There are times when we simply cannot let go of the past and move forward. A floppy disk icon that signifies the Save… or Save As… command illustrates how reluctant we can be to invest in the reality of today while clinging to elements of yesteryear. Take Apple. Please.
What happened to BlackBerry before it went out of business? Sales hit all time records, sagged, then dropped like a rock because the CrackBerry company did not have an answer for the future. iPhone was the future and many major brands died or became disfigured over the past 10 years because they could not see the future. BlackBerry. HTC. Motorola. Nokia.
Wall Street analyst Toni Sacconaghi seems to think Apple is about to join the likes of brands it killed just a few years ago. Wait. What? How is that possible? Isn’t AAPL flirting with all time highs again? Didn’t Apple just beat the street with better than expected financials?
Expectations were low and they managed to modestly beat those but in absolute terms, the business is not particularly healthy
How can Apple not be a healthy company?
The iPhone maker has so much money on hand that it has to give it away to shareholders and buy back its own stock to help prop up the price. Wait. That doesn’t sound healthy, does it? Where is Apple’s investment in the future?
We had iPhone revenue down 17% despite the fact that Apple had to cut prices to simulate demand in the quarter
In fact, iPhone sales were down and so was the product’s share of total Apple revenue, so that must mean something else went up, right?
Growth seems to be the engine that shareholders appreciate more than anything else. Compare Microsoft and Amazon with Apple and any other hardware vendor.
Over the next few years, revenues will be about flattish for Apple.
So, no growth. Why the rise in the stock price?
A real testament to both execution and their vision of what this business can be
But a temporary situation because hardware. Apple is a hardware company.
In absolute terms, the business is not particularly healthy
Or, put another way:
You have 75% of the company that ultimately is unlikely to grow and more likely to decline over time. That remains the core issue.
Unless Apple has another iPhone-like hit, or a number of products that can drive growth in revenue and profits– soon– Apple cannot save itself from itself.