Apple's Continues Decline

Michael Teague  |

Last week may have seen Apple (AAPL) once again topping Forbes’ list of most admired companies, but on the market it was one full of setbacks and complications. The anticipation leading up to Wednesday’s annual shareholder meeting was the result of two unresolved issues currently facing Apple.

First, there is the highly publicized drama of the company’s $137 billion in cash reserves.  Greenlight Capital’s David Einhorn may have dropped his SEC suit against the company, but the whole affair has put intense focus and pressure on the question of what Apple should do with this money.

Secondly, this comes against the backdrop of the company’s recent inability to retain its dominance of the all-important mobile phone/device market.  Samsung (SSNLF) and Google (GOOG) have been more or less caught up with Apple in this arena, leading many to speculate over what sort of game-changing innovation the company might pull out of its hat in the near future.  There is endless speculation about what is next- watches, television, cars- but concrete details are scarce.

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To make matters worse, a rumor was floated the evening prior to the meeting that Apple would announce a share-split the next day.  The company’s shares took a mini leap after hours, but the next day brought no word about a stock split (much less a new product-release), leaving all the anticipation unresolved, and prices closing out the week at $430.47.

The company’s share price has suffered as a result, currently on a downhill trajectory for almost two consecutive weeks, in a year that has seen Apple’s return rate retreating 18.65 percent (over the past six months, the figure is almost double, 35.6 percent).

Not only has the company’s share value been in a steady decline, but the competition has been making gains, and not only in terms of sales and earnings.  On Friday, Apple met with a legal setback in its patent suit against one of its biggest competitors on the mobile market Samsung.  A judge reduced Samsung’s $1 billion in fines it was to pay to the company by $450 million, and has ordered a new trial to settle still-outstanding issues between the two rivals.

The new week does not seem like it is going to be any nicer for Apple, however. By Monday midday, share price was down over 7.5 percent, to 422.87.

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