Apple succumbs to the $500 billion market cap curse

Expectations often trump reality in the stock market.

In its latest quarterly earnings release, Apple (AAPL) reported a record 47.8 million iPhone sales, $54.5 billion in revenues and projected revenues of $41 billion to $43 billion for the current quarter. But analysts had anticipated 50 million iPhone sales, $54.6 million in Q1 revenues and guidance as high as $45.6 billion for the current quarter.

Apple shares plunged after the earnings announcement and shares were down another 11% by mid-morning Thursday.

Jeff Macke, co-host of Breakout on Yahoo! Finance, says Apple shares have peaked.

?Now it?s just a matter of whether or not [Apple] becomes one of the previous list of companies that obliterated shareholders since they hit over $500 billion,? he says. This list includes Cisco (CSCO), Intel (INTC), Microsoft (MSFT) and General Electric (GE). ?So far Apple has given back over a quarter billion dollars of market cap,? Macke adds.

?When you get that successful?picture Wal-Mart (WMT), Microsoft -- there?s nowhere to go. You run out of ideas,? says Macke.

Related: Apple Could Fall to $350 But More Likely a "Bear Trap": Ritholtz

He recommends three ways Apple can reinvent itself:

• Fire CEO Tim Cook. ?The biggest questions [about Cook] were whether or not he could be an innovator, whether he could replace Mr. Jobs, who was an icon, a legend...that question has been answered," says Macke. He?s innovated nothing and failed at his core competency in operations, Macke argues.
• Hire someone to run the retail stores?a position now unfilled. ?They need to get a new guy in there?ideally Ron Johnson?.bring the guy back," says Macke. Johnson held the job previously and excelled at it, then left to run beleaguered retailer J.C. Penney.
• ?Do something? with the $140 billion in cash on hand. ?Put the money to work," Macke notes.

Tell Us What You Think!

What 1, 2 or 3 changes should Apple make to revive the stock?

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Apple's Savior: A New Cheaper iPhone?

Source: http://finance.yahoo.com/blogs/daily-ticker/apple-succumbs-500b-market-cap-curse-173516684.html

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