Apple (AAPL) Successfully Makes Transition from Momo to Value Stock
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With shares higher by over 11 percent in just the past 6 trading sessions - including today's 3 percent bond offering induced rally - it is clear investors are once again optimistic about Apple's (NASDAQ: AAPL) prospects, or at the very least they are less pessimistic. The turn in sentiment follows Apple's dramatic 40 percent tumble from its $700/share peak to $385, a price hit mid-month to the chagrin of many investors Apple who were blindsided by intense smart-phone and tablet completion from Samsung.
Some were even calling Apple the next Motorola, maker of the once oh-so popular Razor phone. Things obviously changed for Motorola, and they are no doubt on the cusp of change for Apple too.
It has been a year and a half since Apple founder and former CEO Steve Jobs passed away, and since then the stock has been on a wild ride, with euphoria peeking in September of last year, prior to the iPhone 5 launch. Since then bullishness has evaporated and many are now questioning the company’s ability to innovate in a post-Jobs era. The company's current CEO Tim Cook is viewed as anything but an innovator and many on Wall Street think his days at Apple are numbered. Alternatively, some see him as the next Steve Balmer, who was handed the reins at Microsoft (Nasdaq: MSFT) in 2000. Since then Microsoft has significantly lagged its peers when it comes to innovation.
On April 23rd, Apple caved to shareholder pressure and raised its quarterly dividend 15 percent and announced a massive $60 billion share repurchase plan. While clearly a positive the stock, some investors are looking past capital returns with a laser-like focus on new products. Potential breakouts include the rumored iWatch and innovation in Apple TV.
However, in many circles this view is becoming obsolete and few expect breakout innovation that would mimic Apple's wild success in smartphones and tablets.
Apple's future might include an unknown new technology, but for now bulls are simply hoping Apple can avoid losing its edge in the smartphone and tablet markets. This edge will likely hinge of Apple's ability to make incremental improvements at the high end of the market while at the same time broadening its reach with mid-priced phone that target growth in emerging markets, an area where Apple's lags behind various Android-based devices.
In summary, Apple has successfully made the transition from growth to value stock, though with so much volatility this fact could be lost. As a tech leader, obviously Apple will still have to innovate, but at this point it isn't about whizz-bang new devices. It's about survival first, then incremental growth and market share gains. Finally, Apple has to deliver results.
Viewed in this frame, Apple is clearly a stock worth owning. It probably is not as exciting as the old Apple. Then again, a breakneck rally followed by a 40 percent plunge isn't all it's cracked to be, is it?
Some were even calling Apple the next Motorola, maker of the once oh-so popular Razor phone. Things obviously changed for Motorola, and they are no doubt on the cusp of change for Apple too.
It has been a year and a half since Apple founder and former CEO Steve Jobs passed away, and since then the stock has been on a wild ride, with euphoria peeking in September of last year, prior to the iPhone 5 launch. Since then bullishness has evaporated and many are now questioning the company’s ability to innovate in a post-Jobs era. The company's current CEO Tim Cook is viewed as anything but an innovator and many on Wall Street think his days at Apple are numbered. Alternatively, some see him as the next Steve Balmer, who was handed the reins at Microsoft (Nasdaq: MSFT) in 2000. Since then Microsoft has significantly lagged its peers when it comes to innovation.
On April 23rd, Apple caved to shareholder pressure and raised its quarterly dividend 15 percent and announced a massive $60 billion share repurchase plan. While clearly a positive the stock, some investors are looking past capital returns with a laser-like focus on new products. Potential breakouts include the rumored iWatch and innovation in Apple TV.
However, in many circles this view is becoming obsolete and few expect breakout innovation that would mimic Apple's wild success in smartphones and tablets.
Apple's future might include an unknown new technology, but for now bulls are simply hoping Apple can avoid losing its edge in the smartphone and tablet markets. This edge will likely hinge of Apple's ability to make incremental improvements at the high end of the market while at the same time broadening its reach with mid-priced phone that target growth in emerging markets, an area where Apple's lags behind various Android-based devices.
In summary, Apple has successfully made the transition from growth to value stock, though with so much volatility this fact could be lost. As a tech leader, obviously Apple will still have to innovate, but at this point it isn't about whizz-bang new devices. It's about survival first, then incremental growth and market share gains. Finally, Apple has to deliver results.
Viewed in this frame, Apple is clearly a stock worth owning. It probably is not as exciting as the old Apple. Then again, a breakneck rally followed by a 40 percent plunge isn't all it's cracked to be, is it?
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