The idea that Apple (AAPL) is a growth company died last night. The company had been clinging to the notion that its best days were in front of it for years. Alas, the circle of life applies to all things on earth be they human or machine. Those who thought Apple would be the first organization in history to grow forever are being punished for their faith this morning.
Apple obituaries are gracing the cover of every major newspaper in the country today. Read them if you want, but realize they are at least four months too late to do anyone any good. I'm not here to warn you. I did that already here, here, here and a bunch of other places. It's not worth a rehash of what went wrong.
What matters now is fixing the company. Having consulted for a major firm and traded 100's of millions of stock as a hedge fund manager and private investor, I'm going to take one for the team and tell Apple how to fix itself, free of charge.
Fire Tim Cook
Cook took the reins at Apple in August of 2011. He came in with the reputation as an operator and seen as the man in charge of creating and maintaining Apple's tremendous supply chain. The only questions were whether or not he was able to manage innovation.
Since Cook arrived Apple has missed Street estimates about half the time and released no earth shaking new products despite endless hints that a TV revolution was imminent.
Last night Mr. Cook said Apple's sales were inhibited by product shortage. He said it as though that was a) a good thing b) the fault of Apple's suppliers. Neither is true. It's Cook's job to make sure Apple is has the products it hypes.
The least charitable view is that Cook has gotten worse at his core competency and failed to fix his weaknesses. It's time to give him the hook.
Rehire a Merchant
Since Ron Johnson went to JC Penney (JCP), Apple has been through 2 retail heads. The job is currently unfilled.
JC Penney is failing under Johnson and Apple stores are showing glaring signs of weakness. It's time for Apple to buy out Johnson's contract and bring him home. Failing that, hiring anyone with a retail vision and letting that person keep the job for more than 10 months would be a start.
Innovate, Don't Tweak
Apple TV has been hinted at for years. In the meantime Samsung, Sony (SNE) and just about everyone else has come out with huge HD TVs with wi-fi connections.
Apple's "new" products since the release of the iPad have involved changing form factors, power cords and adding colors. Last night Cook said Apple still has "immense interest" in TV. That's good because no one else is lining up to buy a $5,000 television.
Innovative products that fail don't kill a company but milking the same old stuff forever does. As it stands Apple is operating on the playbook Sony came up with in 1990. It didn't work for them and it won't work for Apple.
Until Apple finds the courage to move beyond its legacy the stock is dead money, at best. Shares will bounce and drop and gyrate, but long-term investors are better off elsewhere.
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