Apple Inc. (NASDAQ:AAPL) has been on a wild ride since introducing its revolutionary iPhone in 2007. After an outstanding performance in the stock market, Apple’s shares have dipped quite a lot since last year. According to many people, Apple has lost its spark and is no longer one of those revolutionary companies.
Despite Apple’s recent performance and a fall in its market share to only 18%, what many people fail to understand is that Apple Inc. (NASDAQ:AAPL) is a brand, rather than a revolutionary company, and is likely to stay a brand for years to come. Brand loyalty is perhaps the company’s biggest strength and even if it fails to innovate, its brand loyalty will save the company for several years.
What Went Wrong?
After taking the touch screen mobile technology to the next level, Apple Inc. (NASDAQ:AAPL) fell behind to Google Inc (NASDAQ:GOOG)’s Android operating system. Samsung Electronics Co., Ltd. (KRX:005930), the major player in the Android market, is the company’s biggest competitor, and most of the damage was done by Samsung Electronics Co., Ltd. (KRX:005930) after it came out with its Galaxy line of smartphones.
Apple Inc. (NASDAQ:AAPL)’s failure to adapt the latest trends in the industry also showed weakness including larger phones and cheaper models. Apple’s products were targeted towards a specific type of audience while Samsung released several different models.
Valuation
Apple Inc. (NASDAQ:AAPL) was perhaps one of the worst performing companies in 2013, in terms of its stock performance. The company has been on a constant decline since October last year when it crossed the $700 mark. With a market cap of over $391 billion, the company is currently trading around $417-$418 and one of the major reasons of this downfall has been Apple’s constant loss of market share from the industry. Despite Apple’s buyback and dividend increase plan, the company’s last earnings report didn’t leave many happy faces as it just came in line with estimates at Wall Street and showed a YoY decline. .
Sony, on the other hand, is currently trading around $21-$22 with a market cap of around $22 billion. Sony Corporation (ADR) (NYSE:SNE)’s shares have performed well this year, rising from the $12 mark in January. The new restructuring plan and the “One Sony” brand seem to be working well for the company as it made its first full year net profit in five years. The new management is probably Sony’s major turnaround point, and the company is determined to excel in all its divisions. Sony’s smartphone division has also seen major changes and the new smartphone line is too good to ignore. After its flagship Xperia Z smartphone, Sony’s upcoming phablet, the Z Ultra, should also make headlines in the future in both the tablet and the smartphone market.
Nokia and Research In Motion Ltd (NASDAQ:BBRY) are finding it hard to keep up in the industry and are trading at $3.65 and $9.55, respectively. While there might be some hope left for Nokia based on its Lumia line of smartphones, things look over for BlackBerry.
The company’s shares dipped again after it made a shocking loss of $84 million. After making the BB10 platform its future, I had a view that BlackBerry’s good days were behind it and that it was only a matter of time when BlackBerry would start winding up. On top of that, te upcoming BBM service on Android and iOS should also mark the end of the company as its signature service is no longer limited to its smartphones.
Apple: Still a Lot to Be Optimistic About
Let’s turn our attention towards Apple, again. I still believe that Apple is a buy right now and that the company’s shares will bounce back in the near future, even if they don’t reach the $700 mark again.
