One year ago, Apple (NASDAQ:
) was the golden child on Wall Street. It was the stock you could
not ignore. Every analyst in the world anticipated big gains from
the company. Many of them believed that Apple's stock would rise
to $1,000 per share; others expected Apple to become the world's
first trillion-dollar company. Those expectations were supposedly
justified by the growth of the iPhone, which continually broke
records, as well as the iPad, which proved to be the world's most
Then something odd happened in the latter months of 2012.
Dissatisfied with Apple's performance (which was still strong but
not on par with analysts' inflated expectations), investors began
to second guess their view of the Mac maker. They started to
wonder if Apple could, in fact, become the first trillion-dollar
empire. They wondered if the iPhone could really sell 10 million
units in one weekend, as one analyst claimed. They also wanted to
know if the company could release a groundbreaking product on par
with the iPhone.
Quarter after quarter, investors waited for groundbreaking
products and record-breaking earnings results. While the latter
was often reported, analysts continued to raise their
expectations, making it impossible for Apple to stay in-line with
Wall Street. At the same time, Apple has continued to reiterate
its existing line of products without releasing any fresh items
that could bring value to the company's long-term strategy.
This, combined with doubt about the future, has caused Apple's
value to plummet over the last few months. Analysts are not the
only ones to blame, however. Jan Dawson, Ovum's Chief Telecoms
Analyst, argues that Apple has "spent a long time training
investors to expect them to beat their own guidance [and] to
expect them to grow revenue very significantly and to maintain
"The problem is that those three things are not sustainable,"
he told Benzinga. "They cannot keep beating their own
Dawson believes that Apple's conservative forecast was part of
the problem. "That came back to bite them this time around, and
that's why they said now they're gonna provide realistic guidance
instead of conservative guidance," he said. "They can't keep
growing revenues and maintain margins at this rate. If you want
to keep selling more phones, you've got to sell them cheaper,
you've got to have things like the iPad Mini that's gonna have a
lower margin. It was inevitable that this was going to
That said, "There's still massive growth there, there's still
massive profitability," Dawson added.
"It's not clear to me that they were responding to real
performance issues. They were just responding to their own
expectations, which had become unrealistic -- not being met 100
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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