Apple is about to release earnings. Ponder the Bear Case Scenario:
Apple has decided not to compete on price and will therefore avoid margin compression. The risk becomes what if they give up too much market share and lose scale in relation to other competitors. Competitors may leverage lower end market share to capture high end later. It’s been done before by competitors from Asia.
There is still a lingering feeling that Steve Jobs had the driving vision which equalled success. The current management team needs to establish themselves as his equal and bury this lingering feeling. Product enhancements and new products launched successfully will eventually overcome the issue. A few stumbles and the whispers start to get too loud.
Apple stays focused on a few products and is relatively undiversified. A few eggs and then watch the basket real good. Samsung is diversified over more products each is proportionately less important. Diversification is the long term winner.
Apple has the cash resources to start becoming a dividend stock. Shareholders will become confused as to their real reasons for holding the stock.
Remember it’s technology. Technology eats it’s own babies.
George Gutowski writes from a caveat emptor perspective.