May 8, 2012 | In: Technology

Will Apple Stock Continue to Fall?

One of the stocks on the top of my watch list is AAPL. I have been closely watching this stock for over 2 years now, I have written about it many times, and i think that the quick descent from the peak of $644 achieved last month (back in April of 2012) is a first warning for investors. I’m saying first because I believe that the stock will peak again just after next quarter, only to decline rapidly afterwards, and forever. This means that Apple will continue to fall until next quarter, where it’ll be lifted temporarily by sales that beat expectations, and then continue its descent. Why is that, you might think. Well, I have discussed most of the reasons in my post published back in December: Apple: The Beginning of the End but I will discuss them again, while taking into consideration the recent developments in the smartphone and tablet industry…

Samsung Will Be Releasing the Galaxy S3 this Month

I have checked the Galaxy S3, I wasn’t very impressed, maybe because my expectations after the Galaxy S2 are now very high. Nevertheless, the fact of the matter is that Samsung is very aggressive when it comes to marketing and product release strategies as it’s pushing more and more excellent smartphones to the public, and thus increasing the pressure on Apple. Apple, on the other hand, is lame and very passive in its response to Samsung: Lame because it’s trying to sue Samsung because they know that Samsung produces superior products, and passive because it’s not trying to do something better than Samsung. Apple’s long awaited iPhone 5 was called iPhone 4S (as in Samsung Galaxy S) and was technically a big disappointment, although not a single website cared to admit this fact.

Blackberry will reclaim some of its market lost to Apple

If RIM plays its cards right, then it’s very possible that the Blackberry phone will regain some of the market share lost to Apple. The latest Blackberry phone that RIM is advertising looks like the iPhone, but it’s exactly what Blackberry lovers and Blackberry deserters were craving for, and that’s what they’ll get. I’m sure that RIM will price the new BlackBerry phone reasonably and will stuff it with features to match (if not exceed) the latest iPhone.

The number of players in the smartphone industry is growing every day

Any company watching Apple becoming the largest company by market capitalization will probably think: “Hey, I can do what they’re doing and I want a piece of that pie too”. Let me list the number of major players in the smartphone business (by alphabetical order):

  • Apple
  • HTC
  • LG
  • Microsoft
  • Motorola
  • Nokia
  • RIM
  • Samsung

The above list is expanding. I think that HP, Dell, even IBM might join it at one point or the other.

The smartphone market is becoming saturated

Let me ask you a question, you bought an iPhone last year, why do you want to buy another one this year? And why do you want to buy another one in 2 years from now? Unless the iPhone is built using cheap material that disintegrates in a year or so (or unless it breaks in a year), then there’s no reason for you to buy another iPhone every year. The American market is already completely saturated with Apple products, and I think the rest of the world will follow soon. Even if the public opinion about Apple products remains unchanged (which will not be the case), sales will start going down at one point or the other, and this is when you see a big headline saying “Apple failed to meet analysts’ expectations”, and this where you will see a big slump in AAPL.

iPhones are so 2007

Let’s be honest with ourselves. What has changed in the iPhone since 2007 besides the aesthetics and a few gimmicks here and there that you will never ever need? Even the box art is now outdated and ugly. A note to iPhone marketing team: you’re not selling Pepsi, box art needs to be changed at least every year (learn from Samsung, a company that you’re trying to ban its products in every country and for every imaginable and non-imaginable reason).

iPhone has lost is visionary

Despite of what the media is trying to feed us, Steve Jobs is much, much better than Tim Cooks. All the great products were released under Steve Jobs and no new product was released under Tim Cooks. That’s a fact! Tim Cooks may be a great CEO, but he’s not a visionary. The only characteristic that both Jobs and Cooks share is their low appetite for risk, and that’s why Apple has a growing cash reserve that will soon be equivalent to Greece’s national debt. Going back to the point of this point (Huh?), without its visionary, Apple no longer has anything to offer on the long run, and may very well become the next RIM.

The iPad is lame

This is not an opinion. iPads are a complete ripoff when you compare them to other tabs. I won’t do a technical and price comparison here, but you can do it yourself. Start with the processor, move to the cameras (I have an phone that dates back from 2005 that has a higher resolution than the iPad’s front camera), and then compare the prices. I bought a Samsung Galaxy Tab 10.1 32 GB for $389, the latest iPad that has less specifications was selling for $519. I don’t know how much it’ll take for the public to discover that the iPad is a huge ripoff.

Apple did not build an empire with iTunes

Judging from the sales of the iPhones and the iPads, you might think that iTunes would be a bigger business than Microsoft itself. It’s not and it never will be. The iTunes business constitutes only 6% of Apple’s total revenue which means three things:

1- Apple is not taking the iTunes seriously
2- Many people buying Apple’s products do not care about iTune and just want free stuff
3- The products on iTunes are lame

The point of what I’m saying here is that Apple cannot rely on iTunes as a cash cow to sustain its business, should Apple’s sales start declining (and they will).

So yes, Apple’s stock will continue to fall. It will reach a peak though in the next quarter, but it’ll be all downhill from there.

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