Um highlights are:
  1. a number have their CS operation outside of the US;
  2. have less efficient Interactive Voice Response (IVR) systems/Automated Response Systems (ARS);
  3. do not have reps that provide as seamless an experience; and
  4. do not offer an in person/onsite CS option (we think Apple's stores and its Genius Bar are a competitive advantage).

Um also noted that customers unhappy with competitors CS indicate an intention to move over to Apple more often than the reverse and that the positive "nature and tone" of Apple's customers are that which is not reflected by the competition.

Shares of Apple are down 1.2 percent Friday.

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $521.73 yesterday.

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Wells Fargo


It's simple
Tom on 2012-12-22 07:26:28
Mark as Spam | Reply to this comment

When you have a problem, Apple knows it's its responsibility, since they do the software and hardware. None of the buck-passing that frustrates others.

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