For the past two years Apple’s stock price has bounced around from a little above $130/share as a high to $90/share as a low. While Tim Cook has authorized increases in dividend payments, the growth for AAPL is no where to be found. To grow its stock price, usually a company must grow its net revenue (aka profit). But that seems to be a challenge for AAPL the past two years.
Under Cook’s leadership, Apple has managed to slow the refresh of Mac hardware, and keep releases of iPhones on pace at a new-model/year. Apple has sunk a lot of R&D into making the iPad category grow with mixed results. Apple Watch is Apple’s only new product category since the iPad and while besting the marketplace, it is still a dud compared other Apple categories. Hope for shareholders used to lie in Project Titan, Apple’s new car development team. However, recent reports have Apple pretty much giving up on that effort or significantly scaled back expectations. Of course there is the new Spaceship campus, but that delivers no real value to Apple shares.
Where does Apple go for growth?
So where does Apple go to grow their business? More desktops and laptops? It seems Apple is comfortable with its slow Mac refresh every 3-4 years with new models and updates. Increase iPhone sales? The smart phone market is pretty much saturated in the West and China’s growth plan is returning results slower than expected. The only way to really grow iPhone market share is to steal from Android, and that is an expensive proposition (ask Coke and Pepsi about how hard it is to take just 1% market share from each other). Sell more iPads? Apple hoped their recent investment into this space would help grow the product category and combat Microsoft’s Surface assault. Tim Cook said he only uses an iPad Pro, but that has seemed to sway very few into migrating away from their laptops to iPads like Cook. Increase Apple Watch Sales? The problem with Apple Watch is that it does not really solve a problem most people have. It is a “nice to have” product, not a “must have” product because while it is convenient in daily life is not tremendously better than without one.
This leaves Apple in growth-limbo. I am certain Apple’s R&D team has been hard at work, but under Cook’s leadership Apple is a well managed company but certainly not a growth one. One might respond that the new MacBook Pro’s are innovated and way better with their new screen, new keyboard, new track pad and touch bar. This is true, but shouldn’t we expect a “wow” from a product that has been sitting idle for over 3 years (which is like 30 years in technology years).
Until Apple can show significant growth in any product category, expect AAPL to continue to bob up and and down like it has the past two years. We can hope 2017 will be better as Apple updates other products in the Mac line. Time will tell.
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