Speculations from investors on Apple’s future have had major consequences, as the company’s share showed a significant decline this month. Investors asserted that Apple might not be able to keep up with the pace that made it the world’s most valued company. Things don’t seem to be going Apple’s way as the share continues to tumble, with the biggest nine day slide since August 2011. These speculations were further fuelled by news that indicated shortage of key components for Apple’s mobile devices. Added to this, declining sales of the iPhone at Verizon (the top carrier in the US) was another factor contributing to the same.
Giri Cherukuri, a portfolio manager at Lisle, contemplated that this uninterrupted growth had to stop at some point in time. The picture will be much clear when Apple releases a report tomorrow addressing such issues. Whether the concerns are warranted or not depends on the contents of the report. Bloomberg has estimated a profit margin of 55% and sales increase of 48%. These numbers are mainly attributed to the success of the iPhone 4S in 21 countries including China. If results don’t match up to these numbers, the stock will continue to decline.
A look into the past clearly reveals that Apple’s feat is unique and unimaginable. Apple had gained over $250 billion in four months before the decline began. The only companies that come close to Apple’s extraordinary feat are Intel ($230 billion in four months) and Cisco ($350 billion in eight months). Both these companies gained market share during the dot com boom in the 90s. Both companies lost a significant part of their value in subsequent months, and in the present scenario, both companies are only a fraction of what they were back in 2000.
Critics and analysts are all united in stating that Apple got “really far, really fast”. Despite the recent slump, analysts continue to predict that Apple will touch the $1000 a share mark, making it a $1 trillion company. These continue to remain mere speculations as Qualcomm, the leading supplier of LTE chips, isn’t able to keep up with Apple’s requirements, especially when the demand is for a product like the iPhone. This is one factor which will inevitably work against Apple’s swift growth. Reports from Verizon Wireless have indicated a drop in the number of units sold of the iPhone. How things will proceed in the days to come will be under careful observation from both critics as well as investors.
