For Apple it’s almost like 2008 all over again

By Adam L. Penenberg , written on March 15, 2013

From The News Desk

As I write this Apple’s stock is down $270 – to $432 a share from its September 19 peak of $702.10. Eleven days ago the stock traded even lower. Meanwhile, the company that once could do no wrong can’t seem to do much right. Last month CEO Tim Cook had to fend off a shareholder revolt over executive pay (Cook’s compensation increased 51 percent) while arch competitor Android will surpass it in tablet market share; it has already overtaken it in smartphone operating systems.

This has led the company to suffer the ignominy of news headlines like “How Apple is losing its monopoly on magic,” “Apple Inc. stock in trouble,” and “Five reasons Apple is doomed, doomed, doomed.” CNET informs us, “Tim Cook doesn’t like Apple’s falling share price, either.” That’s a far cry from mid-October, when some were predicting that Apple would climb to $1,000 a share – this despite the kerfuffle over Apple’s not-ready-for-primetime Maps app on the iPhone.

All of this recalls another time – 2008, to be precise – when Apple experienced a similar plunge in its stock after a prolonged, vertiginous rise. Like today, Apple had been on a tear until investors began acting like they had suddenly become afflicted with acrophobia. Over the previous 18-month period, Apple’s market cap almost tripled from a relatively paltry $60 billion to almost $170 billion. It had released the lust-worthy iPhone to rave reviews, setting off a stampede of buyers at its retail stores.  Sales of its computers went sky high as Apple quadrupled its market share from 2 percent to 8 percent from what many believed was a halo effect – success of the iPod and iPhone inducing consumers to buy ever more Apple products.

Yet, as December 2007 seeped into January 2008, Apple’s stock started to fall. From a peak of $202 it kept sliding. It fell under $100 a share on October 3rd and kept slipping until it bottomed out at $82 a share on November 21st.  For the next four months it treaded water, when it started back up. Looking at a graph of Apple’s stock price from March 2009 to today is like looking at a side view of a mountain range.

There are similarities between 2008 and now, and they mostly revolve around life after Steve Jobs. Five years ago, Apple’s stock was affected by fears over their mercurial leader’s health. It was public knowledge that Jobs had been diagnosed with a form of pancreatic cancer four years before. Over the summer, when he took the stage at Apple's 2008 Worldwide Developer Conference, tech blogs were abuzz at how much thinner and frailer he appeared. A month later Bloomberg briefly published Jobs’ obituary, which included Jobs saying this about himself: "Remembering that I'll be dead soon is the most important tool I've ever encountered to help me to make the big choices in life." Not long after erroneous reports that Jobs had suffered a massive heart attack and was taken by ambulance to the hospital caused a quick dip in the stock.

Now that Jobs is gone, investors are concerned about Apple’s ability to chart a course within this more competitive landscape. Before Apple was able to easily vanquish competitors like Nokia, Motorola and even the former dominatrix of the desktop, Microsoft. Today it faces better-armed enemies, namely Google and Samsung. It’s notable that in 2008 Apple’s stock fell precipitously at a time stock markets were also heading south, although Apple fell faster and further then the Dow after the housing bubble popped. Now the Dow is kissing historic highs and Apple’s stock is still trending downward.

It almost doesn’t seem fair. Apple continues to rake in the money. Sales are stratospheric. But stocks are all about expectations, and it seems investors are nervous about the company’s future prospects. While Google is soon to release Google Glasses, which have been a must have for celebrities and power geeks, Apple is said to be planning a watch that doesn’t replace your iPhone, it’s supposed to work with it somehow.

Over the past decade plus Apple has had an amazing run, betting the house on products that have proven to be cooler than anyone else’s. The iPhone and iPad have become fashion and design icons. But fashion is fickle. Once you lose the buzz, you become last year’s Prada shoes. Samsung senses vulnerability and has been attacking Apple on this very front with its snarky ad campaign – like the one with the Galaxy S III user holding a place in line for his parents.

The question is: Does the Job-less Apple have more must-have products up its sleeve? Is 2013 like 2008, a precursor to torrential revenue growth? Or are we watching the beginning of the end, when Apple becomes like Sony? A once tech giant that lost its way.

In December 2007, I published a magazine cover story on Apple that laid out the challenges it was facing, and predicted it would run into stiff headwinds. (I even compared Steve Jobs to fashion designer Marc Jacobs, minus the heroin.) I was right in the short term, as the stock lost more than half its value in a year, but wrong in the long run.

With Jobs at the helm, betting against Apple was risky. Without him, this time could be different. Tim Cook is no Steve Jobs. Then again, maybe it won't matter.