Expectations often trump reality in the stock market.
In its latest quarterly earnings release, Apple (AAPL) reported a record 47.8 million iPhone sales, $54.5 billion in revenues and projected revenues of $41 billion to $43 billion for the current quarter. But analysts had anticipated 50 million iPhone sales, $54.6 million in Q1 revenues and guidance as high as $45.6 billion for the current quarter.
Apple shares plunged after the earnings announcement and shares were down another 11% by mid-morning Thursday.
Jeff Macke, co-host of Breakout on Yahoo! Finance, says Apple shares have peaked.
“Now it’s just a matter of whether or not [Apple] becomes one of the previous list of companies that obliterated shareholders since they hit over $500 billion,” he says. This list includes Cisco (CSCO), Intel (INTC), Microsoft (MSFT) and General Electric (GE). “So far Apple has given back over a quarter billion dollars of market cap,” Macke adds.
“When you get that successful—picture Wal-Mart (WMT), Microsoft -- there’s nowhere to go. You run out of ideas,” says Macke.
Related: Apple Could Fall to $350 But More Likely a "Bear Trap": Ritholtz
He recommends three ways Apple can reinvent itself:
- Fire CEO Tim Cook. “The biggest questions [about Cook] were whether or not he could be an innovator, whether he could replace Mr. Jobs, who was an icon, a legend...that question has been answered," says Macke. He’s innovated nothing and failed at his core competency in operations, Macke argues.
- Hire someone to run the retail stores—a position now unfilled. “They need to get a new guy in there…ideally Ron Johnson….bring the guy back," says Macke. Johnson held the job previously and excelled at it, then left to run beleaguered retailer J.C. Penney.
- “Do something” with the $140 billion in cash on hand. “Put the money to work," Macke notes.
Tell Us What You Think!
What 1, 2 or 3 changes should Apple make to revive the stock?
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