OPINION

The So-Called Supremacy of Apple, Inc.

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For a fleeting moment, questions were being raised about the validity of the most recent Apple, Inc. (AAPL) iPhone sales numbers — 9 million phones reportedly sold in three days, pretty impressive numbers.Then, in order to comprehend what was below the surface, a few stock analysts decided to actually peel back the onion a layer or two.

A year ago, Chinese and Japanese sales were not included in the initial weekend sales report of 5 million units of the iPhone 5.Of course, this year Chinese and Japanese sales were included.I guess it’s a good thing to report new vendors, but perhaps a bit misleading in regards to stock market enthusiasm.Therefore, this certainly wasn’t a genuine apples-to-apples (pardon the pun) comparison.Moreover, the traditional analysis of either an increase or a decrease of existing store sales was nowhere to be seen.If the Apple sales report shenanigans just stopped there, it would still be highly questionable, yet somewhat tolerable.Unfortunately for Apple, the inquisitive analysts went a step further.

The real bombshell is that the 2.5 million iPhone units that were sent to other retailers were counted as being sold.It would appear that Apple CEO Tim Cook has carefully read and fully embraced the General Motors accounting approach to car sales: If you build it, they will come (count as being sold), with respects to Kevin Costner.If truth be told, GM “channel stuffs” with inflated numbers in order to make their existence relevant.

The real master of this accounting practice is China.Fully embraced by our Kool-Aid drinking analysts, the Chinese have built an entire GDP reporting process on production — not consumption.For example, while simply being stored in buildings just outside of a Chinese community of 5,000 people, a total of 2 million washing machines were recently counted as being sold.

Most intriguing is that Apple has apparently bought into the federal government’s approach to number crunching, including the age-old story regarding the response given by the government worker when asked to provide the answer to 2+2, with the reply being, “What do you need it to be?”

As an economist and an historian, I seem to remember another notable time period when companies were booking deliveries as actual sales in order to inflate their profits and stock prices.If I’m not mistaken, such names as Global Crossing and Enron should vividly come to mind.Of course, that was another era, a different administration, a little jail time, and those aforesaid companies weren’t known as Apple, Inc.

Next, while they gathered on the streets awaiting the latest Apple product, we’ll probably learn that the massive crowds of alleged Apple customers were just like typical labor picketers — they were merely being paid to stand in line.

It’s all very disappointing indeed.