Why Apple Shares Should Continue to Stagnate

NEW YORK (TheStreet) -- No matter your bias, you have to admit that Apple's (AAPL) stock recently has stagnated and underperformed.

Of course, history shows us that these periods generally end in another considerable leg (or two) up.
Apple

But, for several reasons, Apple's future might not be as certain as it was heading into past episodes of appreciation. You cannot take the future for granted; it is unwritten.

Let's consider several factors that could derail the many lofty price targets bulls have set for Apple.

Microsoft

Today in Los Angeles, Microsoft ( MSFT) could change the game. With the new cross-platform Windows 8 coming later this year, the company is already prepped to provide Apple and Google's ( GOOG) Android with their first formidable mobile challenge.

However Microsoft chooses to go about it, it needs to gain smartphone and tablet traction, while maintaining its foothold in the computer market. Xbox SmartGlass could hold the key. It comes as no surprise that Microsoft will release this new app -- designed to connect the living room across devices -- in time for the holidays.

Expect an advertising onslaught. And expect PC and Xbox owners to take a long hard look at the new Windows 8-based devices and apps Microsoft releases. There's great potential here for synergy across platforms and devices.

Even if Microsoft's efforts do not pan out or achieve solid results, the mere threat of an actual challenge to Apple and Google's smartphone dominance and Apple's tablet superiority should pressure Apple's stock. Once we get the first quarter of 2013 under our belts, we should have a clear picture of the material impact.

No Steve Jobs to Answer the Threat

Rob Enderle put it best at Forbes this past Friday in an article titled Microsoft: Anticipating The iPad-Beating Xbox UltraPad:
There is no Steve Jobs, who was so well connected he often seemed psychic in his ability to anticipate and kill off competitive products. Finally the iPad is kind of old news now, while people still love it, the terms "magical and wonderful" really aren't used to describe it anymore. It remains an impressive product but not the icon of technology perfection it once was.
Let's take the last first and suggest that if there was ever a time to surprise Apple it would be post-Steve Jobs because the firm likely isn't as connected to competitive events as it once was. Jobs had no problem bending or breaking rules to get information, Tim Cook isn't that kind of guy and he'll be much easier to surprise as a result.

Enderle likely will get ripped for his thoughts, but, with blinders off, you have to admit he makes a valid point.

In much of the article, he jokes about what Microsoft might call its tablet. But, when you cut through the fun he had with the situation, you have a well-connected guy making observations you should not ignore: Microsoft is not playing games with its Windows 8/Xbox-related plans. And this will be the first real competitive salvo Apple has to face without Steve Jobs at the helm or available for consult.

The Next Big Thing

Apple not only needs continued (re)adoption of next generation iPhones, iPads and Macbooks, it also needs its next new product to be an equally as smashing success. By all accounts, that would be iTV.

Even though Steve Jobs likely left plans for the Apple team on many aspects of iTV, he's not around to micromanage the remaining steps and oversee the rollout. This marks uncharted territory for Apple.

More questions surround iTV than any other Apple launch. Not only does it face stiff competition from Microsoft and others in the living room, it has plenty of other hurdles to overcome. Trouble cutting deals with content owners tops the list, despite Tim Cook blowing off the question at the recent AllThingsD conference.

In hindsight, it's almost no surprise that iPods, iPhones and iPads did as well as they did. They're all superior products, offered at relatively reasonable prices, in a sea of recent tech mediocrity. Project yourself into the future and the sailing will not be quite so smooth for a television set, a panel, a remote control or whatever iTV will be.

In a nutshell, without Steve Jobs around, Apple's share price will continue to stagnate. $644 was a mirage. The stock will not establish sustainable legs, retouch its highs and hit the overly optimistic consensus price target of $713.12, let alone absurd projections like $910 from Piper Jaffray's Gene Munster or $1,001 from Brian White at Topeka Securities.

Guys like Munster and White have become cheerleaders rather than useful sources of information. Munster, for example, wants iTV to come out so badly he floats seemingly unfounded rumors about it on a consistent basis. These two analysts are telling clients and anybody else willing to listen that AAPL will return 58.5% (Munster) or 74.4% (White) over the course of the next year. Sounds great, but they're living in the past.

Until Tim Cook proves he can sustain the company Steve Jobs built and Apple pushes aside Microsoft's emerging threat, don't expect shares to hit a new high anytime soon.

At the time of publication, the author was long MSFT.

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

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