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Apple: A Great Company, For Now A Toxic Stock

Stocks in this article: AAPL MSFT GOOG AMZN

Sentiment has changed drastically from most of 2012, when Apple could seemingly do no wrong. The world was in love with Apple, with its products dazzling the media, analysts and consumers alike. Now, just consumers appear to be dazzled, judging by the 47.8 million iPhones and 22.9 million iPads sold during the quarter. Apple does not break out iPhone sales by model, but noted that the iPhone 5 was in good supply, while the iPhone 4 was supply constrained (huh?). Wall Street wants more, and the media's not impressed, despite having little, if anything else, that comes close to Apple's quality and innovation.

Amazon's (AMZN) hardware is suspect at best, with its Kindle Fire lineup of tablets. Google (GOOG) can't make enough Nexus tablets to really make a dent. Android holds a dominant market share in smartphone sales, though much of that is due to Samsung, not Google itself. Microsoft (MSFT) is getting into hardware, and sales of the Surface RT tablet have been "modest." Apple has failed to live up to the hype surrounding the company, partly due to its own lofty expectations, and partly due to the outside world.

Right now, it seems as if all hope is lost for Apple. Shareholders, though, would be wise to consider that the second half of 2013 may wind up being better than the first, notes Morgan Stanley's Katy Huberty. Huberty, one of the most respected Apple analysts on Wall Street, removed Apple from Morgan Stanley's Best Ideas list, but noted that catalysts will start to appear in the summer of 2013. These include "a lower priced iPhone , similar to iPad Mini, 2) new iPads, including iPad Mini with Retina Display around mid-year, 3) expanded carrier partnerships with T-Mobile in the US, NTT Docomo in Japan, and/or China Mobile in 2H13/2014."

Apple could also increase its share repurchase program, with Huberty noting that every $5 billion lowers the share count by 1%.

It was recently reported that Cook met with China Mobile (CHL) Chairman Xi Guohua to discuss "matters of cooperation." A confidentiality agreement, however, was signed, so details have not yet been revealed.

If one, or some, of these catalysts happen later in 2013, Apple will be able to get its "mojo" back, and the stock will begin to appreciate. The first nine months of 2012 were beyond incredible, with the stock gaining nearly 70%, then seemingly falling off a cliff.

To me, this is a sign of a broken stock, not a broken company. Apple will again have its day in the sun. Just not right now.

Interested in more on Apple? See TheStreet Ratings' report card for this stock.

-- Written by Chris Ciaccia in New York

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