A few days ago, I wrote a column on why I felt that from a fundamental valuation basis,there is nothing wrong with Apple (AAPL) shares. I discussed at length the main reasons why Apple seems to be spinning its wheels. But there are a few other reasons as to why I believe the stock seems stuck at current levels despite violent moves now and then, mostly to the downside.
Let's start with the most recent first. Jony Ive's promotion to chief design officer was announced on May 25, 2015, which happened to be a U.S. holiday -- Memorial Day. The promotion was not announced in the form of a press release from Apple but came via an article in the U.K. in The Telegraph and then confirmed by the company via internal email. That started a nasty rumor that this was Ive's first step out Apple's door.
Nothing could be further from the truth.
Real Money contributor Eric Jackson had an excellent column in Forbes on how he believed that the move was simply to hide Ive's compensation from public view by making him the top design guy, but with no real department of sorts that reports to him. Even though it is more than likely, Ives is probably among the three highest-compensated employees, if not the highest, at Apple. This "promotion" allows the company not to file his compensation details. It could be as simple as that.
My take is equally simple. No one will argue that after Steve Jobs' untimely death, Jony Ive is the man who now conceptualizes, designs and eventually brings to market almost every Apple product out there, and those we have no clue about yet. This promotion simply frees him to do what he does best, which is to conceptualize and design. Along with freeing Ive from the day-to-day administrative drudgery, the move also allows Apple to prepare for the future by grooming Ive's eventual successor. Ives is a design God but he is not immortal. So that's it, it's as simple as that -- nothing more to it.
A second reason that's often mentioned is the perceived arrogance of Tim Cook, the current Apple CEO and Steve Jobs' handpicked successor. Many investors have mentioned to me that TC comes across as arrogant and has done very little to warrant that arrogance. Some say that he is just the bus driver. I don't know where that comes from, but I don't think Jobs would have picked a guy who he thought would only be able to drive the bus, so to speak. Everything I have read about TC is that he is a genuine and supremely smart CEO. I am no CEO fan boy (as most longtime readers know), but credit where credit is due -- there is no denying that TC has done a remarkable job as CEO.
Of course, there is iPhone antenna-gate and bend-gate and all sorts of other nonsense, none of which should have any effect on why Apple is stuck in a rut, since most of that is sheer mudslinging and not worth addressing. Every new product that comes to market, whether it's from Apple or any other company, usually has a few glitches at the outset. These issues are not unique to Apple and never will be.
Finally, how about the theory that the company's market capitalization is too big? That is a funny one, as far as I am concerned. So, is there a market-cap monitor that we don't know about who sits around and says, "OK, this company or that company has reached the market-cap limit and shall not appreciate any further?"
Who decides what the market cap of the company should be? The markets decide that, of course, and in short order a catalyst will emerge that will get AAPL moving higher again, higher market cap notwithstanding. I am not banking on the Apple Worldwide Developers Conference (WWDC), but no one else seems to be either, so maybe that will be the catalyst?
We will find out as early as next week.