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6 Things Apple Needs to Learn From Facebook, Amazon, Google, Tesla & Disney

6. Make money off of the Apple ecosystem.

Amazon, Google, Facebook, Twitter and Netflix are making a fortune from Apple's ecosystem. Apple has done a great job of squeezing every last penny from hardware sales but there's no denying it has hit the law of large numbers.

Making money within its own ecosystem was something that Apple should have learned from Walt Disney's (DIS) California to Orlando experience. Steve Jobs understood the importance of controlling a closed ecosystem and he immediately recognized the potential of the App Store within a year of its launch. Steve commented that he had never seen anything like it.

The problem here is that Apple hasn't been able to execute. iOS usage data is off the charts. Who is it benefitting? Half of Amazon sales are now performed on smartphones. Facebook is dominating mobile advertising. Where is Apple? It has iAd -- a gigantic failure. It has iTunes Radio. It continues to hold a Worldwide Developers Conference where it showcases Pages, Numbers and iPhoto. iPhoto has gotten creamed by Zuckerberg's Instagram. As Apple sits back, Ebay's (EBAY) Paypal, Square and Amazon are all making major dents in the retail landscape.

Thus far software qualifies as a missed opportunity for Apple. But the opportunity still exists. The problem is it's looking like it might not be part of Apple's DNA.

This brutal analysis of Apple reveals numerous chinks in the armor. I will temper the negativity by stating that long term cycles imply investors should own Apple in 2014 for the iWatch launch just like you should have owned Apple ahead of the iPad launch in 2010 and ahead of the iPhone launch in 2007.

We won't ignore this opportunity as it presents itself, but we do recognize that this earnings season has elevated a new generation of Wall Street winners. Facebook's report was sensational. Mobile advertising is set to explode via Instagram and video ads. Upcoming Facebook apps should boost market share. Zuckerberg is proving to be a smart and capable CEO.

Facebook call premiums remain inexpensive, which is a major bonus for options traders. Today we're adding a 10% allocation of FB September 2014 $50 calls. Netflix's domestic and international subscription growth is more than worthy of a $25 billion market cap. Today we're purchasing a 5% allocation of NFLX April 2014 $370 calls. Under Armor's report showcased massive growth potential in China as its apparel and shoe lineup take share around the world. Under Armour (UA) is a force to be reckoned with in online sales. We've purchased a 5% allocation of UA January 2015 $80 calls. Amazon and Google report after the bell today. Because of Google's high option premiums we will refrain from a flyer position but we are purchasing a 2% allocation of AMZN February 2014 $390 calls.

The bottom line is that there are always ways to make money in the stock market. As Apple deals with structural inefficiencies caused by too many earnings details, momentum killing guidance, secrecy about innovation that inhibits price-to-earnings growth, a lack of acquisitions, too much cash, and too few profits from within its software ecosystem, there are other opportunities for investors.

The honeymoon for Tim Cook is over.

At the time of publication, the author was long AAPL, AMZN, UA, FB, but held no positions in any of the other stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Stock quotes in this article: AAPL, AMZN, CBS, CHL, DIS, EBAY, FB, GOOG, IEP, NFLX, TSLA, TWTR, UA, XOM 
Jason Schwarz is an option strategist for Lone Peak Asset Management in Westlake Village, Calif. He is also the founder of the popular investment newsletter available at www.economictiming.com. Over the past few years, Schwarz has gained acclaim for his market calls on the price of oil, Bank of America, Apple, E*Trade, and his precision investing in S&P 500 option LEAPS. His book, The Alpha Hunter, is available from McGraw Hill.

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