This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Apple Retests Its Consumer IQ

Apple's (AAPL - Get Report) stock is soaring and its revenue is booming. The computer maker has a hit product and is getting loads of favorable press.

So what's wrong with this picture? Nothing, if you ask investors who have enjoyed a run-up of 24% in the stock this year after a 200% surge in 2004.

But more-skeptical observers might note that Apple's been here before. And even some of those bullish on Apple's future admit to some doubts about whether the company can maintain its momentum.

"That's the million-dollar question," said Tim Deal, an analyst with Technology Business Research. "When you're dealing with a consumer-focused company like Apple, it's very difficult to anticipate the consumer wind. Consumer interests sometimes have no rhyme or reason."

While Apple seems to be in tune with consumer demand right now, it's had a tin ear many times in the past. As recently as its 2001 fiscal year, for instance, the company saw revenue plummet 33% amid a drop in demand for its core Macintosh computers. In the mid-1990s, revenue slipped three years in a row.

And that's just in recent days. Those with a long memory may recall that the company saw initial success and even market dominance with its Apple II and original Macintosh computers only to lose steam and market share to fierce competition.

"Apple's success is cyclical," dependent on maintaining a high interest in its products, said Deal, who has no investment in the company. "There are certainly examples in its history where it's failed to do that."

The keys for Apple, analysts say, are to keep up with demand for its hot products and to continue its innovative products. The first requirement is a problem that has frequently plagued the company, said Gene Munster, an analyst with Piper Jaffray.

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
DELL $0.00 0.00%
AAPL $131.44 0.89%
MSFT $47.94 0.14%
FB $82.10 0.70%
GOOG $555.45 -1.70%

Markets

DOW 18,070.57 -9.57 -0.05%
S&P 500 2,111.93 -5.76 -0.27%
NASDAQ 5,060.8070 -31.2780 -0.61%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs