Thursday, April 24, 2014

Apple Needs New Hits

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Even as the most attractive company for the past 10 years, investors will only look at growth potential. The chart shows the quarter's year-on-year growth for Apple's top products. As you can see, iPod has been on a downtrend for sometime already. So what are the runners and gym junkies using to listen to music while they work out? Or has the number of people exercising started to deplete? 

The ever popular Mac is a solid performer over a much longer period. Looking forward to the next Mac, always a design wunderbar. What is worrying is the declining, almost flat growth year on year for IPhone. The trend is worrying as the longer it stays that way, it will allow others to eat into their market share. They had better come out with a new Ipohone within the next 3-6 months, and not just cosmetic changes.

The IPad saw great acceptance two years back but is seeing a similar fate as IPhone. If Apple fails to be innovative as they were under Jobs, then they will turn into another Microsoft. Investors will rate it for its cashflow, cash hoard and dividends.

3 comments:

Tiger said...

Even Steve Jobs had some hits and misses. Innovation also depends on a bit of luck, the right sets of technology building blocks being available at the right cost and at the right time. I think Tim Cook is being judged too harshly because he is being compared to Steve Jobs (similar to a certain football club).

Fung C.F. said...

It is not sensible to expect Apple growing forever, no business can do that, especially for the largest market cap company in the world (in which many think it is undervalued).

I think Apple has exited the growth stage and entered into the matured stage, pretty much like IBM. Their goal should be now about sustaining the business base and not to become the next Nokia, which I have strong confidence in them thanks to their flawless ecosystem.

Nonetheless, Apple can still increase the per-share value by buying back its shares. IBM bought back 40% of shares over the last decade (assuming earnings remain stagnant, that is 40% increase in EPS). Apple is certainly rich enough to pull the similar trick.

Fung C.F. said...

It is not sensible to expect Apple growing forever, no business can do that, especially for the largest market cap company in the world (in which many think it is undervalued).

I think Apple has exited the growth stage and entered into the matured stage, pretty much like IBM. Their goal should be now about sustaining the business base and not to become the next Nokia, which I have strong confidence in them thanks to their flawless ecosystem.

Nonetheless, Apple can still increase the per-share value by buying back its shares. IBM bought back 40% of shares over the last decade (assuming earnings remain stagnant, that is 40% increase in EPS). Apple is certainly rich enough to pull the similar trick.