January 1, 2013
One Bad Apple
The Speedy Decline of the World’s Once Most Valuable Company
In August of this year that we are seeing out at midnight tonight, Apple (AAPL) was lauded as the most valuable company, not only in the world, but in history. This was factored, according to Forbes Magazine’s August 21, 2012 articled, in terms of Apple’s market capitalization. It was on that day that Apple hit a market cap of over $620 billion. If you were fortunate to have stock in Apple on that day, you saw your shares hit a staggering $662.00 each.
So why, only 4 months down the road are we seeing what doesn’t appear yet to be the bottom of a multi-month slide in Apple’s company and stock values? That slide, which began in mid-September, saw the current stock price for Apple, as of Friday, December 28, down over $150.00 from its all-time high to $509.59. While the value is still impressive if you bought your stock in the $100-200 range, you have to have at least a wavering concern.
It wasn’t long ago another tech savvy company held the distinction of the world’s most valuable company. And, it could be argued, for the time it held that honor, when factoring in inflation, its market value far exceeded that of today’s Apple. Microsoft (MSFT) received a late Christmas present when, on December 30, 1999, they were crowned as the world’s most valuable company in history. With an adjustment for inflation, Microsoft’s value would have been, in today’s dollars, $850 billion, besting Apple’s August achievement by some $230 billion. Microsoft also, after the burst of the 90’s tech bubble, experienced a swift slide in value down to today’s market-cap of approximately $257 billion.
Is Apple suffering that same fate, swinging its overall worth down to a more balanced and stable amount? There are some who believe that is going to be the case. Predictions are, however, just guesses. The weight a prediction receives relies solely on the credibility of the predictor. Credibility is achieved, often times, through a cogent and well-reasoned argument of past fact.
My personal thoughts on this matter, originally gleaned from my older brother, a stock holder and believer in Apple, have undergone a transformation due to a better argument.
Now, it should be known that my degrees are in both Political Science and Spanish. I am a political observer. I call the Sunday morning shows my stories. I watch, in order, Meet The Press, Fareed Zakaria: Global Public Square, State of the Union with Candy Crowley and Fox News Sunday with Chris Wallace. It was on this last show I was struck by an interesting theory on Apple’s future in 2013.
Byron York, of the Washington Examiner, in his 2013 economic prediction, invoked the saint of everything Apple, Steve Jobs, in explaining why it was he believed Apple would continue its descent. According to York, “[Stock Prices] will begin a slow slide as consumers realize that there are no more magic products coming from Apple after the death of Steve Jobs.”
Was Steve Jobs the sole driving force behind the creativity and innovation that went into each Apple product? Recent history seems to be suggesting yes. We see updates of Apple products but no amazing ‘change your life’ devices or services that once were the envy of every other company. Instead, we see a company that is mired in patent lawsuit after patent lawsuit. Apple seems to, post-Jobs, lost its innovative edge. Would Steve Jobs be running after Samsung and only settling when they promise not to hone in on the American market? Or would he have recognized that technology is only power when you stay at the forefront? I would like to think that Steve Jobs would have decided that his technology pervaded the market and so it was time to create the next as-yet-unknown “thing”.
Apple, it would seem, has lost its way. It un-nerded technology. It brought fantastical and easy to use gadgets down from the mountain for the masses. Now all we get are re-hashes of their existing product line. And they don’t even necessarily do those well. Need I remind you of their Maps debacle? Now they are jumbling their release schedule. This can only infuriate people who bought before Christmas only to learn their new toy will be ‘less than’ come March. To quote the inimitable B.B. King, the thrill is gone.
There are some die-hard Apple fanatics out there that may find this hard to swallow. Hell, my brother is one of them. But it is appearing, 4 months into this saddening slide, the day to sell your Apple stock was yesterday.
Image Credit: JMiks / Shutterstock