A turning point for Apple?
The standard-bearer for innovation is challenged by executive departures, intense competition and product setbacks.
I have often been a little early in identifying major turning points in the market or individual stocks. I recently went through this with a client and realized that although our trading models are quite precise, my timing of major market-moving events or company transitions was almost always a few months early. One might argue that being ahead of the curve allows you to prepare for what lies ahead, but Wall Street is very shortsighted and, unless your words turn out to be right tomorrow, some investors will be dissatisfied.
My past recommendation for Apple (AAPL) is a case in point. I have warned about competition, the challenge of innovation, and margin pressures. Now I have another concern. When major executives leave a company they may be doing so because there are more attractive opportunities elsewhere. Apple had an amazing run and the best minds wanted to be part of it, but the company has made some very bad decisions recently and is losing traction. This is exactly what I warned about months ago.
It doesn't matter who you are, how big your company is, or the reputation you had yesterday, when you sell into a consumer market you are subject to the fickle nature of consumers themselves. Just like the market, consumers are all about what you did for me lately, and many have reason to be disgruntled with Apple. The maps issue and the restriction on YouTube are just the tip of the iceberg, because many people feel as if Apple will soon try to monopolize everything; no matter how cool a product looks, anyone who feels restricted will not be happy.
Of course, improvements can be made and restrictions can be lifted, but the fickle nature of the consumer and intense competition make it very hard to maintain the growth rate Apple has realized unless the company offers a product that is almost perfect. Instead, we are seeing key executive departures, fierce competition and product setbacks. This could mark a turning point for Apple. What I predicted is now transpiring. While I was a little early, I was not wrong. Apple is not the company it once was, and its growth rate will likely decline substantially going forward.
I am concerned about Seagate (STX) as well as Apple, because without these two companies the information technology sector only grew by 0.53% in the second quarter. If Apple and Seagate (which was directly influenced by Apple) don't perform, the entire sector is going to get hit. That means beware of XLK (XLK), the technology exchange-traded fund, too. There are better ways to make money in this market.
Apple will hit $700 in 2013. I had a sale trigger at $600. so I sold half my shares. Warning Nov. 1, 2012 I will buy back my shares at $580. If Apple never hits $580... I told you so.
Apple is more than just I-phone and apps.
Jobs WAS apple, it's success was pinned to one man. Its success was pinned to being the best of the best. No prudent business ties their hopes to only hitting home runs... to hit it out of the park, again and again is not feasible... their balloon has to be deflated, and brought down to reality.
Apple will not continue in its leadership position. There are too many hungry competitors out there...
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John Stumpf acknowledges that growth has been slow, but he says he's still optimistic.
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