Re: Don't blame Apple for the price drop
The reason the stock price is dropping is not because aapl is not making money hand over fist. It's because there's no more innovation*. In the meantime, others have not only caught up, but left aapl in the dust.
Certainly crApple have become victims of their own success, for years crApple have innovated, but how far can you constantly create a new product because, as mickeysoft have also found out, there is a threshold above which the incremental improvement in a product line is outweighed by the cost of acquiring the latest shiny thing. The iPhoney was a good
logical development of earlier productsinvention, the iPhoney 2 & 3 probably represent significant improvements over the earlier versions, but lest face it, once you have your 8 megapixel pixel camera 64 GB media player internet browser (oh yeah, it makes phone calls as well), where do go from there?
Large amounts of cash are also a bad thing for a company that
develops and improves previous products innovates. Unless you are a cash rich company like Coca-Cola, where innovation consists of bottling london tap water and adding some poisonous chemicals, excessive cash is a liability.
Cash or cash equivalent securities are a safe commodity, unless you have it on deposit in a Cypriot bank (add French, Spanish and Italian bank to that list), but safe also means low rate of return on investment.
Speculators Investors don't like low rates of return.
An excess of cash over that required for working capital represents unused capital (see above), it should be invested to create even more profit or distributed to shareholders = greed not satisfied, and
speculators investors don't like that either.
Paradoxically, and I can't remember the finical ratios to use (rate of return and some others), too much cash also increases the cost of capital ratio for a company.
And the is also the psychological effect of too much cash on a company, It increases risk by creating overly confident management.
Yes, it's crApples fault the share price has dropped, but it will reach a equilibrium point where all these factors will balance out, then crApple will "invent" a new iFad, stock price goes up, market get saturated, excess cash, stock price drops, more bad news because
speculators Investors don't like yo-yo stocks unless they are shorting the stock in the market creating more price instability and so the cycle keeps repeating.