Investors anxious about Apple's profit report
NEW YORK — For many investors, Apple's best days are behind it. Competitors are catching up, they believe, and the latest iPhone is stumbling.
The company's doubters have backed their conviction with billions of dollars. Last week, the stock fell below $500 for the first time in 11 months. Since Apple's stock peaked at $705.07 on Sept. 21 — the day of the iPhone 5's release — it has fallen nearly 30 percent, cutting Apple's market capitalization by nearly $200 billion.
On Wednesday, Apple — still the world's most valuable public company — gets a chance to rebut the skeptics as it reports financial results for the holiday quarter. But the report could end up confirming beliefs that the company is losing its edge as an arbiter of innovation and a pacesetter in sales growth.
Apple's perception problem centers on the iPhone. Many investors believe the company has painted itself into a corner with the high-priced gadget. The iPhone is more expensive than other smartphones that do many of the same things. The company created the modern smartphone, but because of its strategy to sell the iPhone at a large premium, it will be unable to capitalize fully as smartphones continue to conquer the world. The iPhone seems destined to remain the phone of the elite who can afford it.
In many ways, the iPhone's global battle with phones running Google's Android operating system is a replay of the Mac-PC battles of the 80s and 90s, when Apple saw its innovative-yet-expensive Mac outflanked by cheaper PCs running Microsoft's DOS and Windows software.
Analyst Michael Morgan at ABI Research believes Apple's share of the global smartphone market will grow from 20.5 percent in 2012 to 22 percent this year and then remain flat. Meanwhile, South Korea's Samsung Electronics — the world's No. 1 maker of smartphones — is at 30 percent of the market, and is set to leverage its chip- and display-making capabilities into further dominance, he said.
“Barring an unlikely collapse in Samsung's business, even Apple will be chasing Samsung's technology, software and device leadership in 2013 — through the foreseeable future,” Morgan said.
A key tenet among investors who remain optimistic about Apple: Although the iPhone 5 is too expensive, buyers will shift their attention to the older Apple phones, which they find “good enough.”
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Conventional gas, oil drillers seek rules differing from shale industry in Pennsylvania
- 6-year stock market rally still going strong, bulls say
- U.S. Steel considers temporary shutdown of Minn. plant
- Internet gambling results ‘disappointing’ so far
- Stocks of Pittsburgh-area companies set record in March
- Japan snubs China investment bank
- Home prices rise as supply still tight
- Corporate missteps hurt reputations, profits, sometimes in long run
- Tourists rush to visit Cuba before American influence felt
- Dominion Resources CEO Farrell made $17.3M in 2014
- Late decline eats into previous day’s stock market gains