14 DAY TRIAL // Zacks Investment Research, Inc. has issued a note to investors today warning that Apple, “the most prolific growth story in the tech industry over the past 12 months, appears to be losing some steam.”
The analysts at Zacks base their theory primarily on Apple’s recent share decline by approximately 4.0% since the release of its second quarter results on April 21, 2011.
Reflecting a year-over-year increase of approximately 46.4% but a slight decline of 6.8% sequentially, Apple expects revenues of approximately $23.0 billion for the third quarter of 2011, Zacks says.
“Although we believe this guidance is conservative, it is noteworthy that Apple is facing some headwinds that may prevent its bullish run going forward,” the finance company said.
These headwinds are the second major reason for Apple's presumed decline, and they start with a “lack of innovative product launch.”
Not necessarily spot on, their analysis says that “After launching a series of innovative products (iPod, iPhone and iPad) successfully, Apple has failed to unveil any new innovative products in recent times (barring iPad 2, which was basically an upgrade of the original version).” Well, competition is still playing catch with the first iPad (this being just one of many potentially relevant examples), so perhaps Apple is not rushing to get any half-finished projects out the door just yet.
“Traditionally, Apple has used the Worldwide Developers Conference (WWDC) as a launch pad for their newest gadgets and software. However, the company's last revelations at the WWDC were iPhone 4 and iOS 4, which were also upgrades,” Zacks analysts write. Again, as if Apple was somehow bound to follow someone else’s roadmap, Zacks regards the company’s strivings to perfect existing products as bad moves. We're skeptical about this, to say the least.
Zacks also believes that increasing competition and pricing pressure will also impact Apple’s stock, which we admit is clearly accurate.
The lawsuits Apple is embroiled in with the likes of Nokia, Kodak and Samsung are righteously cited as negative factors as well.
The fact that Apple has received unfavorable verdicts in a couple of cases at the International Trade Commission (ITC) is also bad news for their bottom line, says Zacks.
“Moreover, it's not possible for a company (of Apple's stature also) to sustain sales growth of approximately 90% in every quarter, unless it finds a whole new market or revenue segment,” the analysts conclude.
Zacks has a Hold rating on AAPL in the near term.