Sinking Stock May Signal End to Apple's Glory Days
Mar 6, 2013 5:00 AM PT
Apple's stock price is having another queasy week, falling to a 52-week low on Monday. The drop raised questions as to whether the consumer electronics company is either undervalued -- or if its sky-high earnings days are over.
The stock price dipped as low as US$419 on Monday, the weakest it had been since January of last year. That represents an approximately 40 percent drop from its peak of $705.07 last September.
Although Apple reported record iPhone and iPad sales in its most recent earnings report, it did indicate to investors that it might not be producing record profits every quarter. The company's smartphone and tablet might be two of the more popular options on the market, but they're not selling like they used to, said Nehal Chokshi, CEO and founder of Technology Insights Research.
"The company's fundamentals are weak right now, and that's probably what's already embedded in the stock price," he told TechNewsWorld.
Apple doesn't necessarily need a revamped iPhone or iPad in order to help it compete, though, said Chokshi. Instead, the company's stock price would likely significantly improve if Apple could show it can offer first-rate competition to the kind of services where competitors like Google and Microsoft excel.
"In order for Apple to compete in the growth segments of the market going forward, they need to develop best of breed offerings in other areas," he noted. "They need a stronger maps offering, stronger email offering and stronger cloud-based services. Without those, they're going to have a very difficult time competing in the growth markets. Even when users say they want a bigger phone, we believe they subconsciously also want best of breed services."
Apple vs. Samsung Update
The legal battle between Apple and Samsung also got an update this week. U.S. District Judge Lucy Koh, who heard the high-profile patent battle between the two tech giants last summer, reduced the $1.05 billion fine that she had previously slapped on Samsung.
In addition, Judge Koh ordered a retrial on 14 new Samsung products, claiming that the jurors calculated damages using a method that did not reflect the instructions they'd been given.
Samsung is still responsible for nearly $600 billion in damages for some of the products the jury found to be violating Apple patents.
The companies are still fighting other legal battles around the world. It can be difficult to keep up with the intricacies of that ongoing global patent struggle, admitted Roman Tsibulevskiy, patent attorney at Goldstein Law Offices. This is a billion-dollar industry, however, and the stakes are high; asking for a tidy ending to the courtroom drama from last summer would have been too tall an order.
"There are a lot of legal cross-motions which have to be considered," he told MacNewsWorld. "Remember that each side brought its 'A' game to this, so such complexity takes time to decide."
Smartwatch On The Clock?
While Samsung has proved to be one of Apple's toughest competitors, both in the courtroom and in the international mobile device market, Apple might have something up its sleeve that Samsung does not -- a watch.
It wouldn't be the only smartwatch on the market: Sony, MetaWatch and Nike have devices worn on wristss that can use apps and track fitness goals. An iWatch, however, would reportedly be the first made of a glass that is thin and flexible enough to be wrapped around a wrist.
The glass, called "Willow Glass," is made by Corning, which also makes Gorilla Glass for the iPhone.
Rumors that an Apple smartwatch is on its way heated up this week. A Bloomberg report claimed that the device could not only launch by the end of the year, but tbecause of the gross margins on watches compared to television sets, it would also be more profitable than the long-rumored Apple TV.
It's no secret that Apple's loyal customer base and investors are waiting for a winner, said tech analyst and consultant Jeff Kagan, and the time could be right for a wearable device. With Google investing heavily in Glass, and consumers becoming more used to the idea of wearable computing, Apple may have honed in on what will be the next big tech market.
"The reason Apple is always focused on the next big thing is that each previous device has a life span," he told MacNewsWorld. "It grows, crests, then falls on its own wave. Apple needs to keep stoking the fire and introducing new products in new segments. What will people do with a smart watch? Will it act like a mini-iPhone, letting you make phone calls or play with little tiny apps on the small screen? Apple might decide and tell us what we want in a smartwatch."
Apple watchers need to keep in mind that the company is always testing new ideas and products, and that it might be too early to start saving for an iWatch, Kagan pointed out.
"Is Apple ready to create another industry sector like with the iPod, iPhone and iPad, or is this just a test of something that may or may not work?" he said. "Either this is the next big deal or it's another Apple TV, which sounds great but never appears."