Is the bloom wearing off Apple's rose? (Stock takes biggest hit in four years)

[sir pball]

Apple Inc shares tumbled more than 6 percent on Wednesday, chalking up their biggest single-day loss in four years as fears grow about intensifying competition in the mobile device market.

Investors and analysts blamed the sell-off on a mix of factors, including a forecast by an influential research firm that the iPad maker is continuing to cede ground to rival Google Inc's Android gadgets, and unconfirmed reports that at least one major stock-clearing house was raising margin requirements on Apple stock trades.

Reuters

Investors cited fears about competition in the mobile market and the threat from both Android and Nokia/Windows as factors in the fall.

But competition has always been strong and so it's likely to be factors from within Apple itself that are shifting perceptions. The iPad Mini hasn't been the wunderhit many were expecting, with warm but not raving reviews and very muted crowds at the launch of the device. The absence of any other big hitter devices on the horizon - a new Apple TV still seems far off - reinforces the view that Apple may be losing its innovative edge in the Tim Cook era.

The Register

I've used exclusively Apple computers for the last 25 years starting with a Mac SE; I lived through the first departure of Jobs and watched the slow slide as things went from revolutionary to evolutionary to completely uninspiring (Performa, anybody?). I had a bad feeling when the iPad Mini came out - it was clear Tim Cook was second-guessing Steve on both design and "diversifying" the product line, trying to appeal to a wider market. I think Apple's mobile-device fanbase is dedicated enough now that the company won't end up in nearly as dire straits as they were in the mid-90s; if I owned stock I'd still hang on to it but at the same time I think their dominance may be waning.

Maybe they'll ask The Woz..

[rdking647]

1. i own the stock. and i bought more yesterday

i look at things from a fundamental basis
AAPL is trading for 550/share
they have 120/share in cash.
that gives the company a value of 430/share ex cash.
they are expected to earn 50 or so a share in this year.
thats a p/e ex cash of 8.6
walmart has a pe of over 14
exxon a p/e of 9.25
intel 8.8
microsoft over 14

apple is chaper than any of them and is rapidly growing earnings. on a fundemental,non fanboy basis AAPL is one of teh cheapest stocks in the world

[BlueStreak]

2. Hard to see how they sustain that value, but the market is already discounting them

They have a P/E of 12ish while comparable companies are over 20. The market is already saying they don't believe the earnings are sustainable. But there are a whole lot of people who are blindly loyal to Apple. With that loyalty surviving 5 or 6 desktop generations, and transferring to phones and MP3 players, it can't be seen as a fad or fluke.

But still, the downside has to be much greater than the upside.

[dballance]

3. I bought a Google Nexus Tablet rather than an iPad

It was just more affordable. Since all I mainly do with it is surf the web and read e-mail I just couldn't justify paying twice as much for an iPad for me. Your milage may vary. I have all the same news and weather apps and my favorite Jeopardy game as I would get on the iPad.

Also, the Android auto-complete for words and phrases as I'm typing is much better than the auto-complete on my iPhone iOS. I also see no real reason I need to spend a few hundred dollars and sign a new two-year contract with AT&T to get iPhone 5 at a discount. There's really nothing there in iPhone 5 I need. I need my $200-$300 in my pocket more than I need iPhone 5.

Yes, Apple sold millions of the iPhone 5 within hours of it being released. But I think the prestige of having the latest, greatest Apple whatever is wearing off. And the fact they're changing the plug on their newer devices to a different format will not be looked upon in a good way. No one wants to replace all those docking stations and speaker sets that accommodate the current plug/socket format they already own and that work just fine.

In an unrelated topic - don't get me started on Windows 8.

[Mutiny In Heaven]

4. I'm an iPad user, but the Nexus line is excellent

The only thing holding it back is the app eco-system (and, personally, aspect ratio, but that's much more subjective); there just aren't nearly as many dedicated tablet apps, most are just the phone versions upscaled. That's not a knock on the device, because for folks who're going to use it as you do, unless they're really set on an iPad, I'd be perfectly happy recommending one of them and saving a bit of money. Nice tablets...I've no interest in fanboy wars.

[dballance]

6. Totally Agree with you

If one needs more than the basic web surfing and apps I use they might ought to go with an iPad. The iPad is an excellent device. I've used some of my friend's iPads and they're very nice.

For me it really did come down to an economic decision with respect to how I'd use a tablet. So the Android won for me.

[nadinbrzezinski]

5. Here is the problem with the mini

It's the same processor as the Ipad two. I was there at launch day. My IPad one was close to buying the farm. Decided to get the four A5 processors instead of the mini. I fear their support will be done in 36 months or so.

[Mutiny In Heaven]

8. Probably, but even two years (let alone three) is a long time in the tech world.

There are a lot of devices that don't even see support for that long, which is unfortunate. The big thing with the first iPad is that it only had 256mb RAM, and Apple might be brilliant at optimising their software, but that was just a mistake. They currently have several devices with 512mb (iPad 2, iPad mini, iPhone 4S, new iPod Touch) and the OS is hunky dory with that, so I expect the standard 18 months - two years before it really starts to sag.

[nadinbrzezinski]

9. Well I got almost four years out of the one

Hope that many out of the four.

[discopants]

7. a couple of things

When you say "I had a bad feeling when the iPad Mini came out - it was clear Tim Cook was second-guessing Steve on both design and "diversifying" the product line, trying to appeal to a wider market" then you're saying Tim Cook had Apple design, develop, produce and bring to market a new device in less than one year. That's crazy talk. After Jobs stepped down as CEO he continued to be involved in major strategic decisions at the company.

Wall Street investors are responsible for market swings. There are AAPL sell offs and there are APPL buying binges. This is a huge company with tons of assests in the bank. When investors and analysts determine that "innovation" means making televisions, and Apple doesn't give them televisions, then AAPL drops in value. They play a short-term game.

Apple plays a long-term game. They re-invent a techology niche and year-by-year improve and build on it. Their strategy has worked and practically every other competitor is always challenged to keep up.


Today's news is Tim Cook following Steve Jobs' vision with first steps to some move production back to America. Let's hope this is part of Apple's long-term plan and they find success in this effort too.

From Oct 2011:

When Steve Jobs met with President Obama earlier this year he made this case strongly. From Walter Isaacson's new biography:

Jobs went on to urge that a way be found to train more American engineers. Apple had 700,000 factory workers employed in China, he said, and that was because it needed 30,000 engineers on-site to support those workers. 'You can't find that many in America to hire,' he said. These factory engineers did not have to be PhDs or geniuses; they simply needed to have basic engineering skills for manufacturing. Tech schools, community colleges, or trade schools could train them. 'If you could educate those engineers,' he said, 'we could move more manufacturing plants here.'

http://www.huffingtonpost.com/penny-herscher/engineering-is-the-way-to_b_1031672.html