I really don't understand why the stocks have dropped so dramatically if Apple reported a record breaking quarter?
Because stock prices are not so much about how have you done but how much you might do going forward. Beating last year was not all of the expectations. Expectations were to beat last year and beat anyone and everyone best speculations this year... AND lay out a forecast that says growth will far exceed anyone & everyones best speculations going forward.
There always comes a time when the slope of growth on the chart becomes just too steep to maintain. A giant company with centralized, consolidating management instead of decentralized, delegating management (creating lots of little Steves instead of reducing the decision-makers at the top and giving them even more responsibilities) becomes bottlenecked by the maximum production of the few at the top. I suspect Apple is grappling with this right now.
I recall reading time and again that just about everything of consequence at Apple had to go through Jobs. That can work when the company is small. But when you're the biggest company in the world, you need too many decisions made for any one guy (or a handful of guys) to keep pace with the needed growth. I was worried with the recent announcements about Exec departures and consolidation of power & responsibility when I believed (and still do) what Apple needs is delegation and decentralization, leveraging it's "best & brightest people in the world" in a way more suitable for the big company that is Apple now rather than the small/shrinking company it was in 1997.
In very simple and narrow terms: we celebrated when Ive was given the added responsibility of software design. Given the great job he's done with hardware design, it seems like a great idea. But one could also see it like this: he used to be able to give 100% of his focus to hardware design. Now, he might split it- 50% to hardware, 50% to software. If so, hardware gets half the focus it used to get because now he's got to give the other half to software design. The same applies to other consolidations of power & responsibility with other leaders. Is that actually a good thing (when Apple obviously needs more "next big thing" rollouts than less)?
Sure these managers have legions of employees who do most of the work. But the trick is that too much decision-making consolidated at the top can have legions waiting for decisions rather than rolling on with "next big thing" creations. When the very few hold too much of this decision-making responsibility, they are the bottlenecks to ongoing, robust growth.
Apple needed a "next big thing" rollout on par with iPhone (2007) and iPad (2010) last year (2012). That didn't happen. Instead, it was just refinements of old "next big things". There better be something genuinely new (not a thinner, lighter, or different color, old NBT) this year or I suspect AAPL stock will feel even more pain. In short (and IMO), the old NBTs are not strong enough to maintain the growth slope on their own. They need a new NBT (that is not a Mac or new iDevice) to become a major source of new revenues & profits. It needed to hit in 2012 but didn't (and thus AAPL from $700 to about $460 in just the last few months).