Apple Inc. (AAPL): Will The Company Heed To This 3 Point Solution To Stop Negativity?

In Apple Inc. (NASDAQ:AAPL)’s case, its revenue for the first quarter of fiscal 2012 is not a problem. In fact, the company posted $54.5 billion in revenue, up from revenue of $46.3 billion in the same period a year earlier. Its net profit per diluted share slightly declined from $13.87 in the year ago quarter to $13.81 per share. The company has a large sum of cash on hand at approximately $137.1 billion, and every quarter its available cash is increasing. So, why is the market surrounding Apple with negative perceptions?

The main reason is that analysts and investors alike are becoming increasingly concerned that Apple might not be able to release a new product to maintain its profitability. The iPhone and the iPad are facing strong competition from devices powered by the Android OS, particularly from Samsung’s (NASDAQOTH:SSNLF) Galaxy smartphones and tablets.

Samsung had been very successful in innovating its products and has captured a significant market share in the smartphone industry. The South Korean electronics manufacturer shipped approximately 33 million units of the Samsung Galaxy S3 in the second half of 2012.

The Samsung Galaxy S4 has received positive reviews, an indication that the device will achieve high sales. The device is no doubt a strong competitor because of its features and lower price compared with the iPhone.

According to Jefferies’ analyst Peter Misek, Samsung and Apple Inc. (NASDAQ:AAPL) have equal satisfaction ratings from customers. If there’s no major difference between the high-end Samsung and iPhone, there’s no reason for consumers to pay a higher price.

Based on Jefferies’ global analysis of the smartphone markets, the incremental growth for smartphones is happening in emerging markets where a $350 to $450 iPhone maybe too expensive for consumers. He believed that Apple’s profit from the iPhone may have peaked in 2012.

Goldman Sachs Group, Inc. (Goldman Sachs) removed Apple from its conviction list and lowered the stock’s price target, citing a valuation that is “remarkably depressed” and a recent product cycle that failed to drive its anticipated market share and new user growth.

Three-point solution