Midday Report: What's at the Core of Apple's Problems?

Apple (AAPL) is in an unusual situation: investors are expecting the worst.

You've no doubt heard of the plunge in the company's stock. There are lots of reasons why, but here are two of the keys: Apple is expected to post a drop in earnings when it reports quarterly results after Tuesday's closing bell. And critics say that innovation has stalled.

Analysts polled by Thomson Reuters expect an 18 percent decline from a year ago. That would the company's first drop in more than a decade.

Apple Earnings
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There have been lots of hints of Apple's malaise recently. Several key suppliers have missed their earnings targets, because of falling sales to Apple.

There's growing concern that demand for Apple's key products – the iPhone and iPad – has been weakening. That's partly because of stiffer competition from Samsung (SSNLF) and Google's (GOOG) Android-based devices. And Samsung is expected to start selling its new Galaxy 4 smartphone next week.

Basically, the shine of invincibility has worn off. That seems to have been happening ever since the death of Apple's iconic founder Steve Jobs back in 2011.

Analysts say that Apple needs to show it can once again be the innovative company that made its stock the most valuable in the world.

But most Apple watchers do not expect any new product announcement when it releases earnings tomorrow.

The company is well-known for its secrecy and rarely gives much advance notice about new product launches.
Still, there's plenty of speculation about Apple TV, the next generation of the Apple 5 iPhone, and the hope of true believers that Apple still has something big in the pipeline.

Reuters reports the iPhone update may be delayed several months because of design problems. It says Apple is working on a fingerprint sensor.

In the meantime, Apple may try to placate investors in the near term with a dividend hike or a special payout. It certainly has the money – $137 billion in cash and investments at the end of 2012.

Apple's stock is higher this morning, but still trading below $400 a share. That's down a whopping 42 percent from the all-time high of $702 a share, set last September, when Apple was considered a surefire bet.

–Produced by Drew Trachtenberg

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15 Comments

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john.flath

March 22,2014
My Wife and I bought two apple iPhone 5's from Verizon.
We like them very much, but we always seem to have a problem with Apple Service.
They are the worst to deal with in my opinion and so unprofessional. My wife lost her password and they want to charge us 150.00 to help us change it. I said no. I went online at first and could not find the answer, but I found the procedure the next day. They also charge my account 1.00 for canceling my credit card without my person. I got it back. We were planning on buying an Apple iPad, but not now. Apple's attitude needs to change. right now it is " buy our products and get lost.

March 22 2014 at 10:02 AM Report abuse rate up rate down Reply
jeviga

Apple has become a value company and no longer a growth company....Same exact thing happened to Microsoft after it's booming growth.

April 23 2013 at 4:33 AM Report abuse rate up rate down Reply
Dennis Wayne

foreign slave labor.thats their biggest problem.

April 23 2013 at 1:06 AM Report abuse +1 rate up rate down Reply
ga7smi

the lttle splash of luck Apple had recently is used up - Apple never was a well managed company - now it is headed back to where it belongs

April 22 2013 at 11:52 PM Report abuse -1 rate up rate down Reply
Kuntheer

you know what would fixt this, if we could come up with a way to get people that lost their Jobs, and who's houses are in forclosure, and unemployment checks are running out, to go out and buy apple toys, insted of insurance that can not afford to avoid a fine.

April 22 2013 at 9:20 PM Report abuse rate up rate down Reply
hcrissal

Nothing wrong with Apple.
What drives up the stock is one thing only.
Potential growth.
A company can have 30% net profit every year for 30 years and the stock just sits there.
Another company can be loosing money hand over fist... but if the revenue is growing 20% every year, watch it's stock fly thru the roof.
Anyone remember Amazon when they started?
this was a company loosing money every month at twice the clip as the previous month. They did that for years ! But at the same time, their revenue was double digit quarter over quarter during same time frame. And what did the stock do? Rocket to the moon.
Nope, nothing wrong at the core. Still growing, still making money. But not at double digit revenue? They're baked Apple pie.

April 22 2013 at 9:03 PM Report abuse rate up rate down Reply
cb529

maybe a gold covered cell shoe next?

April 22 2013 at 7:36 PM Report abuse -1 rate up rate down Reply
myhappylab

Maybe they can get Ron Johnson back.

April 22 2013 at 6:25 PM Report abuse rate up rate down Reply
bcoldpro

The Core of Apples problems is that one can only buy some many toys one after the other.
I have a dependable Mac laptop and Mac desktops that I intend in keeping running as
long as I can.
Now maybe of Apple gave me some "trade in" cash I would be a little more interested,
but not by much. I don't have extra cash to buy the latest toy nor do I really care all
that much to do so.

April 22 2013 at 5:07 PM Report abuse rate up rate down Reply
krs

I can get a Laptop from HP, Gateway, Dell or any manufacturer that has a Quad Core
processor, 8GB of Memory and a 750GB to 1 TB for less than half of what Apple
wants for a Dual Core processor with 4-6 GB of Memory and a 500GB hard drive.
Which one will the average buyer purchase? Apple products have always been over
priced going back to the McIntosh.

April 22 2013 at 3:42 PM Report abuse +1 rate up rate down Reply