The record low price of Apple share of $485 surprised me. I didn't expect the slide down to be so fast. This overfilled my prognosis of last year. In fact it is absolutely logic Apple to lose value, as it was overvalued in last few years. But Apple has too much cash and too strong market presence to allow so a rapid move down.
As I already wrote, the main problem of Apple is the lack of Steve Jobs. Now step by step we are seeing the consequences of his missing. Apple is getting more and more competitors that ruin its markets and lower the profits. Apple has a business model to sell expensive products on new markets with big profits. Steve Jobs was the heart of finding these markets. In fact he was the creator of these markets with his inspiring imagination. He was able to make people believe the new products that Apple produces are of vital importance and deserve the big money that they cost. In fact people were even happy to pay big money to Steve Jobs, making this way themselves part of the Jobs' dreams.
But today there is no such a magician. So new super markets lack and as is written in Economic schoolbooks the increase in competition on old markets lowers the profits for all companies. This influences not only Apple (whose results are expected tomorrow), but also Samsung, Sony and all other main players. All they are affected and will have less income. But with Apple the shares-fall will be greatest, because before that the benefits and shares-rise was greatest. Some months ago, when the price was $700 per share, some analysts started dreaming of $1000 per share...
The current price of about $500 means about 28% slump for little more than 4 months time. I think this fall is too rapid and some correction up is possible. I think levels below $450 are hardly possible in 1 year time. The management of company will intervene, and they have enough power to do a major influence on markets. The company still has a stable cash flow and markets are still generous. The ruin process will continue at least 3 or 4 years before we can suppose a serious problem to occur.
Anyway - it is clear the markets has started to awake...
Dobri
Jan 22nd 2013
