If you are a tech geek, investment guru, headgy, marketing professional, IT , student, multimedia
professional, a kid in china (who sold his kidney to buy an iPad and iPhone) … everyone knows what apple is and wants to possess one or more of its product. In very short time, Apple has progressed to become the world’s most valuable company thanks to its almost blind customer base (including me) and investors who think Apple is more valuable than any other company out there. According to its recent 10-K, Apple has $9.8 billion in cash and cash equivalents.
As an investor, any one would like to know, how is Apple utilizing all these extra cash sitting around. Right?
Let’s take a step back and look at Apple when Steve Jobs came to its rescue and resurrected the
company from the verge of bankruptcy and complete melt-down. Today it has struggled its way to the top, literally to the TOP of the WORLD. – awww … it’s a fairy tale. But, how did Apple achieve such a feat? With innovation and marketing backed by Steve Jobs wit and vision, which acted like a catalyst in the composition – the product was Apple’s core competency. I had once read in one of the books during my MBA that innovation and marketing are the only two functions business – everything else are instruments to support these two functions.
Now, with so much capital sitting around what had Aaple been doing? - investing in bonds, treasuries, foreign securities while innovation has slowed down significantly. Think of iPod how that revolutionized portable music, iTunes that killed CDs, iPhones that gave birth to a whole new world of smart phones and PDAs and now iPad that is shaping a whole new world of portable computing, even threatening laptops, hitting PCs at such a vulnerable time.
Im sure everyone agrees that Steve Jobs was a visionary and make things work. Though I think there are a lot of people in this world with his capabilities, maybe even better, but having such capability and doing something with it are two different things.
Hence, I see innovation being a real problem going forward due to lack of strong leadership. New CEO will face a lot of resistance with every decision. I think $AAPL will fall soon.
FAST FORWARD TODAY - ALMOST 2 YRS LATER, my prediction has been on the spot.
SO WHAT NOW FOR AAPL?
Two years has enforced my initial analysis about Apple. Innovation has become a real/ongoing problem. Apple used to create products that created new markets that in turn changed the world. With their exeptional marketing and almost blind customer base, they could do anything. But, Apple seems to have lost complete focus on their core competency - they've lost their mojo! It seems like their sole focus is increase revenue and market share so they can keep their stock prices - very short-term thinking, not Apple like at all and I believe the stock will test 400 levels soon.
Reasons;
- I was convinced that Apple was going to demonstrate some crazy innovative product during the last product launch (few days ago) and surprise the world. All the rumors about different types of products - they did not deliver anything.
- Mini iPad and now cheaper iPhone. That will cannibalize their actual iPhone's market plus reduce already shrinking margin.
- Late on emerging markets, Samsung has gained some serious traction globally. Nokia is the new buzz. Apple was the buzz. Apple had traction.
- CEO talking with headgys. I don't think Steve Jobs would have ever talked to Icahn. Shows Cook's focus on stock price. When hedge funds try to manipulate the stock - Stay out of it!
Basic point of the rant - Apple is losing its MOJO and until and unless they come up with something innovative, this company is in a downward spiral and I would not invest in their stock right now.
I do not currently hold any POS in AAPL.
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