The expectations for Apple are high, that's why everyone is questing the company so much lately and the stock is tanking even though they are breaking sales numbers. They expect Apple to keep popping out something revolutionary each year. I don't think that'll happen, nor has it really happened. Every 3-5 years is realistic. People have to stop expecting year-after-year major changes.
I give Cook 2 more years as CEO. If he doesn't come up with anything 'great' during that time, he'll be out the door sadly. Whoever replaces him will just make it worse I'm sure.
No, the stock is tanking because gross margins are down and Apple changed the way they report on estimated future guidance. Stock is traded on the secondary market for only three reasons.
1. to gain dividend income
2. to take over a company
3. we buy shares today to sell them to someone else in the future at a profit.
No.3 is the most common. Essentially traders look at a company and establish a P/E ratio and better yet a PEG ratio. These essentially are two competing forms of the earnings multiple. In other words, what the stock price should be considering the future earnings of a company.
If a company says that the next quarter looks like we'll make less than this current quarter, then the future value of the company is less than what it is today. Therefore is not going up in value, it is gown down. And if it is going down in value it is violating the 3rd reason to own it, which is to sell it later for a higher price than I paid for it.
Apple could making a trillion dollars on phones, and it would not matter in the slightest if the trend is downward for the future. Then stock traders would know that the future value is less than the current value and therefore not attractive to buy and sell.
We don't buy stock to simply own a part of a company for the sake of owning it. We have to make money owning it. And until recently Apple didn't even offer a dividend. So that historically never played a roll in owning the stock. And since no one is going to attempt to take Apple over, that rules out #2.
So in the next earnings report, all of you can put what I am saying to the test. If Apple's earnings are record breaking again, but they report that the future will be less than what it was currently, the stock will drop.
Now Apple gets 85% of it's income from iOS in some way. The Mac accounts for less than 15% of their revenue. The more Android gains in market share the more investors worry about Apple. They want to see a whole new market created for something. I personally believe the PC will continue to drop and tablets will continue to rise. So Apple has a bright future ahead. BUT, who's to say the Surface doesn't gain ground and become the defacto new standard, thus shutting out Apple? Who's to say the Samsung Galaxy S IV doesn't over take the iPhone? Whether you believe it or not doesn't matter. The point is, there is credible competition out there and so Apple's future is not assured. There is credible risk.
