For several years Carl Icahn, the billionaire American activist investor, has been one of Apple Inc’s highest-profile shareholders. Last year the value of his stake in the world’s biggest company topped US$6 billion and he has been regularly quoted as insisting that the world’s biggest company was undervalued and exhorted boss Tim Cook to pay out bigger dividends to investors.
Thursday last week he popped up again, on the CNBC business TV channel, to talk about Apple. However, this time, he was not there to demand the company pay out more to its investors. He was out.
Icahn reported that he had dumped every single share he held in Apple, claiming he had made a US$2 billion profit and was done with the company.
He cited concerns about the Chinese government possibly blocking the company from its vast domestic market, which is more important to Apple for sales than the whole of Europe.
Watching the broadcast was Dan Nathan, who runs influential market analysis site Risk Reversal. He, too, believes Apple has big problems.
“The jig is up for Apple,” he said. “The big money has known that for a while. But people love their iPhones so much and the tech press are all fanboys, so people haven’t talked about it.”
It is the end of an era in Cupertino. Four days ago Apple reported its first drop in iPhone sales, sending its shares down again. They are now about 30 percent off their all-time high of US$133, seen in May last year.
Sales of iPhones in China, a crucial market for Apple if it is to continue growing, have plunged 26 percent as that economy stalls and some reports suggest the Apple brand is losing prestige there.
In the US, customers are upgrading their phones more slowly as the differences between generations of iPhones — the 6 to the 6S, for example — become more incremental.
More bullish commentators said a slowdown is inevitable as the smartphone market matures and think Apple will come up with another game-changing product.
The business is still good: Apple pulled in US$50.6 billion in revenue and a profit of US$10.5 billion in profits in the most recent three months. Its chief executive has also shown just how powerful Silicon Valley is by winning a high-profile public battle against the FBI.
“It was 30 years between the Macintosh and the iPhone,” said Jean-Louis Gassee, the former head of Apple engineering who oversaw the early days of the Macintosh. “It takes time for these major waves.”
However, in Silicon Valley, where the motto seems to be “innovate or die,” growth is everything.
And critics said that Apple, famous for its internal culture of aggression and secrecy, has lost that innovative edge.
The company has not had a distinct hit in recent years.
Apple tightly guards sales figures for its watch, but analysts reckon they are slipping in favor of rival Android wearables. Reviews for the new “retina display” Macbook were tepid. A reviewer from tech Web site The Verge liked the “beautiful” machine but found it slow, impractical and expensive, so went back to his older Mac.
“You see, the problem with the future is that it isn’t here yet,” he wrote.
And the company’s music-streaming effort, Apple Music, has been a consumer “nightmare,” according to Jim Dalrymple, a former news editor of Macworld who has been writing about Apple for more than two decades.
However, the service does have 13 million paying subscribers and they are in 113 countries — many more than bigger rival Spotify. This was a bright spot in the recent earnings report.
The most important issue facing Apple now, according to analysts, is how it can expand internationally.
Nathan said that in China, the company’s most important new market, the number of people who can afford an aspirational product like an iPhone is peaking.
“It’s an expensive phone,” Nathan said. “And the high-end has become saturated.”
He said Apple’s best bet would be to expand into the lower end. The company is now doing this, to an extent, with the new four-inch iPhone SE.
However, a past effort at a bargain product, the colorful, plastic iPhone 5C, was widely seen as a flop.
“That was three years ago, though,” Nathan said.
Ben Bajarin, analyst at technology market research firm Creative Strategies, said there was little Apple could have done better, given the broader smartphone market. The company was a victim of its own success, he said.
“There’s contentment with consumers at large, who look at their phones and say: ‘You know, this thing’s pretty great — I don’t know if I need a new one,’” Bajarin said.
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