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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Apple's Problem in One Chart

NEW YORK (TheStreet) -- The former analyst and newly announced venture capitalist, Benedict Evans, had the tweet of the night in assessing Apple's (AAPL) latest earnings results Monday night.

Here's his tweet, Apple growth question in one image. 

It shows Apple's trailing 12-month revenues in billions. And what it shows is that it has hit the top of the S curve. It's mature market time, even though we all think of the smart phone market as new and dynamic.

Horace Dediu also had an interesting visual image in his roundup of Apple's earnings.

Note the bottom left graphic which shows how iPhone's revenue contributions have exploded over the last four years for Apple from a relatively small amount to a juggernaut.

For Apple's stock to start growing again, it has to fix the Ben Evans flat line of the S-curve problem. Of course, as everyone has been talking about, that will take new products. But new products alone which aren't blockbusters will still make it tough for Apple to keep boosting its stock price.

And heaven forbid if the new Apple products are duds. That flat line may even be at risk of contracting if that happens.

And don't think that a stock buyback is a panacea here for Apple. We saw Microsoft (MSFT) do a one-time dividend which was a dud and then followed that up with steady stock buybacks. Yet the stock went down for more than a decade. Why? Investors didn't care about the steady revenue increases every year. They wanted to be dazzled with supernova growth.

Apple right now needs supernova new product growth. I didn't say new product growth. I said supernova new product growth.

Will it be TV? Will it be a watch? Will it be payments? Will it be a phone with a larger screen? It's really hard to say today until we actually see them.

However, to move up from these levels, Apple needs to keep selling all its existing stuff at at least the same pace and then add meaningful new revenue streams. Incremental growth -- even if it's adding new iPhone sales through China Mobile (CHL) or NTT DoCoMo (DCM) for example -- just won't do, from a stock price perspective.

It's still quite possible that Apple can surprise us here to the upside, but when you look at Ben Evans' chart and you think about the sheer size of what Apple sells today, it's no slam dunk to just whip up a few new multi-billion products.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!
DOW 16,918.71 -41.86 -0.25%
S&P 500 1,971.01 -7.33 -0.37%
NASDAQ 4,423.6240 -25.94 -0.58%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs