4 reasons Apple will not reach 700 again per marketwatch

NEW YORK (MarketWatch) — Last September was a great time to be an Apple Inc. shareholder. The stock topped $700, capping a remarkable run in which the shares practically doubled since July 2011.

Even more extraordinary, much of Apple’s (NASDAQ:AAPL) huge advance came after the death in October 2011 of its founding genius, Steve Jobs. Nothing could stop this juggernaut, it seemed.
Read more: The surprising (and untold) genius of Steve Jobs.

Click to Play

Is Apple a value investor's dream?

Growth-minded investors are selling Apple shares to value investors, who are drawn to the stock's valuation and potential for a dividend hike.

It’s been downhill ever since. From its closing peak of $702.10, Apple shares plunged by 37.4% as of last Friday, when it closed at $439.88. The stock has bounced back a bit, but when the world’s most valuable company loses that much in just four months, something must be seriously wrong.

It is. Apple’s competitive position has seriously weakened, and investors are recalibrating their outlooks. Tailwinds have turned into headwinds as tangible and intangible issues alike weigh heavily on the shares. Counterpoint: Brett Arends gives reasons to buy Apple now.

Apple has lost the mantle of the greatest growth stock of our era; it may no longer be a growth stock at all. (The company said executives were not available for interviews.)
Read about what Apple needs now on MoneyShow.com.

Here are four reasons why I don’t think Apple’s stock will see $700 again:

1. Growth in phones is slowing as competition increases

The IPhone is by far Apple’s largest product, comprising more than 56% of total revenue in the first quarter of fiscal 2013. The 47.8 million phones sold, including the new iPhone 5, represent nearly a 30% year-over-year gain in units sold.

Sounds great, but growth has decelerated dramatically, from well over 100% year over year in the third quarter of fiscal 2011.

/quotes/zigman/68270/quotes/nls/aapl AAPL 453.55, -0.04, -0.01%

Apple by day

800

700

600

500

400

F

M

A

M

J

J

A

S

O

N

13

Peter Misek, an analyst at Jefferies & Company, who downgraded Apple to “Hold” last week, told me the smartphone market has “matured” and is “saturated.” He expects global smartphone sales to grow by 17% this year. That’s down from 60%+ in 2011. Apple’s chief rival, Samsung, also warned that the market is slowing.

Meanwhile, Samsung is gaining ground. While Apple’s share of the global smartphone market slipped a percentage point to 22% in 2012’s fourth quarter, according to IDC Worldwide, Samsung picked up six percentage points and now leads the pack with a 29% share.

2. Margins are shrinking

For smartphones, the big growth is in emerging markets, where Samsung and other suppliers using Google Inc.’s (NASDAQ:GOOG) Android operating system are eating Apple’s lunch.

That’s one reason Apple is reportedly working on a cheaper phone , maybe priced at $99 to $149, for emerging markets. The company hasn’t confirmed that.

And only half the iPhones sold by Verizon Communications Inc. (NYSE:VZ) here in the U.S. in the fourth quarter were iPhone 5s as customers bought older, deeply discounted models. (Unlike the iPad, iPhones are subsidized by wireless carriers, so customers pay a fraction of their true price.)

On Wednesday, Verizon’s website featured the iPhone 5 for $199.99, the 4S for $99 and the 4 for…free.

And the new iPad Mini may be cannibalizing sales of the larger iPad, lowering the average selling price by $101.

Net net: Last week Apple reported its weakest quarterly sales growth in 3 ½ years and the slowest profit increase since 2003.

That’s hurting gross margins — revenues minus cost of sales. Misek of Jefferies sees gross margins “staying below 39% and trending lower.” That’s down from a peak just below 45% in the fourth quarter of 2011.

3. Apple is losing its innovative edge

Here’s an ominous sign: Apple isn’t as cool as it used to be.

Samsung launched an in-your-face ad campaign that showed prospective iPhone buyers wowed by a new Galaxy smartphone. Unlike Apple, Samsung makes several models a year and it offers a bigger screen — a strong selling point.

Also, there have been relatively few big changes in the latest iPhone models, except for the Siri voice-recognition personal assistant on the 4S. Releasing a big new model every six months has forced Apple to make incremental, not fundamental, improvements.

Best of MarketWatch

Reuters

Here's the one other story that you can't afford to miss today

/conga/story_of_the_day.html 247800

Which brings us to the elephant in the room.

Steve Jobs was a singular figure in American business, who combined marketing acumen with a highly developed design sensibility. He also was a hard-driving control freak who pushed his staff relentlessly to build products that were “insanely great.”

Result: Apple under Jobs produced five major technological breakthroughs — the original Apple II computer and the Macintosh in his first go-round and the iPod/iTunes ecosystem, the iPhone and the iPad during his triumphant return. ““There’s no company like it in history,” Misek said.
Read Howard’s analysis of “5 Ways to Spot Tech’s Next Winner (or Loser)” on MoneyShow.com.

And although he left behind an outstanding team — including supply chain wiz Tim Cook, now CEO — and possibly a road map for future innovations, no one has the vision and sheer creative genius he did — or the manic perfectionism to make things happen. Jobs is truly irreplaceable.

4. Apple may no longer be a growth story

As margins shrink, earnings growth is tougher to come by. When the momentum stops, growth investors flee like rats from a sinking ship.

Although we haven’t yet seen their most recent quarterly reports, I’ll bet some big growth funds have dumped Apple shares by the boatload. Some analysts even speculate Apple is transitioning from a growth stock to a value stock (it trades at less than ten times projected 2014 earnings.) “It’s happening right now,” Misek said.

The company already pays a decent 2.4% dividend and it has $137 billion in cash. Much of that is overseas and would mean a hefty tax hit if Apple repatriated a lot of it to buy back stock, which the company already has started to do.

CEO Cook may be quietly repositioning Apple as a solid blue-chip stock. That would be a big blow both to Apple’s image and to the cultists who worship the company.

A dividend-paying Apple that buys back its stock like, say, IBM (NYSE:IBM) might be a fine long-term investment, but it wouldn’t be worth $700 a share. And it wouldn’t be, well, Apple.

Howard R. Gold is a columnist for MarketWatch and editor at large for MoneyShow.com. Follow him on Twitter @howardrgold and read his account of the debate between Paul Krugman and Paul Ryan over whether there even is a fiscal crisis on ww.independentagenda.com .

Feb. 1, 2013, 10:31 a.m. EST

Home improvement gets a makeover

Homeowners are being choosier about which projects they undertake

 

By Kelli B. Grant

No longer content with new cabinet pulls or a fresh coat of paint, homeowners are beginning, again, to dabble in home remodeling projects.

Poggenpohl

Poggenpohl kitchens (ARTESIO Walnut)

Contractors say they’re getting more requests for upgraded kitchens and bathrooms, as well as home additions and major improvements that cut energy bills and reinforce structures against storms. It’s a significant shift from recent years, when homeowners were focused on only vital home repairs, “preserving the investment you had,” says Steve Melman, the director of economic services for the National Association of Home Builders. The NAHB’s forecast expects a 2.4% increase in remodeling spending this year among single-family-home owners. Harvard University’s Joint Center for Housing Studies has a rosier outlook. Residential spending on additions, remodels and other major home improvements for October 2012 through September 2013 is expected to tally $145.5 billion, up 19.6% year over year, according to a January report.
Even as remodeling rebounds, however, consumers are looking for ways to save. Prerecession-style, “blowout” renovations like creating a master bedroom suite or multiroom home addition pushed the average remodel tab to between $250,000 and $350,000, says Justin Mihalik, the second vice president of the New Jersey chapter of the American Institute of Architects. Today, the average for bigger projects runs about $100,000 to $150,000, he says — and many people are spending far less. Four trends that are reshaping remodeling:

Cash Beats Credit

Homeowners are largely capping the budget at whatever they’ve saved up. That’s because financing isn’t as readily available as it was during the last remodeling boom — nor can people easily wrap the costs in when refinancing a mortgage, says Bill Shaw, chair of the NAHB’s Remodeler Council and owner of Houston-based firm William Shaw & Associates. Not only has paying in cash led to less expensive projects; it has also fueled the trend of mini remodels, where homeowners tackle, say, just the kitchen cabinets, with the intention of getting new appliances or flooring later, says Sean Murphy, DIY expert for home improvement retailer Build.com. “It’s easier on the wallet,” he says. But consumers should still plan out the whole project in advance, to avoid extra work and costs down the line from elements that don’t match up, such as new cabinets that won’t fit the new, bigger fridge.

Livability, Not Resale Value

Unlike in boom times (or during the “house-flipping” craze), there’s less focus now on the added value a remodel might bring at sale. For virtually every residential remodeling project, “if you sell within a few years, you’re not going to recoup 100% of the cost of that project,” says Melman. According to Remodeling Magazine’s 2013 Cost vs. Value Report, the typical recoup is just 60.6%. That’s up nearly three points from 2012 — and represents the first increase since 2005. With more consumers thinking about long-term livability, experts are getting more requests for smaller-ticket projects that don’t typically add value at sale anyway, such as mudrooms, innovative kitchen storage and outdoor spaces. Older adults who have rethought selling have also created a bigger market for aging-in-place renovations such as grab bars, step-free showers and even elevators, says Tom O’Grady, chair of the National Association of the Remodeling Industry’s strategic planning and research committee and owner of Drexel Hill, Pa.-based O’Grady Builders.

Practical Upgrades

Premium prices for energy- or water-saving appliances and fixtures have come down over the years, making those upgrades more attractive for long-term-minded homeowners. Annual savings for a low-flow or dual-flush toilet average $50; a water-conserving faucet, $220, says Murphy. Energy-efficient roofs, siding, windows and doors are equally popular projects, says Mihalik. (Currently, homeowners can claim a credit for 10% of the cost, up to $500 total, of qualified projects, including insulation, water heaters or roofs. Projects must have been completed during 2012 or 2013. Find details at Energystar.gov ( energystar.gov ). Storm-proofing upgrades, such as wind-resistant roofing, built-in generators and basement drainage, have also gained traction. “It’s exploded since Hurricane Irene in 2011,” Mihalik says. The hope, he adds, is that the investment will help homeowners avoid or limit damage in future years, and maybe cut their insurance bills. But even consumers who aren’t specifically looking for energy-efficiency or storm-proofing may find they need to budget for them. Depending on where you live, upgraded building codes now often require some such features.

Casting a Wide Net

Click to Play

Luxury real-estate agent's blockbuster sales

Alyssa Abkowitz joins Lunch Break with a look at brokers who make only a couple of sales a year — but they earn them a year's salary. Photo: Steve Mundinger.

During the fourth quarter of 2012, remodelers reported a 3.9% increase in inquiries over the previous quarter, according to the NARI. But the number of bids that turned into actual jobs was slightly behind, up 3.5%. “It’s taking much longer to close a sale,” says Shaw. Where boomers might talk to two or three contractors at most, younger couples are meetings with at least twice as many. Recently, Shaw says, he met with a homeowner who had initially reached out to 20 contractors before soliciting bids from seven. “That’s unheard of in previous years,” he says. Experts say plenty of contractors left the industry during the downturn, but work is still limited enough that it’s worth the effort to shop around and get multiple bids. Homeowners’ best bet is still referrals from friends or family who have had work done, says O’Grady. “In the downturn, we lost an awful lot of remodelers that didn’t use the best business practices,” he says. “Anybody that’s low-balling a number today? Either they don’t know their costs or they’re going to come back with a tremendous number of change orders.”

SF Real estate update Amie Chilson

November Case-Shiller Index Released

January 30, 2013 by Amie

The Case-Shiller Index just released their November report, which is reflected in the two charts below. Remember that this is for the top third of sales price-wise in the 5-county San Francisco “metro statistical area.” The city of San Francisco has recovered more quickly and dramatically than the 5-county area as a whole. Each month, [Continue Reading...]

inShare1

2

Filed Under: Blog, Market Trends & Conditions

House Sales in Cole Valley, Ashbury Heights, Buena Vista, Clarendon & Corona Heights

January 29, 2013 by Amie

See the market condition trends for home sales in Cole Valley, Ashbury Heights, Buena Vista, Clarendon & Corona Heights since 1995.

Video Tour 45 San Leandro Amie Chilson

Video Tour of 45 San Leandro Way: St Francis Wood Neighborhood

January 31, 2013 by Amie

Amie Chilson, San Francisco Realtor with Paragon Real Estate Group, Tours a charming Arts and Crafts Home in the historic St Francis Wood neighborhood in San Francisco, listed for $1,988,000.

inShare1

2

Filed Under: Blog, Buyers, Relocation, Sellers, Video

Lost warrior at Asian Art- Amie Chilson

Creative Marketing: Lost Warrior at the Asian Art Museum, San Francisco

February 1, 2013 by Amie

Once upon a time I shipped a full-size Terracotta Warrior, (The Kneeling Archer) from Xi’an, China during my 2-week gourmet tour through that amazing country…I found this new Marketing Campaign for the new Asian Art Exhibit highly creative! “One of our terracotta warriors is lost in the Bay Area. We don’t know how, we don’t [Continue Reading...]

inShare1

The Universe

"Congratulations! Fantastic! You go, baby! I'm so happy for you. No one deserves it more. I love you so much." That's what people say, alan, after a really big dream comes true for a dear friend of theirs. Know what they often say beforehand? "You should be happy with what you have. Don't forget to smell the roses. It's all about you. No one ever died wishing they spent more time working." When you love something enough, alan, work becomes play, perspiration becomes inspiration, and it doesn't matter what others may say. No one deserves it more,     The Universe

alan, nothing is more important than the feeling. Visualize a life of abundance, starting with $10 million in your purse or pocket this week... 10 "million dollars bills" to spark feelings of abundance!

Thoughts become things... choose the good ones! ® © www.tut.com ®

Does FTC help on a credit complaint

Does the FTC actually help when I send them a Credit Complaint?        In years past yes they did. I’m sorry to say that if you now have a complaint with someone such as a collection agency, the FTC passes the information on to a division called the “Consumer Sentinel Network”.      Although the Federal Trade Commission states that this is a method to handle your problems “more efficiently and effectively” it is simply a method for them to “hand-off” these problems to local & state law enforcement agencies.      They state on their website that it allows you the consumer, to search complaints more efficiently and to “save data in your own 100 megabyte online storage center”!            But when we as consumers have a complaint we don’t want to “store it”! We want an answer, we want action! This is simply another way that our Federal Government actualizes more bureaucracy in my perception. If you would like more information here is the link: https://www.sentinel.gov/      So what is your best recourse when you have a problem with, debt collectors, financial institutions, credit bureaus etc…?      Contact your State Attorney General. If you live in a more rural state such as I do you’ll have much better luck. Live in a larger state & you may have a tougher time getting them to act.      New West Credit Consultants does provide assistance in this regard so call us if you have a problem and we will do our best to point you in the right direction or handle the work for you.     Yours in Credit Education,   Thomas R. McKee    Contact me personally: Thomas R. McKee

To unsubscribe write “remove” in the Subject field and click reply.