Apple Inc. (AAPL) Fail: Deliberate Or Delusional?

Apple Inc. (AAPL) Fail: Deliberate Or Delusional?
<a href="">ElisaRiva</a> / Pixabay

Has Apple Inc. (NASDAQ:AAPL) completely lost its touch, or is the company stringing everybody along until it’s ready to announce the next big thing in tech? That’s the question on the minds of the company’s investors today as they try to frame yesterday’s awful earnings report in terms of the company’s history and its future.

Apple Inc. (AAPL) Fail: Deliberate Or Delusional?

The use of the word ‘awful’ to describe the report might be a bit much, but on the whole it’s pretty accurate. Apple Inc. (NASDAQ:AAPL) reported a small beat on earnings and revenue, but saw a substantial 100 bps reduction on its Gross Margin, the metric investors have been touting as the company’s greatest asset for years.

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The firm also said that analysts should be expecting poor metrics, in comparison to previous year’s growth, on all of the company’s key numbers in the next quarter. Either Apple Inc. (NASDAQ:AAPL) has completely lost the plot, or it’s readying something for release later in the year.

The lack of movement on the company’s shares today, which were down a fraction from yesterday’s close, was caused by the other big announcement in the report, the massive expansion of the company’s capital reallocation program including a massive dividend and a substantial share buy back. On the whole, the market seemed desperately disappointed with the firm’s results.

Apple Inc. (NASDAQ:AAPL), lacking a new product category, is likely to see its Gross Margin fall every year for the coming decade on increased competition and higher manufacturing costs. The company will no longer be the darling of the tech industry without a new product, and it’s possible that Apple Inc. (NASDAQ:AAPL) is intellectually and creatively bankrupt. That’s something investors have to take into account.

In order to restore faith, Apple Inc. (NASDAQ:AAPL) needs to release a product on the magnitude of the iPhone or the iPad. It won’t get away with upgrades any longer, unless, of course, the company is all right with being another value stock in diversified consumables.

If Apple Inc. (NASDAQ:AAPL) really is transitioning to a value stock state, it’s going the right way about it, but it will inevitably fail. If Apple Inc. (NASDAQ:APPL) gives up on innovation, it will inevitably fall behind. Being a value company is fine in food, it’s bad in tech and investors know that.

Apple Inc. (NASDAQ:AAPL) needs to do something big in 2013, and if it doesn’t investors will turn against the firm.

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