Posted January 26, 2013 by Katty Warnes in Technology

Apple Inc no more a value buy for investors- INTC, HPQ, T, IBM, MSFT


Northern, WI 1/26/2013 (noesisstar) – Commenting on Apple Inc. (NASDAQ:AAPL)’s financial performance, some analysts are of the opinion that Apple Inc. (NASDAQ:AAPL) is being dubbed as a “value stock” now.

On Jan. 23, Apple declared its lowest growth for many years and expected the slowdown to continue. Shares of Apple dropped 12% after results were announced and lost its market cap by as much as 35% since September.

Years of admiration and acceptance of Apple’s iPod, iPhones and iPad had always proved Wall Street wrong in its forecasts for the company. But now, after entering a phase of slow growth, it is becoming an imitation of other “value stock” companies like AT&T (NYSE:T) and International Business Machine Corp.(NYSE:IBM). But for Apple, the slowdown in growth seems much rapid.

Rising Challenges

The first quarter results display a somber outlook to the future of Apple as a viable investment option. There is much more rivalry with Samsung, Google Inc. (NASDAQ:GOOG) and Amazon. The iPhones, though very popular, falls in the niche of a Smartphone market that is becoming overwhelmed.

Apple Inc. (NASDAQ:AAPL) CEO, Tim Cook, has brought in drastic measures in the administrative structure when he became CEO in October.

He restarted the payout of dividend which had been stopped since 1995. Apple’s dividend yield stands at 2.35% compared to International Business Machine Corp. (NYSE:IBM)’s 1.66% and AT&T’s 5.33%.

New Forecasts

Apple has signified that it is becoming a more dependable company. Sales projections for the second quarter are estimated at $41-$43 billion and a profit drop of about 17%.

But to turn into a real “value stock” in the real essence of the term, Apple will have to begin doling out the extra cash of $137.1 billion that it is sitting on. Its dividend yield trails behind that of Intel Inc. (NASDAQ:INTC) which pays 4.3%, Hewlett-Packard (NYSE:HPQ) at 3.1% and Microsoft Corp. (NASDAQ:MSFT) at 3.33%.

The company has given away $4.5 billion for dividends and share repurchases in the last quarter with future potential of increase.

Inevitable Slowdown?

Apple’s slowdown had to happen eventually taking into account the size of the company. It posted sales figures of $156.5 billion last year. An analyst, Michael Walkley, said “The days of Apple’s meteoric rise seem to be over.”

If the rapid growth era has to be revisited, then Apple Inc. (NASDAQ:AAPL) would have to come up with a real extraordinary product.

Apple Inc. (NASDAQ:AAPL) shares were down by 2.36% to $439.88. Intel Inc. (NASDAQ:INTC) shares were up 0.05% to$20.96.

Katty Warnes

Katty Warnes was a reporter at NBC Nightly News, where she works with editor Brian Williams. She most recently traveled to Joplin, Mo., where Williams anchored Nightly News and covered the aftermath of that devastating tornado. Katty Warnes has traveled to over 20 countries with Williams, including Egypt, Afghanistan, Indonesia and Iraq, since she became the reporter and editor in 2004.