Apple Losing the Ability to Attract Investors?

By: Zain Nabi  |   April 29th, 2013   |   Apple, Business, Google

Owing to a rather shaky performance from Apple during the last 12 months in which the company’s profits took a hit and its share value declined, many investors now are not that much tempted to consider Apple a favourable for investment. As ironic as it seems, many investors are now inclined towards Apple’s rival, Google, that has seen quite healthy growth in its share value during the period Apple lost stability.

 

While Apple’s loss and Google’s growth are not directly related to each other, the trend has certainly supported the latter. But it should be noted that this trend is not going to hurt Apple as a company, at least it does not look that way. The reason here is Apple has lost its hold in the market and the decline in share value is an apparent result of decline in its sales, but the company seems to be strong enough to bear these losses as it handsomely follows its strategy of securing long-term future, which will eventually pay off investors too (those who stick with the company).

 

One of the main reasons behind the decline in Apple’s share value is its inability to come up with innovative and creative products. It has been said many times that Apple’s creative and innovative approach was attributed to the brilliance of its late co-founder Steve Jobs, and the current chief Tim Cook lacks that approach. The Globe and Mail recently quoted Andy Hargreaves, an analyst with Pacific Crest Securities, mentioning in his report:

 

“We believe total profit growth will remain stagnant unless Apple is able to create a massively successful new product or service category.”

 

However, Cook has his own philosophy, equally important for the company. In his aim of securing long-term future of the company, he is leading the company to a new direction, which seems bothersome for investors, but the company’s management has repeatedly asserted that it is going to pay off. We support Apple’s stance in this case as the company prepares to launch cost-effective products this year to enter new markets.

 

So the current trend of losing investors’ attraction is not a sign of worry for Apple keeping in view its long-term interests. However, Google has certainly benefited from this trend and will continue to do so.

 

Photo: Bolsa