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Three Reasons Apple Is A Big Uncertainty

Dec. 01, 2013 9:27 PM ETAAPL
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I read with interest the plethora of AAPL blogs which are fired to my screen every day. There are three reasons that I haven't read in any of these, that for me, make AAPL a very uncertain investment.

Apple is in control of your view of their sales

It's very clear to me that AAPL's new strategy is to control public perception of sales, inventory and manufacturing. Why?

Take the iPad Mini Retina launch as a perfect example. They spoofed the launch date, didn't launch in-store, but instead launched online only. They show stock as 3-5 days but it's clear there is stock, because there is in-store stock if you want to get it.

And then in the Black Friday sale, you could have a discount on any iPad apart from the Retina Mini.

What are we to take from this? Depending on who you listen to, Apple has stock problems, quality problems or supply problems.

My take is that Apple just wants to control the public perception and perfectly balance stock-outs, revenue and profit through the holiday season.

Apple has become a master of execution, but not of innovation

There's no secret here. I'm a big Apple user and their devices are (in my opinion) the best in the world. But, the latest iPads, iPhones and MacBooks are all incremental improvements on their previous generations.

For sure, the new iPad Mini Retina is by far the best tablet ever produced - there is now no downside to having a smaller tablet, apart from the size.

However for AAPL's stock to continue to rise, they need to actually innovate. We can speculate about the Apple Watch, Apple TV and other markets which are ready for disruption, but Apple hasn't delivered.

This isn't a worry in the short term, but if Apple doesn't produce an innovative product in the next 18 months, this becomes an issue.

There are master-manipulators at play

The valuation of a company is generally not based in fact, but rather steeped in opinion. Nowhere is this truer than with Apple, where various writers claim over and under-valuation.

In the meantime, Carl Icahn continues to push for an aggressive buyback, in his own attempt to manipulate Apple's stock price.

Final Words

Apple is an amazing company, but these three factors, to my mind, cause much more uncertainty in the future price than short-term strategy, stock and sales execution.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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