Apple (AAPL) is a screaming bye -- as in, say "goodbye" to your shares.
Over the past six months, I've been critical of Apple and have received sufficient comments from the Seeking Alpha readership in response to my articles to know that there's an impassioned group supporting Apple's manifest destiny.
As share price has repeatedly faltered and as Apple finds itself uncharacteristically in the spotlight for its own corporate falterings, instead of gloating I've been looking for a "screaming buy" entry point. Opportunism is forward-looking. Gloating revels in the past. I'd much rather be sharing in the upside glory than smugly having my opinion validated. The tangible is much more rewarding than the intangible, just as realized profits are much more rewarding than the paper variety.
Not having owned shares for more than a year, given the price trajectory, its been difficult to find a new entry point other than for some brief occasions the past few months, but cold feet got in the way. Cold feet were invariably followed by regret and then by relief, all on a regular basis the past few months.
Until recently, despite those cold feet, I thought that there was good opportunity in share ownership, especially as a trading vehicle. But I've now gone back to thinking that it's time to say goodbye to shares if you are currently an owner and I see very few catalysts for near-term price appreciation.
The impetus for my reignited pessimism is the accelerated reheating talk and speculation regarding what people are referring to as "Apple TV." No one has any clue as to what that might end up being, but Tim Cook's recent comments and rumors that in-house projects for an Apple TV are under way is getting everyone interested again. The fact that he laments the aged feel to modern-day television is as clear a statement as you can get that Apple has resolved to bring television into the 21st century.
Whatever the speculation, I can guarantee that no one is going to leave a prototype in a bar this time around. People's appetites will need to be whetted in some other fashion, certainly something far more enticing than 3D.
The Apple TV, regardless of its form, will carry little to no cache and its "cool factor" will be disseminated only to an owner's social group. Unlike the iPod and iPad, you won't be casually carrying around your new Apple TV for everyone to see, ogle, and envy. In a society where you can go 20 years without ever saying "hello" to your next-door neighbor, the universe of those ogling and envying your new Apple TV is going to be limited.
What concerns me most about Apple producing its own take on a large-screen HDTV, with whatever spectacular hardware and software it can conjure, is that its previous models for product success won't be replicated. Back when the iPod and iPad hit the scene, there were already MP3 players and tablets on the market. They just weren't very good. Put an Archos 15 GB MP3 player/hard drive next to a first-generation iPod and it's no contest. The iPad? Whatever feeble attempts at tablets that existed prior to Apple's game-changer are all but lost to history.
But televisions? They're pretty good right now.
Perhaps Best Buy (BBY) and Corning (GLW) sales don't back up this assertion, but everyone I know has at least one new, big flat screen on their walls and smaller ones in every room. Whatever new things an Apple TV may offer, its competition is certainly going to be far more capable that it had faced with its game-changers of the past decade.
As opposed to the grossly unsaturated markets of the past decade, what Best Buy and Corning will attest to is that the market for large-screen television sets is approaching saturation. Not only does almost everyone have an elegant flat screen, but they've bought them as flat screens have themselves become commodities. The profit margins make no one envious. Yet, Apple is based on introducing products that offer a quantum leap in technology and design into an unsaturated marketplace, providing owners instant status while generating enviable margins.
For a consumer who really has no need to replace a perfectly functioning appliance, one that very few of his or her friends are ever going to see in his or her possession, where is the incentive to drop everything and enter the Apple ecosystem? Doing so is not quite as simple as putting that Archos player in a drawer and making believe that it never happened. The dirty little secret is that momentum doesn't go on forever unless there is something to fuel the velocity.
Apple needs the TV much more than the world needs it. The anticipation of its offering is beginning to get old, as it has been a topic of discussion and speculation for much of 2011 and 2012. Usually that level of anticipation results in disappointment. For a stock that can brutally punish or reward based on meeting expectations, the risk/reward equation is increasingly becoming skewed toward risk.
Not being one who knows much about technical analysis, I'm reluctant to make many comments -- but that rarely stops me. When I look at an Apple chart, all I can see is the big drop taking it to its next lower price level, more than $100 below the current price. Add to that news that Apple's biggest and most consistently high-profile market proponent, Piper Jaffray, has quietly dropped its price target by $100, albeit still at an optimistic $900 level.
For one, I would love to be wrong on my own assertion. Apple share price performance has essentially served as a market of one. As goes Apple, so goes the S&P 500. Having a vested interest in the health of the broad market dictates concern for the health of Apple and a desire that it continue moving forward with consumer-pleasing and highly profitable innovations.
But even manifest destiny had its limits. At some point, the realization that infinity can only be a concept and not the basis for reality is necessary to make the most out of what you have.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.