Apple has seen better days its fair to say, after its earnings last night the stock was slammed today -10%. This is a function of what happens when there is euphoria in a stock and suddenly its all goes bad.
Up until about November of last year Apple was powering on from strength to strength in a appreciation that mimicked the crazy dotcom days. This time it was different Apple was backed up by being one of the most robust business models in the world and deservedly claimed the “top stock” in the world title for a long time.
It still is a great company and last quarter earned $54bln in revenue and earnings per share was strong as well, sign of a good company. Hearing some quotes on tv like Apple is a “broken company” sound ludicrous, its just not living up to the excess hype that investors placed on it. The markets search for continuous growth has once again turned ugly. No one company can go on forever continually growing profits or revenue and to boot they did increase sales …..just not at the same rate they normally do.
Apple has ridden a perfect storm in that for a good period of time it dominated the scene that it created. The company created products that there adoring public never even knew they wanted and sold them in the millions. Combining sleek design and handy functional products mixed in with a lot of wow factor and they maxed out their golden era.
Now they must respond to much more competition and competitors that are filling the gap by the day. Samsung is the main player to watch and even RIMM and Nokia are making gains.
Apple is sitting on a pile of cash to the tune of approx $130bln that’s a massive war chest to have for a country let alone a company and especially a company with the accomplished R&D history that Apple have.
Apple has not done much wrong to deserve such a punishing, they are a victim today of their own success and the hubris of a market that got too complacent. Apple was the darling of most portfolio’s and even worse over owned by retail investors.
That’s what happened today, Apple didn’t do anything wrong it was just the cycle of love/hate playing out and while there may be still a few left to puke the stock out due to margin calls and generally hitting their pain barrier it probably should not break through $400-$425.
Apple have got problems but only because they had it so easy for so long, now the real merits of the company will start to show and importantly answer the question whether Steve Jobs was the core of Apple or was it the company.
In no way shape or form am I advocating anyone to buy/sell Apple shares and I dont own any.