Tomahawk, WI 7/22/2013 (Basicsmedia) –Problems with Apple Inc. (NASDAQ:AAPL)

Poor earnings’ guidance and slimming margins are also creating a dent in the image of the company. The primary reasons which contributed to the considerable decrease in the company’s stock prices can be attributed to:

  • iPhone has lost its innovative grounds given the addition of innovative products by competitors. This is likely to cause a decline in overall revenues of the
  • Profit margin of the company is not showing strength, instead its declining.
  • Apple has not made any announcements of late of new addition to its innovative

All the above mentioned factors indicate that apple has started the process of long decline in the value of stock, which is common with the technology industry. Nokia, Microsoft and Intel all have gone through the same graph and thus Apple cannot be ruled out from the thump rule. However, the cash piled up of $145 billion can act as the savior.

Few Facts about Apple

The quarter which just went by, could be the last best quarter for the company, billion is ahead-for-the-hills disaster.  Company is witnessing the continuous decline in its margins and there is no product launch news, and in near future we are not expecting the launch of Mac TV.

Apple has never been considered to be the machine that launches new product frequently. Expectations from this stock are very high as people are emotionally attached with the brand and its products. Stock price wouldn’t have plunged if the expectation hadn’t been so high. Revolutionary products from Apple were iPod, iPhone and iPad. But it took six year to launch iPhone after the launch of iPod, and iPad was launch not before 3 years from the launch of iPhone. It took Apple two years to sell 100 million iPads, four years to sell iPhones, and it took 6 years for iPod to reach the 100 million club. However, there have been not much buzz on innovative products but only variants of the existing products have been launched. On the other hand, competitors are moving ahead of the innovation curve and are quick to add newer and bolder gadgets, grabbing a larger share of the pie.

Apple controls about 21.3% of the US Computer Manufacturing industry.

Apple stays ahead of the curve with continuous innovation and upgradation of its handful of products. Launch of latest versions of iphones and iPods have helped Apple sustain with. Apple launched the first Ipod in 2001 and was quick to launch Ipod Nano. Classic, Shuffle capturing Apple’s approach towards the industry. Ipod Mini changed people’s perception of music which in turn helped the company increase its market share. Apple forayed into the smart phones segment through 3G and further strengthening its position through the introduction of 3GS, 4G, 4GS and now 5. Apple’s software innovation has driven the growth of the company but the question arises what’s the next product that Apple will launch?

Apple’s strength lies in its experience and expertise in integrating hardware, software, services, and third-party applications into differentiated devices that allow Apple to capture a premium on hardware sales. Although Apple has a robust product pipeline and ample opportunity to gain share in its various end markets, short product life cycles and intense competition will prevent the firm from resting on its laurels.

Conclusion

Increasing competition from Samsung, Nokia and other mobile phone developers in the emerging economies may lead to further decline in the market share of the company. To stay in the market, Apple has to come up with low end products that would help the company to regain its lost momentum. Apple’s frugality may be frustrating to some investors regarding capital allocation, but is quite admirable in terms of acquisitions. Apple’s strategy of focusing on smaller tuck-in deals and developing products in-house, rather than splashy but questionable deals like Microsoft’s purchase of Skype or Google’s foray into hardware by acquiring Motorola Mobility, appears to have served investors quite well in recent years. Everything will be forgotten if Apple comes up with the product that would be unexpected and terrific, but we only can do what we always do with Apple is wait and wonder.

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