With Apple Inc. (Nasdaq: AAPL) off nearly 50% from its $705.07 a share high set last September, many investors want to know if it's a buy.
Not in my book. Here's why:
1. The company has held on to its premium pricing strategy for too long. Going out on price as it has recently with iPhones, for example, is the death knell of competitive differentiation. Businesses that engage in price wars have a very difficult time climbing back up the proverbial ladder.
2. The present management team is having trouble fulfilling the late Steve Jobs' vision, and execution appears to be stumbling. The Maps thing, for instance, was an unmitigated disaster and shattered Apple's image of invincibility. The public noticed.
3. Apple has lost its "head start." The company used to be one to four years ahead of everybody else with every aspect of its design, function and software, especially when it came to iPads and iPhones. Now they're lucky to have six months…if that. Apple owned the vanguard in devices. Now it's simply one choice among many.
4. Consumers no longer feel the need to upgrade every time something new comes out. Better, bigger, and cheaper smart phones from Samsung, HTC and other makers have displaced the "gotta have it" drive for everyday people. Diehards and early adopters will never change; it's just that their numbers have gotten smaller as the numbers of those seeking utility have gotten larger.
The Changing Landscape at Apple
Increasing earnings pressure and diminished value in the years ahead.
Apple is doomed to go the way of Intel Corp. (Nasdaq: INTC) and Microsoft Corp. (Nasdaq: MSFT). Both are quality companies, as is Apple, yet both struggle to produce anything even remotely resembling excitement and are trapped in their own legacy. My good friend Barry Ritholtz put it succinctly on Tech Ticker: "Apple is transitioning from a growth stock to a value stock."
About the Author
Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.