As I have said countless times, whatever your feelings about or involvement with Apple are, if you are a HotViews reader you can’t ignore them. What they do affects every area of what we analyse. So the 24% decline in Apple’s share price since their $705 high in Sept and an 8.6% decline in the last week, deserves comment.
Most commentators seem to be searching for ‘trading’ reasons to justify the share decline. The most bizarre is that Apple is losing market share in both tablets and smartphones. It has been forecast since Apple entered (invented?) both markets that Apple would face competition. I’m surprised that Apple’s share has held up as well as it has. On top of that the market for tablets is many times higher than any forecaster had suggested only a couple of years ago.
If you use any of the metrics applied to other tech companies then Apple is ‘cheap’. I haven’t seen any comment that Apple is likely to miss its expected targets; very high as they are. Anyone who thinks that Apple is trading on its past should heed Tim Cook in an interview yesterday. “Eighty per cent of our revenues are from products that didn’t exist 60 days ago. Is there any other company that would do that?”
But that doesn’t mean that Apple doesn’t face huge challenges. As I pointed out in my Predictions 2013 Apple has a Make or Break year ahead too. “They have to launch a game-changing new product genre – the most likely being iTV. If they pull it off, Apple will soar. If it flops (or even is ‘average’) then even I might believe that Apple’s golden days will be over.”
At the end of the day, the current weakness in Apple’s share price might be down to rather difference reasons. The FT today in Apple succumbs to capital gains fright suggests that it is all down to the impending rise in US CGT with investors banking the huge gains made over the last years. On top of that investors had hoped for a ‘special’ dividend for similar US tax reasons. Apple has never much liked giving back its cash!
As I said in my recent Diversity of Performance post, top performers of one year are more than likely to be amongst the top performers in the next, and the year after, and the…
I bought into Apple at c$10 in 2004. In 2008, Apple shares halved from c$180 to c$90. I took fright and sold half my holding. Today they are $535 and are still showing a 32% rise YTD. I won’t class my sale as my biggest mistake but I still kick myself.