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Apple’s stock closed at $585.57 on Friday after hitting $600 in anticipation of the iPad 3 release. Not bad for a stock that was $400 late last year and that, according to a new 12-month price target from Morgan Stanley, could reach $960 in a bull scenario.
The bear scenario, according to Morgan Stanley would be a return to the $400 level, now a distant memory for shareholders.
But what could send Apple’s share price dropping? Overly high and unrealistic expectations about the iPad 3 have been one thought.
Global Equities Research Weighs In
There are others--some minor, some fundamental—according to a new research note from Global Equities Research called Apple Bull & Bear. In it, the research organization lists several factors that could push Apple into bear territory. Some of these include:
Steve Jobs is gone. Now Apple holds about 10% to 15% more staff meeting than before and the typical decision process is taking on an average 15 days more.
New college graduates seem to prefer to join Facebook and Google. Apple is third on their list. Also Apple has been successful in hiring lateral talent from Cisco, but VMWare has been able to attract more hires in this category than Apple.
iPhone fatigue. Its form factor is heavy, bulky and getting boring.
Apple's patent defense against Android. It is significantly weaker following Google’s acquisition of Motorola Mobility. Apple has only about 1,300 patents in mobile space, while Google now has now more than 17,000.
Apple’s lead on the desktop. It may narrow with the launch of Microsoft Windows 8.
I asked Azita Arvani, principal of the Arvani Group for her thoughts. Her decidedly bullish response:
About hiring: Google and Facebook are both great companies, along with VMWare. But Apple is also an amazing company and top talent would have some very good options to choose from. This view that the top talent would just want to work for a few companies … ignores the fact that these companies are fundamentally different with different products, cultures and business models. So, while there might be an overlap in their target market, it is like comparing apples and oranges.
Apple iPhone form factor fatigue: It is true that the form factor is ready for some refresh and I expect we will see some of that in iPhone 5. But it also has a distinctive look and feel that makes it classic and recognizable, similar to the way we recognize a BMW.
The Google-Apple (and Samsung for that matter) patent wars: In patent wars, it is the quality not the quantity that matters. So, we cannot compare 1,700 Apple patents directly with the 17,000 from Motorola Mobility. In each of these cases, there are only a few tens of patents that really matter. Google has strengthened its position and its Open Handset Alliance partners’ position to some degree. And, that should help but we don’t know the extent of impact on Apple product sales.
Microsoft Windows 8: Microsoft will take its time to bring out this product, which will have to run on ARM as well as Intel processors. And, when it comes out, it will be a first generation operating system with all the challenges for a new release. So, there will be a year or two before it makes a big impact on desktop arena.
The post Steve Jobs Apple: Undoubtedly, Steve’s presence will be missed. I don't know this for a fact but it won't be surprising if decision-making takes longer. But I also know that Steve depended on many amazing people to get the job done. And, those amazing folks are still at Apple. So, I don't see that as a huge issue.
“If anything,” Arvani concludes, “I would worry more about Amazon tablets and their integrated devices + content + commerce model to displace some of the Apple user base.”
Windows 8 Tablet Too
Another possible competitor could be the Windows 8 tablet, which Nokia has said it plans to develop, along with a new crop of ultrabooks expected on the market in the second half of this year. “With all the fuss over the iPad 3 it is easy to forget that we are just a few months away from a Windows tablet,” Charles King, principal of Pund-IT, says.
“It is good to remember that a lot of companies out there that are trying to find a place in the tablet market and I think the latter half of this year will be particularly interesting.”
