Seeking Alpha

EricLi's  Instablog

EricLi
Send Message
View EricLi's Instablogs on:
  • Apple Is Different Now

    Apple (AAPL) has been a great company making amazing products for consumers. The iPhone and iPad have definitely been the best innovations of modern technology. These innovations have been changing the world and people's lives. Not only that, these innovations helped Apple shares reached an all-time high of $700 per share. However, Apple is a different company now.

    Different Sentiment

    When Apple's share price first dropped from $700 to the low 500s, there was still strong investor support. There were some long-term investors defending the stock. Some bulls were telling the bears that they would get burned for shorting the stock. But now, this strong sentiment for defending Apple is gone. It seems like many Apple investors are giving up.

    Different Psychology

    The views for smartphones are different now. When the iPhone first came out, it was the first smartphone that people loved. For a period of time, iPhone was the only smartphone that people wanted. Competitors quickly followed Apple and created smartphones of their own. In the beginning, smartphones were a "wow" product, and they had functions that never existed before. It was amazing for people to be able to touch and swipe. Now, this "wow" factor is gone and it's so common to see a smartphone. For Apple, most of its revenue comes from the smartphone industry and if smartphone is no longer special anymore, Apple sure doesn't seem like a special stock.

    Different CEO

    For Steve Jobs, he focused on creating the best products for people and there's no doubt that he achieved that. For Tim Cook, he has been trying to please shareholders in different ways. Unlike Jobs, Cook listened to Wall Street and Apple is now returning $100 billion to shareholders through repurchasing of shares and distributing dividends. However, returning $100 billion to shareholders wasn't the reason why Apple was able to have high stock appreciation. Most important of all, there're no new innovative products being released under Tim Cook's reign.

    Lack of Innovation

    If innovation helped Apple reach $700 per share, then lack of innovation is the reason why this stock is nowhere near that number. Investors have to understand that Apple is not making any revolutionary products right now. The iPhone and iPad are simply evolutionary at this point, and this is a fact.

    Although there are rumors of the potential TV and watch, these products are not on the market yet! No one even knows whether these rumored products would ever get released. Yes, the stock would go up if one of these products was to be released, but what if that doesn't happen. Common investors do not know about Apple's future product line, but as of now investors do know that Apple's product line has no new innovative products. It is also important to note that Apple is still relying on Steve Jobs' innovative products to generate revenue and profit. Whether Apple can innovate without Steve Jobs is still a problem.

    Conclusion

    I am not writing this article because I am short Apple or I hate the company. I just want to point out that Apple is no longer the same high growth company anymore. For me, it doesn't matter when I heard Apple just sold 9 million newly released iPhones within 3 days. In the long run, one has to consider whether Apple can still generate enormous amount of profit when it's only selling the iPhone and iPad. It was only few years ago that Blackberry (BBRY) had 50% of the phone market share. Before, Blackberry investors could also make the argument that the company has a lot of cash, but now it seems like BBRY has burned most of it. Similarly, if Apple doesn't innovate new products that can appeal to the mass market again and only relies on its current product line by changing screen size and colors, it could end up being the next Blackberry. Even if it doesn't end up being the next Blackberry, it is closed to being the next Microsoft (MSFT), a company that didn't innovate and a stock that was considered dead money for many years. Lastly, if you are an investor looking for high growth, you should know that Wall Street do not reward companies that simply generate a lot of revenue. Wall Street liked Apple because it disrupted industries and created new markets. Wall Street now likes Tesla (TSLA) for the same reason. As a growth investor myself, I rather put my money elsewhere even though I love Apple products and enjoy my new iPhone 5s.

    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.

    Tags: BBRY, MSFT, TSLA, AAPL
    Sep 25 3:03 PM | Link | Comment!
  • IPhone Shouldn't Be Cheap

    When Apple (AAPL) first announced the iPhone 5C, Wall Street was not too happy because the price of 5C was set, $549.99, too high for emerging markets. However, Apple investors should be happy that the 5C is not cheap. The reason Apple is popular in China, a major market for Apple, is that it's a premium brand. Chinese people are known for buying brand name items. The psychology is that if the iPhone is being sold too cheap, fewer Chinese will like the brand. To some extent, Apple and Samsung will be the same company if Apple rolls out cheaper phones like Samsung just to capture emerging markets. The major differentiation between Apple and Samsung to the Chinese is that Apple is a company of ONLY premium products. Also, lowering the price of iPhone means lowering its quality, and Apple shouldn't care about pricing when it's focused on building the best product.

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

    Sep 23 6:02 PM | Link | Comment!
Full index of posts »
Latest Followers

StockTalks

  • why is $FNMA $FMCC down today?
    Mar 18, 2014
More »
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.