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Why Apple could be dead money for the next decade

Talking Numbers

Apple's best days may be behind it, says Paul Sagawa, head of Technology, Media and Telecom at Sector & Sovereign Research.

If you think Apple's most recent quarter was a let-down, get ready for see more of that down the road.

According to Paul Sagawa, head of Technology, Media and Telecom at Sector & Sovereign Research, once-cutting edge Apple is on its way to a lackluster existence. Several days ago, Sagawa's research note "Is Apple the New Microsoft?" created a buzz in the financial community. In an interview with Talking Numbers, Sagawa explains why the Cupertino-based company is looking more and more like its rivals in Redmond.

"You've got to find a place to get some growth on the top line," says Sagawa about Apple's predicament. "If not, all of the cash flows in the world won't get investors that excited and your multiples will never expand."

Sagawa sees Apple's problem as being in crowded industries. "They're competing in high-end smartphones, high-end tablets, [and] high-end laptop computers," says Sagawa. "Those are markets that are pretty darn well saturated."

(Read: Smartphone shipments surge as Apple's share tumbles)

By not actively pursuing high-growth, low-end products, Sagawa believes Apple's choices are limited to either taking market share from its current competitors or inventing a new line of business. But, even with the latter, it will have to be significant.

"You're going to have to come up with some new hero product that's big enough to move the needle for a company with nearly $200 billion in revenue," says Sagawa.

And, that's potentially why Apple's future may be a string of disappointments to investors.

"They've been the most innovative company of the last decade in all of tech," says Sagawa. "But, unless there's something that we don’t know about that can be a $50 billion business for the company, you're looking at a low single-digits grower."

(Read: Apple won't make investors happy until it innovates again, say pros)

At the same time, Sagawa doesn't expect Apple to give back some of its $159 billion in any significant way.

"Apple is a company with a very strong culture," says Sagawa. "It's almost like a religion to it. They don't do big acquisitions. They don't give back money in dividends. It's just so against their nature."

To see the entire interview with Paul Sagawa on what's next for Apple, watch the video above.

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