Apple Is Like Sony 20 Years Ago: Apple Bear
Apple, which has just reported its first quarterly profits decline in a decade, is headed the same way as Japan's Sony which fell out of favor with consumers 20 years ago, says one commentator who expects Apple shares to fall 20 percent.
The U.S. tech giant, which reported its earnings late Tuesday, beat earnings forecasts and doubled the amount of cash it will return to shareholders. But it disappointed investors with comments on slower growth and a lack of new products on the horizon, pushing its shares lower in after-hours trade.
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Bert Dohmen, founder of investment research firm Dohmen Capital Research Institute, drew parallels between the technology poster child and Japanese electronics giant Sony 20 years ago.
"Apple is like Sony 20 years ago, everyone had to have Sony and Sony always delivered much less than the competition at a higher price, and finally people broke out of the system...People are calling it jailbreak when they finally get away from the ecosystem of Apple," said Dohmen on CNBC's "Asia Squawk Box" on Wednesday.
Sony, one of the world's most popular brands, has lost some of its luster because of Asian rivals taking market share and a lack of fresh innovative ideas, analysts say. Its shares have almost halved in value over the past 10 years.
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Dohmen, who sold out of Apple stock late last year, likened investing in Apple shares to life in a gulag, a network of forced labor camps engineered by the former Soviet Union.
"I had finally decided to get out of the Apple gulag and it is a gulag. And finally when you get out of it, you experience how great life can be," said Dohmen.
Apple shares have fallen more than 40 percent from over $700 per share in September to around $406 on Tuesday.
Dohmen forecasts the stock to weaken further to $322 in the long term, a slide of 20 percent from current levels.
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"I've been a bear on Apple since the high of $705 per share in September 21. Apple is no longer a growth stock and the numbers show that," he said.
Not all analysts were bearish on the stock.
"This is a still a game that Apple largely controls and to an extent they continue to enjoy premium pricing and continue to outsell expectations in terms of shipment volume and in smart phones and tablets," said David Garrity, principal at U.S. research house GVA Research.
"At this higher dividend, we are being paid to wait to see how well the management team can execute," he said.
Apple reported fiscal second-quarter earnings of $10.09 a share on revenue of $43.60 billion versus $12.30 a share on $39.19 billion a year earlier. That was the first time Apple's profit declined in a decade.
According to Dohmen, ever since Apple's CEO Tim Cook took over from the late Steve Jobs in August 2011, the tech giant's product releases have lacked innovation, making room for competitors such as South Korea's Samsung to come in and take market share.
"Tim Cook [Apple's CEO] is a great operations guy... I don't think he's a creative genius. Since he took place every apple product has been a disappointment," said Dohmen.
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"Later this year people will realize that the new CEO of Apple doesn't have the imagination to take the company to the next level and really overleap the competition. Samsung is now way ahead and Apple is really struggling to catch up, the marketplace will find that out next year. It's really a shame," he said