Apple Inc. Shares Are Likely Dead Money For The Balance Of Its Fiscal Year

| About: Apple Inc. (AAPL)

Apple (NASDAQ:AAPL) reported revenues of $35.3 billion and net income of $7.47 a share, a respectable showing based on the pessimism analysts have shown to Apple recently.

iPhone sales of 31.2 million were a lot better than most analysts predicted but a little short of the 33 million I forecast in my July 14, 2013 article on SA "Apple Third Quarter Earnings May Put You to Sleep". The stock moved a bit higher after hours, regaining the ground it had lost during the regular session and adding a couple of percent to a point just shy of $430.

The surprise to me in the numbers is the degree to which Apple lost share in tablets, selling only 14.6 million units for a 14% drop from last year's 17 million in a market IDC estimates to be growing at almost 59% for 2013. You can parse the data any way you want to, but the iPad numbers do not bode well for Apple's tablet future, a market it created. Android and Windows 8 tablets appear to be having an Apple with their lunch.

Apple also seems to have lost share in iPhones, showing flat volumes over 2012 despite rapid growth in this arena, as well with reports showing that Android in particular and Windows phones to a lesser degree are taking share from Apple in the early months of this year and no doubt this trend is continuing.

Not long ago, analysts fell all over themselves forecasting higher and higher sales and profits for Apple. Now the street is impressed if the decline in sales and net income is less than they thought it might be a few weeks earlier. Again, an unimpressive trend and not one that is likely to cause investors to line up outside stock exchanges overnight to be the first to buy shares when the market opens.

Tim Cook promises that the remainder of the year will be more interesting with new products to be announced, but it is hard to see that any new product will replace the millions of iPhones and iPads Apple is no longer selling and bring Apple sales, margins and net income growth to the levels that propelled its stock to over $700 not quite a year ago.

Chart forApple Inc. (<a href=

Guidance was pretty well as expected. Another so-so quarter with sales, margins and net income a lot like the one that just ended, and in my view that is a good result given whatever they have up their sleeve for the "next big thing" will barely be in the market by the time the quarter ends, and the prospect of something new and exciting may prompt some die hard Apple fans to defer a purchase until they can buy the next generation of whatever it is Apple is going to sell.

For investors, who did in fact greet Q3 with a yawn (unless you think a 2% move in stock price is enough excitement to keep your eyes wide open and call for the Nyquill at bedtime), the fourth quarter is likely to be out-and-out soporific.

Sure Apple continues to make a lot of money, pay dividends and buy back stock, and for that investors have every right to be pleased and Apple to be proud of its achievements. But Apple, the darling of the market and in the words of SA Author "Quoth the Raven" the "most appealing investment on the planet" is likely to be no more appealing than a dime store novel and a cup of decaf for the balance of the year, and until I see evidence that their next "big thing" is big enough to move the needle I will remain on the short side of the street.

I closed out my recent straddle at a profit this afternoon, have no current position, but may establish a short position in the stock or buy writing call options above market at any time if I see an opportunity that is more exciting than the guidance Apple gave us today.

Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in AAPL over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.