(Image credit: AP Photo/Eric Risberg)
By Harold Maass, The Week US
last updated
Just last year, Apple was a tech investor's dream, and its stock hit $700 in September as gadget junkies snapped up Apple's industry-dominating iPhones and iPads. Since then, however, Apple's stock has been in a prolonged slide. Even when the company announced better-than-expected quarterly profits of $13.1 billion and record sales of (47.8 million) and iPads (22.9 million), its stock dove by as much as 12 percent early Thursday. What went wrong? Apple's profits went flat, fueling fears that its dominance is slipping as it tweaks old gadgets instead of unveiling game-changing new ones. With Samsung and other rival smartphone and tablet makers making gains, Apple's stock is now trading around $450, and some analysts wonder whether the company can ever climb back to its peak. "Apple's been on top for so long now," says Matt Warman in Britain's Telegraph, "there is only one way it can go."
Indeed, Apple shares will never get back to $700, says The Economist. The stock has recovered after being "mauled by bears" before, but this time is different. The company's visionary co-founder, Steve Jobs, is dead, and since his passing in 2011, Apple "has concentrated on sprucing up its existing products." These days, tech blogs are buzzing about Samsung's latest Galaxy smartphone, due out in March, the way they used to about iPhones. The nearest thing Apple has to the next big thing is an iTV, expected later this year, but it will have plenty of competition out of the gate and is "no surefire blockbuster."
The fantasy that "Apple would be the first organization in history to grow forever" has finally dissolved, says Jeff Macke at Yahoo Finance. "What matters now is fixing the company." It can climb back with three drastic but simple steps. First, it has to fire Tim Cook, who took over in 2011. The company's stumbles are on him, and "it's time to give him the hook." Next, the company needs to fill its vacant retail head job with someone who has vision. Finally, it needs to unveil bold new products, instead of tweaking old ones by fiddling with their shapes and colors.
Subscribe to The Week
The Week provides readers with a wide range of perspectives from 200 trusted news sources.
Try 6 Free IssuesSign up for The Week's Free Newsletters
From our daily WeekDay news briefing to an award-winning Food & Drink email, get the best of The Week delivered directly to your inbox.
From our daily WeekDay news briefing to an award-winning Food & Drink email, get the best of The Week delivered directly to your inbox.
But as "Apple's luster dims on Wall Street," says Andrew Tangel at The Los Angeles Times, its stock is actually "becoming a bargain." If any other company had posted an earnings report as good as Apple's, says S&P Dow Jones Indices analyst Howard Silverblatt, "we'd be breaking out champagne." When it comes to Apple, people have unreasonable expectations, so they're pushing the company's shares lower than they should be. Apple's price-to-earnings ratio, a shorthand measure of a stock's value, has dropped to 10.5, far below the average of 15 for the broad Standard & Poor's 500 index. In other words, Apple stock is selling at a "steep discount," Tangel says. Investors might actually want to buy now, before Apple's stock starts going back up.
To continue reading this article...
Create a free account
Continue reading this article and get limited website access each month.
register for free
Already have an account? Sign in
Subscribe to The Week
Get unlimited website access, exclusive newsletters plus much more with a subscription to The Week.
Start your free trial
Cancel or pause at any time.
Already a subscriber to The Week?
Unlimited website access is included with Digital and Print + Digital subscriptions.
Create an account with the same email registered to your subscription to unlock access.
Not sure which email you used for your subscription? Contact us
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Harold Maass, The Week US
Harold Maass is a contributing editor at The Week. He has been writing for The Week since the 2001 debut of the U.S. print edition and served as editor of TheWeek.com when it launched in 2008. Harold started his career as a newspaper reporter in South Florida and Haiti. He has previously worked for a variety of news outlets, including The Miami Herald, ABC News and Fox News, and for several years wrote a daily roundup of financial news for The Week and Yahoo Finance.
Pros and cons of solar energyPros and consSolar power could become the primary source of electricity worldwide by 2050 – but there are still clouds in the forecastBy Rebecca Messina, The Week UKPublished 18 April 24 Post Office's Capture software to be reviewed over 'glitches'Speed ReadSolicitor representing accused postmasters says flaws in the IT system follow 'very similar pattern' to HorizonBy Arion McNicoll, The Week UKPublished 18 April 24 How would we know if World War Three had started?Today's Big QuestionWith conflicts in Ukraine, Middle East, Africa and Asia-Pacific, the 'spark' that could ignite all-out war 'already exists'By Harriet Marsden, The Week UKPublished 18 April 24