Apple's "Bad News Trifecta" — And What Comes Next For the iDevice King
Apple has to have these two "Next Acts" stick ...
There’s an old maxim that “bad things come in threes.” With its shelved car program, a hefty fine from Europe and a bad showing from its Asia business, Apple Inc. (AAPL) may have achieved this “Bad News Trifecta” … over the past week.
Let’s start with that car program.
After 10 years and $10 billion, Apple finally scrapped its electric car development program last week.
It probably should have happened sooner.
It’s obviously a gut-wrencher for the 200 employees who lost their jobs. But once it became clear that the widespread acceptance of self-driving vehicles is further down the road, Apple was looking at developing “just an EV” — which is less alluring from a technology and profit-potential point of view.
From a longer-term strategic standpoint, there’s a “good-news” element to this decision: Apple can turn its focus to AI, a generational opportunity and one that appears to have the company playing “catch-up.”
Then there’s the European fine — prominently featured yesterday in my favorite part of The New York Times (the Business Section).
European Union (EU) regulators hammered Apple with a $2 billion — the result of anti-competitive practices in the music-streaming industry.
The fine isn’t the real issue here: The real story is what global regulators are forcing Apple to do with its App Store, which the company has characterized as an “economic miracle,” says New York Times writer Tripp Mickle.
“Since introducing the AP Store in 2008, Apple has run it largely the same way across 175 countries, right down to the 30% commission it has collected on every app sold,” Mickle said. “The company calls the result an economic miracle. The store has generated more than $1 trillion in sales, helped create more than seven million jobs and delivered Apple billions of dollars in annual profits. But as the App Store approaches its 16th anniversary, a patchwork of local rules is upending Apple’s authority over it.”
That’s good stuff … and is dead on point.
And it brings us to the third hammer blow of the “triple whammy” — the concerning results emanating from China.
China sales of Apple’s vaunted (and ecosystem-fueling) iPhone plunged 24% in the first six weeks of the year, says Hong Kong-based Counterpoint Technology Market Research.
That’s a lot to process.
Apple has a history of meeting and overcoming challenges. And with Apple shares down 8.76% year to date (while the S&P 500 has surged 7.8% and Nvidia Corp. (NVDA) up 85% during the same stretch), the “what’s next for Apple?” questions are growing in volume and emotion.
So Stock Picker’s Corner (SPC) is creating a series of special reports detailing the “Next Acts” that are critical to Apple’s ongoing success.
I want to share two of those “Apple’s Next Act” reports with you here today:
The fact is that there are two types of investment opportunities … “Wealth Builders” and “Wealth Killers.”
We want to find the former … and avoid the latter.
At SPC, we’re here to help you do exactly that.