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Apple Inc. (AAPL): Analyst Questions Tim Cook’s Sanity as iPhone Rumors Surface

Apple stock

Apple Inc. was at the center stage of bullish versus bearish arguments last week after the firm reported a bittersweet earnings report. You’ll remember that the firm reported decent earnings, but growth appears to be slowing and the firm provided gloomy guidance for the rest of the year. Apple has made some moves that could help drive interest in the iPhone to jumpstart sales; yet, an analyst has opined that Apple CEO, Tim Cook might be playing the fool.

Apple, Inc (AAPL) Tim Cook

Saving the dying iPhone

Over the weekend, Apple revealed a new “shot on iPhone 6S” campaign with iPhone 6S and iPhone 6S Plus photos. The “shot on iPhone” campaign might also include videos shot on the iPhone 6S and we can expect to see some ultra high-resolution 4K footage.  The “shot on iPhone” 6S concept is built on a revamped “Start Something New” Campaign for artwork created with the iPhone 6S, iPad Pro, and Apple Pencil. It remains to be seen if the new campaign will drive interest in the iPhone 6S in order to jumpstart sales growth.

It is no longer news that one of the main reasons Apple has been recording slowing iPhone sales is that the market considers the 6S and 6S Plus models to be mere upgrades over the iPhone 6 and that they are not a “new” model. However, a new report indicates that Apple might release two iPhone 7 Plus models later this year.

A KGI Securities report by the notorious Ming-Chi Kuo holds that Apple is planning to release two new iPhone 7 Plus versions in September. One of the new iPhones will have the usual iSight camera found in all iPhone units on the market now. The second device will reportedly sport a dual-lens camera – the dual-lens camera will improve zooming on the device and make it easy to shoot better pictures in low-light situations.

The new iPhone 7 Plus might have a full HD display, the device might also sport an edge-to-edge display that will remove bezels from the edge of the screen. The iPhone 7 might also be waterproof and dustproof. However, it is somewhat strange that Apple might want to release two versions of the iPhone 7 Plus when the only difference in the two versions appears to be the presence/absence of a dual-lens camera.

Analyst questions Apple’s CEO Sanity

Last week, news broke that Apple might not really have a $200B cash position because the firm is recording rising debts. An analyst at Global Equities Research, Trip Chowdry says that Tim Cook is doing the exact thing over and over again but he is expecting a different result – which is what Albert Einstein defines as insanity. Apple has revealed that it plans to be “very active in U.S. and international debt markets in 2016 in order to fund our capital return activities.”

Chowdry believes that Apple is destroying shareholder value by using up cash and raising debts to pay dividends and share repurchases. Chowdry opines that the firm has spent $110 billion on share buybacks, $43 billion on dividends and debt has skyrocketed to $63 billion; yet, the shares of Apple have lagged the general market. The analyst says, “Obviously, share buybacks and dividends are not working… And somehow the current CFO thinks that doing the same thing over and over again may generate different results.”

Chowdry went on to say that Tim Cook is playing a similar script to what John Sculley (Apple CEO 1983 to 1993) did when Apple started paying its first dividend in May 1987. Chowdry says Sculley was “instrumental in destroying Apple, and evaporating cash from the balance sheet” and it would be dangerous if Tim Cook followed suit.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.

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