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francescocmazza
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I graduated in economics, and had a master's in Management and Marketing. I have been trading since 2005, especially in stock options.
  • Apple: A Qualitative Mid-term Perspective 0 comments
    May 20, 2013 12:12 PM | about stocks: GOOG, AAPL

    Newton had it. Sooner or later Apples do fall. Stockwise, Apple (NASDAQ:AAPL) grew very well as the iphone was relentlessly catching market share. Apple's success in the recent years has been mostly determined by this one product. The iphone has been a game changer in the mobile phone industry, and the stock market did show serious appreciation.

    The music is changing now, and the company is neither adapting nor leading the change. This is why, in my opinion, the Apple stock is doomed.

    The iphone has been a design icon and a champion of usage ergonomics, but most of all a status symbol. It reshaped the mobile phone industry and set new standards. After setting its concept with the iphone 2g, the company has simply kept on perfecting the same idea. Over and over and over again. Now the iphone has, unfortunately I say, become a standard for the industry. Usage ergonomics has been copied or even improved by competitors and the status symbol effect is greatly diminished. Iphone desirability has dropped dramatically amongst mobile purchasers and the company does not seem to be anywhere near releasing or even developing "the next big thing".

    Innovation wise, Apple has ignored several pressing market demands (i.e. larger displays) and is starting to lose market share. Now that Jobs's genius in understanding consumer needs is gone, ignoring the market demands can be very dangerous.

    Nokia and Motorola taught us how volatile market share can be in the mobile phone industry. In my opinion, we are only experiencing the beginning of the down curve, unless some radical innovation is presented by Apple very soon.

    Concerning the massive share buyback, I see it as a complete lack of vision. I am convinced that Apple shareholders own the stock because they believe in the company's ability to thrive in the tech industry, not necessarily in stock trading. I bet many, like me, would have much rather appreciated if that cash was spent on a tech investment, even a high risk, high gain project (i.e. Google's glasses project) (NASDAQ:GOOG) then in desperately trying to stabilize share price.

    It is not up to me to know if the current market price is over or underpriced, but for these purely qualitative reasons I believe that Apple has lost its "dream company" edge, and is becoming just another dull tech firm. If this is the case, be it overpriced or underpriced at the moment, the stock is still going to go down, much down.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within 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.

    Additional disclosure: I have purchased AAPL long term put options.

    Themes: short-ideas Stocks: GOOG, AAPL
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