Why Apple is losing appeal

[marmar]

(Toronto Star) Apple Inc. appears to be throwing in the towel as one of history’s greatest growth companies.

In deciding to return $100 billion (U.S.) in surplus cash to shareholders, Apple is giving in to pressure from a Wall Street that is fretting over Apple’s slowing pace of sales growth and the heightened competition it faces. Apple shares have already dropped 37 per cent from their September 2012 peak. In recent months, even shares in beleaguered BlackBerry, up about 13 per cent over the past 12 months, have outperformed Apple.

How considerable was the pressure on Apple to restore its reputation with the Street? The trigger might have been news that one of the most prominent funds at Fidelity Investments, the world’s biggest mutual fund operator, had cut its Apple holdings by 12 per cent in the first quarter. Or it might have been the revelation as spring approached that some 870 other institutional investors had likewise reduced their exposure to Apple, while still others had evicted the Cupertino, Calif., company from their portfolios altogether.

Under Steve Jobs, who returned in 1997 to the firm he co-founded, Apple rolled out a parade of game-changing products for which there may be no equivalent in modern times. The iMac, the iPod, iTunes, the iPhone and the iPad are among the most prominent Apple breakthroughs, by which all things Apple became “aspirational.” This cult-like aura enabled Jobs to price his gadgets at a premium. As a result, Apple is now sitting on an accumulated $145 billion in spare cash, a nest egg that exceeds the entire market value of more than three-quarters of all S&P 500 companies. .................(more)

The complete piece is at: http://www.thestar.com/business/personal_finance/investing/2013/05/03/why_apple_is_losing_appeal_olive.html

[bemildred]

1. "Bullshit will only take you so far."

As a corrollary, the same can be said of hype. Apple makes fine, expensive products and relies on constant innovation and marketing to stay ahead of it's competition. This is not a recipe for stable growth. You want stable growth, you don't go the constant inovation and marketing route, it is a short term, high-profit strategy, not a long term stable growth and profit strategy.

[Demeter]

2. Wall St eats up the bullshit...it's steady growth that turns them off.

Steady growth is incompatible with ponzi schemes, fraud, cheating and scalping the prices. Wall St. lives on churning and High Frequency Trading algorithms to skim the fat off every trade. Only know, they want the muscle and the bones, too.

[bemildred]

3. Yep, stability is boring and it makes it hard to make a killing.

And that is all they really care about, making a killing, it's a game to them, and it's like a disease in this country. I can remember when working hard and making a good living got a little respect here, not it just makes you fresh meat for these riverboat gamblers.

[Warpy]

4. Maybe some of their base is waking up to their

crappy business model. Maybe people just can't pay their prices any more.

Maybe the thrill is just gone.

[Doctor_J]

5. Aha! I saw what you did there