Are Apple’s glory days over? (Answer: no)

“Apple ended the quarter with $137 billion in cash and investments, more than the GDP of many nations. (About $94 billion of this is overseas and would be taxed if repatriated, so some borrowing by Apple might be necessary),” Tiernan Ray writes for Barron’s. “The 37.6% drop in the past four months in market value of what had been the world’s largest company—Apple relinquished the title to Exxon Mobil Friday, a year to the date it assumed the mantle—is increasingly frustrating investors, so much so, many believe, that the company must give back a lot more to shareholders.

“Apple could have, for example, removed the sting of Wednesday night’s report with an increase in its quarterly dividend from the current $2.65 per share, a 2.4% yield. That’s not bad, and it’s certainly better than it was when the stock was at $700, but it pales beside the 4.3% yield on Intel’s shares. Even Microsoft’s long-criticized yield is 3.3%,” Ray writes. “Apple could have boosted its share buybacks, too, on which it spent just $2 billion last quarter.”

Ray writes, “It’s not necessarily wise, however, for Apple to heed the calls to unleash its cash. For one thing, cash doesn’t necessarily have a multiple of zero, as Gundlach suggests, when it’s in the hands of a company that can sell nearly 50 million gizmos at around $600 a pop in three months… Although we’ll probably see a protracted period of hand-wringing about the cash, at some point the focus will return to the fact that Apple can and still does surprise with very good products, of which it sells gazillions.”

Read more in the full article here.

MacDailyNews Take:
1. If you think Steve Jobs left those in charge of his life’s work with bupkis, you’re a fool.

2. If you think the people at Apple, including Jony Ive, were just hangers-on riding the Steve Jobs train and now its all just sitting, rusting on the tracks, you’re a fool.

3. If you say either of these two things, but don’t believe it, you’re a stock market manipulator.

4. If you wish Apple simply had their iMacs ready when they were supposed to be ready and not two months late, thereby missing out on approx. 1+ million holiday quarter Mac unit sales (which would have just so happened to contribute more than enough to beat the Street soundly), you’re probably long AAPL.

5. If you know anything at all about Apple product supply/demand, you know that Apple customers have proven they will wait. Therefore, you understand that sales of iMac, iPad mini, and iPhone 5 (all of which were constrained during the last quarter) will be pushed into this quarter, with its drastically lowered expectations, which means you’re thinking ahead.

43 Comments

  1. Well said by MDN. You do not become a multi- billion dollar company without a long term game plan. One so call bad quarter (compare to most companies it was a pretty Dan good one) does not make or break a company. These Analyst/ market manipulator are probably the same asshole that predicted the end of the world last December via the Mayan calendar. This why I stop using a broker and do my own buying, they have too much off a personal agenda. Apple
    long term will be fine and this is the perfect buying opportunity.

    1. The results of the current quarter (AAPL 2Q 2013, CY 1Q 2013) shall be interesting in regards to Apple in Asia. Asian Lunar New Year, in February this year, is THE major gift giving holiday of the year; it is comparable to Christmas in the West. This quarter will show how well Apple is doing in Asia. Maybe that will change the minds of the analcysts who say Apple is failing in China. Although, it won’t, or they’ll make up other lies.

  2. Wait. Yes. I think we’ll just have to wait it out. Many days I lose a thousand dollars. But, if I sell, then I think what would I buy; and AAPL seems a good buy, the lower it gets.

    1. Subtle hint:

      You don’t lose diddly squat unless you sell. Right now is a VERY good buying time.

      Think about it.

      If you had bought at – oh, say – $50/share, would you even be worrying.

      The market manipulators should be hung out to dry with their kahonies stapled to the tree. (not that I have much emotion about all of this – I am one of the lucky ones who bought early and often – DCAd at about $35 – 10,000 shares. Not much but it will be a nice retirement – even if it drops to $250

      Don’t sweat the small stuff unless you are a scared little ninny and feel you need to sell so you can whine about how much you lost.

      That kind of whine always goes best with gorgonzola on rye crisps.

    2. I took the original value out of my Apple stock a long time ago and now it’s just all profit. HUGE profit. But the wife laments a loss of some $75,000 since last September just as we were looking to buy new cars and I did not take advantage. And it’s really hard to inform the uninitiated that things at Apple are not dire but we now have to do the waiting game thing for the stock to rise again and to show the market that Apple is worthy. Maybe this will be the final hurdle to assert Apple is here to stay and it’s stock a solid investment. Ascribing Apple’s business and corporate set up to any other company like Microsoft is foolish and belies a complete ignorance of Apple and how others operate. Apple is a unique company and not like all the rest, unlike what Jim Cramer says the magic is still there.

      1. I’d rather have a double root canal than explain whats going on with Apple to another person with no idea. You want to talk about Apple? I’ve got a 10 hour reading list for you. Get back to me when you’re done.

        1. Same here. The amount of misinformation accruing concening Apple is growing exponentially. A good part of the reason I’ve done fine in AAPL investments stems from my daily study of it, allowing me to filter out 99% of the drivel circulating these days. I would never recommend AAPL to anyone else, though, as few are prepared to put in the time required.

          1. to those of us that know better. This is a great time to buy more. The sentiment against apple dosent add up. With 6 billion people on this planet the idea that smart phone blitz is over is so wrong. I wonder what percent of current iphone owners will by the iphone 6 the day it comes out. And lets not even talk about the iPad and its huge success … the mac numbers would have been better the quarter if Apple could have made them fast enough. The hot 27inch didn’t even stop shipping until the first of 2013. And you know Sir Jonathan Ives will strike again. Apple should hold the line and tell the market to get lost, just as Steve would have. Focus on making incredible products!

      2. the problem is that investors don’t buy stock anymore. they are suspicious apple future. that’s why they don’t invest anymore. unfortunately, apple will lose more value, target price will even drop deeply. I think that it will get below $400 soon. if people will buy at that time, it will be fortunate. otherwise, apple will face with really deepshit. iphone, ipad market share are slow, seem to be reach to full. the line will continue to be flat if they won’t create new market. but I don’t think that Tim Cook could. he doesn’t have an ability to do that unlikely Steve. too bad. all important VPs left house.

    3. But why bother to buy Apple? You can buy lower priced stocks like Amazon, Netflix, etc. Those stocks are on the move so you should take advantage of that fact. Apple is only going down, so what benefit would that be to you. You could buy those winning stocks, sell them in time and then buy Apple when it starts to move up, if ever. Now, very few investors think Apple is a good buy. It’s just a sell if you bought it below $400. For those who bought it at $600, I don’t have a clue what they should do. Apple may go back up later in the year, but $600 in 2013 seems like a longshot at this point. Apple is currently the Chernobyl of stocks while Netflix is Nirvana.

      1. AAPL may indeed go down more? And it may indeed go up from here? I’m guessing it has more room to go down for a little while yet. But they still make the best stuff out there. There are indeed better places to put your money but that could always be said to be true. A APL has done great in the last five years but there are other stocks that have done better. I have done very well in AAPL but have done much better in Priceline in the last year. Same holds true for AMZN. To begin with, you never put all your eggs in one basket. That’s just stupid. But you’d be surprised how many people do that. They’re hurting really bad about now. You simply have to diversify. And in different sectors not just technology. I learned the hard way during the dot.com boom. Still hurts today. I didn’t have enough sense to take my profit off the table when I was way ahead and I also didn’t diversify. Lost my ass! Lesson learned. And you don’t have to be a daytrader or market timer. Just use common sense. And don’t be greedy. Apple is Doing fine. AAPL is struggling. Learn to keep them separate. You can love the company but don’t love any stock. Don’t fall in love with it and don’t make excuses for it. It’s an investment. It’s your money so don’t be foolish. I think AAPL will make a comeback but not as dramatic as in the past. Don’t expect the rocketship that we’ve had the last five years. As MDN said, it’s a broken stock not a broken company. I think It will heal nicely.

  3. Apple has repeatedly understated it performance goals only to subsequently exceed them. Falsely understating its goals has finally bit Apple in the ass. Basically, Apple has deliberately lied about it’s expected profits and sales. This has lead investors to overestimate Apple’s real performance measures. Recently, Apple delays in shipping products and cut backs in its supply chain have resulted in reactionary backlash. It was inevitable. Sadly, had Apple been more forthcoming and honest the exorbitant rise and fall in stock would have been prevented.

    1. Apple does not falsely state its performance goals. It states what it realistically can achieve and then strives to exceed those goals. The market responds to the wild speculation of analysts who rarely get their ‘guesses’ right and the stock swings wildly with all the rumours.

      1. Apple repeated and consistently underestimates its performance. Apple is 100% complicit in the exorbitant rise and fall of its own stock. That’s what happens when a company deliberately distorts its performance estimates.

          1. Unsustainable earnings. One would be a moron to predict future performance on limited statistical regression analysis. There aren’t enough people on the planet to support Apple attaining 28% growth annually indefinitely. The stock price merely reflects this reality.

            1. Unsustainable astronomical growth maybe but growth none the less. How much will Apple be adding to their cash hoard every year if they only grow at 15%? The only thing that can hurt Apples long term prospects is negative growth. Not gonna happen. Apple is not sleeping.

      2. Perhaps you’ve identified the real “takers” in our society: those who sole contribution is moving other people’s money around to “create” more wealth thereby aggrandizing their own position. Rather sad actually.

          1. Not at all. I think Wall Street has done more harm to society in general by becoming a driving force of the “quarterly report mentality” that savages companies for short term gains.

            1. I like your thoughts. Too many companies are so myopic that they fail to see the looming paradigm shifts and eventually become ‘buggy whip’ salesmen in the age of the automobile.

      3. I guess you weren’t around in the 80s and 90s when these slime bags, Milberg Weiss Bershad Specthrie & Lerach, would find a stock holder to sue Apple as part of a class action lawsuit, every quarter Apple didn’t exceed expectations. This is the real reason Apple is conservative on their guidance.

        1. Boo f’ing hoo. I’m sure Apple would rather not deal with pesky stock holder complaints and criticisms. Seriously, the thought that Apple has a fiduciary responsibility to its stock holders is ridiculous. Just shut the hell up and let Apple tell you what to think and what to do.

  4. If you think Apple’s stock should be trading at only 9 times P/E, then you probably already have a Surface sitting next to your Zune, both covered by drool bibs and non-breakable cases for those spontaneous outbursts of poo flinging.

    1. #6, #7, #8

      6) patiently waiting, the iTV which is really a iMac+iTV+50″ igzo screen + fusion drive PVR, cable tv cutter, sensation revolution

      7) patiently waiting, iPhone 6 with a 5″ screen, and iPhone6s – “s” for small, which also stands for simple, sweet, smartphone with siri embedded, a simpler smartphone geared more for Messaging, FaceTime NOT for music, apps and games.

      8) patiently waiting, for the next revelation in iDevices, be it an AR pen, or AR headset with smart camera for maps or purchasing

      YES patients… thats what Wall Street doesn’t have and never will

  5. I like what Jony Ive did with the new iTunes. I expect that Jony is/will be the true successor to Jobs, being a product guy with his hands in all the pies they are building there at Apple. The culture remains the same, and between Jony and Cook there should be plenty to be happy about coming soon.

    1. I disagree on iTunes. With every recent “Upgrade” it becomes less intuitive, if that is possible, didnt think they could accomplish that.
      Some music files apparently can never be removed from my iPhone even though they are removed from the library, trashed, trash emptied, synced repeatedly. hidden menus, once you have synced iphone the iphone icon disappears from the tool bar, have to quit iTunes and reopen to make it appear again. Change for the sake of change. all change is good :WRONG: good change is good change, bad change is bad change. I am a web developer and the one thing you never do in any app is leave the user wondering where to go next. And its happening in more and more apps because of the apparent need to “simplify” apps. end of rant

  6. No they are not over!! If Apple is working on a TV or even a enhanced ATV, they will surely change gaming and TV the way they did with the music industry with the iPod. Nitendo Wii U is ok but Apple can make something that is better than that. They already have the handheld devices like the iPhone, iPod Touch, iPad and iPad minito serve as the WiiU’s touch pad controller. There are game apps out there that can do this already with the help of AirPlay. All they need is the final two parts to make it complete. Get developers to make more games that take advantage of AirPlay and the TV and/or a enhanced ATV. With Apple’s innovations they can put the whole gaming console industry to shame. The content will come later once the cable companies see that Apple has a excelent product.

  7. Apple will no doubt continue to make money for itself, so I don’t think that Apple is done for as a company. However… Apple’s high share price glory days are likely done for, if the company continues to rely strictly on hardware. I’m still shell-shocked and I may not be thinking clearly. It’s pretty hard to digest how a company that makes so much money can end up being worth next to nothing. I always suspected that share value is like the value of the U.S. dollar. No longer being backed by gold and only worth how much paper you can print. Currently, most of the share price winning companies are only backed by empty promises but big promises which seem to excite investors.

    Wall Street expects Apple to compete for market share which it can’t possibly win. If market share is the most important value for a company to have a high share price, then Apple is already finished considering its present company financial model. Samsung will win easily, I have no doubt. Stamping out plastic designs is just so easy and inexpensive. Samsung can out-manufacture Apple at least 5:1 using cookie-cutter products. It’s Toyota vs Mercedes but Apple will have to prove it’s got Mercedes brand clout.

    Anyway, that’s how I see it. I’ll be happy if Apple ever sees $500 again, but even that is unlikely. Anything Apple does, Samsung will just copy it with a cheaper product. So far it worked and Wall Street likes that type of financial model. Apple could certainly get into other things, but it might take some time and that’s no guarantee for shareholders to see a higher share price.

  8. But weren’t the Wall Street grifters right about Enron and the housing bubble (there wasn’t any)? Oops! They were dead wrong. And they’ve basically been wrong about Apple.

  9. Apple is constrained….they have so much demand they can’t meet supply. The Apple stores are crowded with consumers looking for products. Apples competitors stores are crowded all right….with employees looking for consumers. Apple is a value stock that is still growing, they have been and continue to shift manufacturing away from samsung and their supply chain has been tested but they still the best team on the field.

  10. Apple only makes gadgets. They used to be a frontier company but it was because of creeations such as the Newton, OpenDoc, Palm, OmniSky, Motorola internal creations (which Chris
    “Clueless” Galvin killed) …., as well as NeXT and it’s NeXT/OpenStep and of course the MAC architecture. The margins and P/E ratio will remain high but sales will go over the cliff with market saturation in a couple of years.

    No new ideas here. Apple was decades ahead of their time. Now it is just months.

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