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Morningstar equity analyst Brian Colello on the decline in Apple shares and whether it’s time for investors to add Apple to their portfolios.
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Great transition.
Well despite -- successful iPhone 5 and I've had many launches shares of apple.
You know the story everybody they've -- about twenty per -- Off their all time highs and dipped into bear market territory what is behind the tech giants fall and is now the time.
To buy the stock joining me now morning.
Equity analyst.
-- -- Let's talk about this yet you got a stock that at one point we were saying was gonna not we but analysts were saying it's going to be 700011100.
What.
Happened here.
Well I think there's three factors to look at the first is just pure profit taking even though the stock is down 20% -- -- it's still up 35% year to date.
So you might have money managers taking profits right now especially if you concerned about this -- fiscal cliff.
Especially if you could concerned about capital gains taxes things like that if portfolio managers wanna shed some of their holdings -- shed some of their largest holding.
Or their biggest winner and -- has -- both so we think that's part of it.
On top of that we're hearing more more concern Annapolis lost its touch.
The management shake up kind of adds fuel that fire apple -- has been a bit of an issue so we think there is an investor concern there.
And third in the reason why didn't pop back after earnings is gross margin guidance for the upcoming quarter.
I'm going to stop people want to piggyback fingerprints -- -- you mentioned what happened with the management shake up that happened in the middle of the hurricane I was kind of questionable timing.
But you know the head of the retail stores have been on the job seven months -- mean is this.
Is this the new reality for apple at these knee jerk reactions because -- -- investors get very nervous when he made that move -- to two people out of their jobs immediately.
Sure well I I think ultimately whether the management team whether that Jacob is successful or not it will come down of the products whether.
Apple need to continually improve upon its product the five -- the six IOS seven and if he's come out as great products that are innovative that have features that -- -- competition from android and Samsung and and others I think the shake up makes sense vice Versa if these products is still continue some may think they look stale if that's an issue.
-- then it probably was a wrong move but I think Apple's a story where the management shake -- I think you'll become pretty obvious.
Fairly quickly whether work -- -- not.
Well -- -- one of the things that happened with with regards to apple -- with Samsung came along and there's there was this lag between.
The iPhone four S and the actual iPhone 5 and it -- that that really hurt them Brian.
With consumers and many more went to the galaxy which is now for the first time.
Outselling them volume wise anyway -- so have you gotten a little bit nervous about about the Samsung -- Well I think sense of being a good job of taking advantage of that window in the -- -- in the spring -- three G device.
With a three and a half inch -- the same -- down PS3.
It's four point eight inches had four GL TE.
Now the iPhone 5 take care some of those problems at the four -- -- it's a little bit bigger screen.
I think to be really interesting to see -- Samsung does next to take care of the iPhone 5 because.
Four G network is here to -- there's no five -- so there's no chance to upgrade on that feature.
Four point eight.
-- screen it's going to be hard to make it a lot bigger without turning into a tablet so be very curious to see -- Samsung turns two next to improve the next.
Yeah but -- you see what's happening in -- you what's happening -- it got screens that are so similar in size the bigger screen on the Samsung and then along comes apple would be.
I've had many which you know its -- -- -- 329 or so which sums it was a little expense said.
And that it did and that this is something Steve Jobs never wanted to do he -- he did not want to do an iPad -- he did not want to cannibalize.
On the iPad itself I mean do you think that Steve Jobs as vision.
Is still happening at this company.
I think ultimately it's -- I think Tim Cook is a little more.
I would -- rational and -- of not he's not steadfast in his beliefs that perhaps Steve Jobs was a -- Steve Jobs always.
He didn't want him really distribute cash to shareholders they ended up paying -- dividend he talked a lot about not having the seven inch screen.
It can cook -- -- -- -- an opportunity for smaller -- and and going along with -- I think it is becoming his company which I think you know has to happen -- after.
Steve Jobs is unfortunate passing so I think I think you're seeing it the company sort of come under Tim Cook swing a little bit more.
Farley go over the weekend apple and HCC settled their losses what do you think happens to -- -- -- possibility that we -- -- the the HCC is going to be paying.
On the patents apple.
I think that's a likely scenario I you know -- Again the terms were not disclosed but the you hear about the initial -- that apple wanted to be enjoyed.
Phone makers to pay to -- for some of the patent for things like that apple does have innovation a lot of the software gestures.
And features and things like that I think it's likely that HTC is going to be paying apple that -- I don't know if it's a a large amount or small amount they're means we -- but I think it's TC will be paying apple something thing is apple is so big that it.
If -- won't move the needle on Apple's fair value.
Very much but certainly we -- happy with this sort of resolution to these factors the legal wranglings are expensive and and distracting and and so we like to see that kinda gets settled.
Right Frankel look thank you very much -- Morningstar -- -- gonna continue to follow the stock as we always do Brian thank you.
