Can the Apple Bear Be Killed?

NEW YORK ( TheStreet) -- While we're all celebrating new highs in the Dow Jones Industrial Average, Apple ( AAPL) remains in the doldrums.

At its current value of about $430/share, it's 270 points below its October high of $700. Over a quarter of a billion dollars in value has been destroyed. Doesn't sound like much in a market whose value is approaching $20 trillion, according to the Wilshire Index.

But consider this: Since October's Apple high, the Wilshire has advanced only a little more than 1,000 points, adding about $1.2 trillion to the market's value. If Apple had just stayed where it was, that figure would be about $1.45 trillion. For every $5 in total stock market advance during the period, Apple by itself lost the market $1.

The point is that what happens to Apple does matter to the total market. Even at its present depressed level, $400 billion is nothing to sneeze at.

Writers here at TheStreet.com are as confused as anyone else about what's going on. Rocco Pendola blames management. I'm more inclined to believe that everyone was "in" at $700 so there were no more buyers, and a rush to the exits ensued.

I personally believe Apple is just one solid press conference away from being a $500 stock, and one hit product away from being a $600 one. Mere rumors of an iPhone 5s sent the stock up 2.5% on Tuesday, TheStreet reported.

Doug Kass says Apple remains fine for trading and that he recently made a little money on it. Kass made the bear case in September, so his words here carry weight.

His earnings estimates are still below consensus, yet he's predicting nearly $42/share in 2013 earnings, implying a forward PE of just 10.1. And his bearish case sees earnings growing 10% per year. I think Kass sees Apple as fairly valued.

Intel ( INTC) currently carries a PE of 10.1. Analyst estimates for its earnings this year, according to Yahoo Finance, are $1.94/share, and for next year $2.10. Which would you rather own?

Apple's business problem is basic. Its markets have moved quickly, so while the iPad is only four years old its market is fairly mature and the iPhone's market is practically ancient. Value pricing is called for in these cases, but Apple doesn't do value pricing -- it only does premium pricing. Thus, Apple has lost share and should continue to lose it.

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