Is It Too Early To Write Off Apple (AAPL) As An Investment?

Posted By Tate Dwinnell |  Subscribe in a reader | Comment 0

By Guest Author Frank Owen

It was announced earlier in the week that Apple has lost its ranking as the most valuably publically traded company in the world. With the technology giant’s share prices plummeting, Exxon Mobil surged into pole position after a good performance last year. Apple may only be a few billion dollars behind the US oil company, but columnists all over the world seem to be suggesting that the California based brand has had its day.

The question then is whether or not this is an opportunity to go short on Apple, to leave it for dead, or to invest in the hope that its fortunes will change. To answer this question, we’ve got to look at competitors, and the reasons that Apple appears to be in decline.

It wasn’t that long ago that Apple seemed to be unstoppable. It had the best products available, a huge market share, and one of the best rated brands in the world. If analysts are to be believed, it is in decline for the very same reasons that its competitors lost out. Nokia, Research in Motion and a variety of other companies seemed to be at the top of the game, until they failed to notice changes in the technology market. The same has apparently happened to Apple, meaning rivals like Samsung are suddenly leading innovation and sales. Even Nokia are finding that their fortunes might be changing.

It seems that those who are writing off Apple as a company to invest in have very little faith in the brand’s ability to recover. There are others however, who realise that Apple’s power is not in its twilight; it is still one of the strongest companies in the world, with huge reserves to call upon. If there is any company that can turn its fortunes around, it is most certainly Apple.

There are a great many different strategies open to Apple, depending on where they believe they need to focus efforts. They are certainly going to go head to head with other technology giants such as Google when it comes to mobile operating systems, but Apple has the resources to ensure a high level of profitability.

The conclusion is that it seems far too early to write off Apple. Much of the current negativity is based upon just one quarter, and we’ve seen other huge companies such as Facebook, Amazon and Google suffer disappointing periods, only to recover.

Many investors will certainly have been scared off; there’s no avoiding that. Forex trading experts have even asserted that we could see risk aversion as a result of the company’s unexpected downturn, meaning investors move to havens such as the dollar and yen. For now at least, Apple is still worthy of investment, so much so that going short might only be worthwhile in the very short term. Only after a prolonged period of disappointment can the company really be regarded as past its prime.

 

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