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Apple Inc. (AAPL.O) has been the unrivaled gold standard in consumer electronics since the iPod turned the status quo for music consumption on its head in the early 2000s, but concern is mounting among investors that the tech giant will lose steam like former tech darling Sony Corp. (SNE.N).
Apple shares plunged over six percent Wednesday, the morning after the company broke the record for the largest quarterly earnings ever reported. Apple forecast weaker sales for the first time since 2003, suggesting “a changing global macroeconomic environment” is coming home to roost in Cupertino, California. The company warns the current quarter could be its most challenging in 2016.
“Apple smells a lot like Sony” said Mark Sebastian, founder of OptionPit.com in an interview with BNN. “Everybody had to have a Sony boombox, a Sony Walkman, and a Sony TV. Now that company might as well be Magnavox.”
Sebastian says investors have the need to “undergo a mental change” when thinking about Apple going forward, shifting away from the perception that the company has what it takes to deliver substantial growth for shareholders.
“You can only sell so many cellular phones. iPad sales stink. Nobody is wearing that hideous watch, and the Mac is just a blip,” he said.
iPhone sales, which account for about two-thirds of Apple’s revenue, rose less than one percent from a year earlier. Mac and iPad sales also came in weaker than expected. CEO Tim Cook said Apple Pay usage accelerated in the second half of 2015, but Sebastian says the company’s mobile wallet is still a “marginal business.”
Sebastian is among a growing number of analysts suggesting Apple stock is maturing into a value play rather than a growth stock. So-called “value” stocks typically generate predictable results accompanied by a reliable dividend, rather than surge on runaway revenue growth.
“It’s going to be a great stock to hold for a dividend. If you are looking for huge market cap upside, I think that ship has sailed,” he said.
Correction: A previous version story incorrectly stated Apple forecast weaker iPhone sales for first time since 2003, rather than sales in general.