Latest News: Technology |  Celebrity |  Movies |  Apple |  Cars |  Business |  Sports |  TV Shows |  Geek


Filed under: News | Apple


Is Apple Rotting From The Core?

2 Updates
Is Apple Rotting From The Core?

YouTube Videos Tweets Comments

Full Story

Is Apple Rotting From The Core?

Apple released results on April 23: The company announced higher dividends, increasing stock buybacks from $60 billion to $90 billion, a 7 for 1 stock split, and higher earnings. The stock shot upward by $44 per share to about $570. Sounds great? Well, on Sept. 21, 2012 it was $705. Therefore, Apple stock is still in a bear market.

For me, the announcements were actually bearish. Instead of technological innovation, the CEO has now learned “financial innovation.” I look below the surface…

Apple had nine consecutive quarters from 2010-2012 of more than 50% profit growth, all under Steve Jobs.

Under the current CEO:

  • Profit growth is now single digit at best, and 7.1% last quarter
  • Apple’s revenue growth: 13.4% in 2013, while industry growth was almost 3 times higher at 38%
  • Revenue growth of iPad:  12.9% in 2013, while tablet industry growth was 4 times higher at 51.6%
  • iPad sales growth last quarter:  down 16% from the previous year
  • iPod sales growth last quarter:  down 51% from the previous year
  • Every product released under the current CEO has been disappointing. Offering different colored iPhones is not a technological advance. Finally, this year Apple was going to have a larger phone that the market is yearning for. That has now been delayed until next year. Apple fans must have lots of patience while all the features are available elsewhere…at lower prices.

This week’s positives in the Apple report are an illusion:

Earnings per Share (EPS): +16%. But total company earnings are only up 7.1%. Why the difference? Because of the share “buybacks” there are fewer shares outstanding.

The CEO has discovered ‘financial engineering’: keep on buying back the stock, reduce the shares outstanding, and the EPS will rise even if actual company earnings do not. Is that why the firm will now increase “buybacks” from $60 billion to an amazing $90 billion?

The 7:1 stock split doesn’t increase value by one dollar. It’s very unusual, the first time in over 30 years. It just gives more individuals the chance to buy and get trapped in this stock.

The Wall Street Apple bulls have talked the past two years about all the great products the company may have in the future. The problem: none of these have come out or have even been announced. Imaginary products produce zero sales.

Even the larger iPhone, which everyone thought was a sure thing this summer, now won’t appear until next year. The competition offers every size imaginable.

Here is my conclusion. You can draw your own. I never try to convince anyone of my view.

  • The stock is DEAD MONEY. It’s been a loser since Sept. 21, 2012
  • The corporate graveyard is littered with companies that went from ‘dominance’ to ‘irrelevance’
  • Apple is rapidly dropping behind the industry in market share and innovation
  • The much vaunted ECOSYSTEM is starting to crumble. The Apple groupies have run out of patience waiting for new features, larger sizes and lower prices…everything the competition has.
  • Apple has 85,000 employees, almost twice as many as Google. It has no manufacturing. What do all these people do? The company has only three primary product lines now:  iPhones, iPads and computers. Each one is very vulnerable to stronger, faster and cheaper competition
  • The Wall Street bulls continue to cite long-term growth of Apple, i.e. the past seven years. They apparently haven’t read the obituaries.

One week after Apple made its top on September 21, 2012 I wrote that I would not buy the stock. I have written several articles since that time with the same message. Today I say that with such numbers, I still see no reason to buy the stock and have many better places to put my money.

I have used what I call the “BD Trend Theorem” which says: “A trend will continue until an external force acts to change it.” Currently, the trend is one of continuing disappointments.

The external force will have to be a change in leadership.

I assume that several large hedge funds, which have significant positions in the stock, will recognize what is said above and take this rally as an opportunity to sell.

Disclosure: I do not own Apple.

Also on Forbes:

Apple's Most Unforgettable Ads



iPad Air Giveaway. Win a free iPad Air.

You Might Also Like


Sponsored Update

Update: 2




More From the Web

Shopping Deals


<a href="/latest_stories/all/all/31" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.




blog comments powered by Disqus

Latest stories

Microsoft set to unveil Windows 9 on September 30th
Microsoft set to unveil Windows 9 on September 30th
While Threshold is likely to be named Windows 9, it’s unlikely that Microsoft will name its upcoming Windows release at its press event.
Tara Reid Wears Revealing Dress at Sharknado 2 Screening
Tara Reid Wears Revealing Dress at Sharknado 2 Screening
Sharknado 2 hit the big screen yesterday in LA. Tara Reid used the occasion for a dramatic red carpet appearance. How does this dress stay on her boobs?
Mariah Carey Feels Sorry About her Marital Issues
Mariah Carey Feels Sorry About her Marital Issues
The pop diva, Mariah Carey feels sorry about her marital issues. Her problems with her husband may offer trouble in the future for the rich and famous songstress.
Rear Panels Of 5.5-inch iPhone 6 In Latest Leak
Rear Panels Of 5.5-inch iPhone 6 In Latest Leak
The 4.7-inch iPhone 6 and the unofficially-named ‘iPhone 6L’ will play out like the smartphone version of the iPad mini 2 and iPad Air.

About the Geek Mind

The “geek mind” is concerned with more than just the latest iPhone rumors, or which company will win the gaming console wars. I4U is concerned with more than just the latest photo shoot or other celebrity gossip.

The “geek mind” is concerned with life, in all its different forms and facets. The geek mind wants to know about societal and financial issues, both abroad and at home. If a Fortune 500 decides to raise their minimum wage, or any high priority news, the geek mind wants to know. The geek mind wants to know the top teams in the National Football League, or who’s likely to win the NBA Finals this coming year. The geek mind wants to know who the hottest new models are, or whether the newest blockbuster movie is worth seeing. The geek mind wants to know. The geek mind wants—needs—knowledge.

Read more about The Geek Mind.