Opinion: Recent Issues Signal Potential Top for Apple (AAPL)

October 8, 2012 9:18 AM EDT
Back when the iPhone 4 debuted, many folks complained about the reception of the device. Later, it was found to be caused by the design of the antenna, which was wrapped around the device in three segments for their respective purposes. Apple (Nasdaq: AAPL) told users that they had, in fact, been holding the phone improperly. That answer wasn't good enough and it ended up leading to the company issuing free cases to combat a problem of the gap between different antenna's being bridged by the user's hand.

No big deal. Shares are up markedly since then.

Now, Apple is showing more weakness. Over the last few weeks, the big stories for the company were missing (possibly rich) iPhone 5 sales estimates, a defunct mapping application, and a mysterious "purple haze" that appears when users take photos with a bright light in the frame.

For the maps app, Apple CEO Tim Cook issued an apology last week and suggested that users download a different app for now. That's somewhat uncharacteristic for an Apple CEO.

On the sales numbers, the issue may be related to the technology implanted in the advanced display panels. With the process taking longer and requiring higher skill and materials, Apple has found itself with a shortage of devices to meet demand. That may have worked in the past to drive sales (can't meet demand!), but today's consumer doesn't want to have the latest technology six months after a new device is released.

Then there's the camera issue. Though it might seem a little overblown, just imagine how important a camera is to a smartphone. At an event and want to capture the moment quickly? Don't have the funds, steady hands for an SLR? Find that voice-recording what you're looking at just doesn't seem to cut the mustard? Thank heavens your smartphone has a high-tech camera. But, all that amounts to nothing if it doesn't work right.

Apple also may have offended some folks in its response, saying a purple haze was "typical" and users should just "angle the camera away from the light source." The company even suggested "shielding the lens" from the light source.

What is this, the 1920s?

Here's some food for thought moving forward: Apple's next "innovation" is a smaller iPad, potentially a smart TV, and the iPhone 5 was allegedly that last one that Steve Jobs worked on. Since Tim Cook took over, Apple has missed Street earnings views twice (they did best internal expectations) and may be on the brink of a third miss with the recent iPhone 5 shipment issue hitting sales and margins.

Forget about the "fantastic" valuation for a second. Investors aren't blind to the issues either; shares of Apple are down 6.8 percent since closing over $700 in September. It might just be a typical pullback following a strong run, but investors are likely to scrutinize the company if fourth-quarter results fail to meet expectations. Those results are expected out on October 25th.

Ahead of the bell, shares of Apple are indicated lower.

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