Apple facing challenges but it’s not all rotten news.

15th January 2013

So what’s up with Apple? A story in the Nikkei newspaper in Japan followed up in the Wall Street Journal has suggested that Apple has halved orders to some of its Asian suppliers of iphone 5 components. This led to shares falling below $500.

For those who are worried about the immediate consequences, we highly recommend this analysis by Guardian technology editor Charles Arthur who considers exactly what might be happening in the immediate term.

Arthur considers several alternative explanations for that troublesome component news including Apple rescuing a component supplier and switching orders to it and the fact that the standard of components may be rising with less need therefore to order as many in future.

Cnet also says that many analysts suggest investors should relax at least about this issue. But as the company continues its downward share price trajectory should investors be worried about the medium and long term? We look at seven issues you might consider complete with useful links.

1)    Even Apple may not be immune to the global economic downturn and some analysts agree as this round up by the Telegraph at the time of the last set of results shows.

2)    As Apple falls in price its valuation may become much more attractive. But is it a buy, sell or hold? A few weeks back, CNET was saying pick your analyst for a different recommendation.

3)    Apple’s leading position, briefly becoming the world’s number one company, could be following the pattern of Microsoft which saw a big share price spike when it was number one before settling back.  Forbes suggested Apple might following this pattern in November last year.

4)    Questions are sure to asked about the shepherding of the firm by Tim Cook in the wake of Steve Jobs’ death well over a year ago. Last year’s share price high was $702.10 in September. At the start of 2012 it was $424. It is still up on that price. But the critics are harsh. Forbes contributor Joan Lappin suggests that Cook is not aiming to disrupt industries the way that Jobs did. The headline is unflattering. ‘Steve Jobs thought bigger, Tim Cook thinks smaller.’ Ouch.

5)    However all eyes will be watching to see if Apple can revolutionise another huge market such as television. It hasn’t yet, though Slate magazine argues the change may have started. It’s just that it doesn’t always start with a bang. Apple has rivals also eyeing the TV market of course.

6)    As it matures Apple may take on the characteristics of a different kind of company i.e. it may become a dividend paying stock and transition from growth to value. SeekingAlpha considers the issue. It is, of course, hugely cash generative but its dividend while increasing is still on the low side.

7)    Keep your eyes on the fact that the Apple boss has been meeting with China Mobile with it hundreds of million of users in recent days. This has helped feed speculation of a cheaper Apple handset for emerging markets. On the one hand, it would be very like Apple if they pulled something significant out of the bag. Other the other, despite Cook’s obvious ambitions, negotiations have been ongoing for a very long time. However CNN carries this significant viewpoint pointing out that, in China, Apple does not face the same censorship issue as some of its rivals such as Google or Facebook.

Compared with some of these issues, we suspect this components speculation story won’t even merit a footnote in a month’s time. (of course we could be wrong).

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