Is Apple in Trouble?

A year ago, we wouldn't be singing this tune, but it looks like Apple (NASDAQ: AAPL  ) fans (and shareholders) may be in for yet another pinch as the company released an unsettling bit of news late Sunday. The market, as usual, overreacts to this information, but investors do need to consider the idea that the iconic technology company has its work cut out for it going forward. As Apple faces tepid demand for its flagship device, what should investors think going into 2013?

Dun dun DUN!
Don't worry, I am not going to turn this into (too much) of a sensationalist article heralding the end of Apple's reign of joy. But, as someone who was trying to tell people nine months ago that this wasn't an impenetrable machine of profit, I feel entitled to some degree of "I told you so." OK, ego checked.

Late Sunday, sources familiar with the situation told The Wall Street Journal that Apple's iPhone component orders were substantially cut based of weak forecast demand for the devices. Specifically, screen orders were cut in half from the original numbers.

Now, depending on where the product is in its lifecycle, there is nothing to be worried about by a drop-off in demand. But we are only four months into the iPhone 5. If this is indeed a sign about waning interest in the iPhone 5, then it's an extremely unsettling event to me.

Now now, children
Let's be real: Apple remains the most relevant and influential tech company in the world. Sure, Google kicked things up a notch last year, and Samsung proved its lawyers had just as much chutzpah as Apple's, but this remains the company that can announce a doggie door was installed in Tim Cook's office and people will line up to see it.

Android devices may be the worldwide leader right now according to the numbers, but that is the work of many companies (Google, Samsung, HTC, etc.). The truth is, Apple doesn't need to be the No. 1 purveyor of all things "smart" in order to be a great company (and stock). And it won't be a year of losing market share anyway, not with a fifth-generation iPad rumored to grace us with its presence as early as March.

Apple does need to restore some of that mystique that it has become known for, though, to keep us hooked. iPad 4 -- What was that? A CPU improvement and a minor camera change -- that's small potatoes. Being the most innovative, disruptive, impressive company on the planet, Apple must continue to knock our socks off. If that means an iPad 5 that can pour me the perfect Old Fashioned, then so be it. We all have to make sacrifices.

The bottom line is, Apple is kicking off the new year with some less-than-pleasing news. It seems the weakened demand comes as a surprise to even the company, and by a wide margin (referencing the slice in screen orders). While I think the company will continue to be a class-leader, it's going to need to reaffirm confidence for those who are, with good reason, nervous. 2013 isn't 2012, or 2011, and one can only rest on its laurels for so long.

iPad 5, iPad mini 2: I am eagerly waiting my Old Fashioned.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 14, 2013, at 7:09 PM, dwilh51183 wrote:

    APPLE CUT ORDERS SO THEY COULD START ON IPHONE6

  • Report this Comment On January 14, 2013, at 7:15 PM, dwilh51183 wrote:

    I HAVE A BLOCKBUSTER PRODUCT FOR APPLE AND TIM COOK. PATENT APPROVED BY USA GOVT. APPLE WILL NOT EVEN CALL ME BACK, YET THEY WILL PAY 21 MILLION FOR A STUPID SWISS CLOCK LOGO.

    MY PATENT WITH THEIR HELP WOULD MAKE APPLE BILLIONS HAVE MR COOK EMAIL ME CALL HIS OFFICE AND BUG HIM OR THE STOCK MAY CONTINUE TO SINK

    DWILH51183@AOL.COM

  • Report this Comment On January 14, 2013, at 7:24 PM, Thompr97 wrote:

    Apple didn't release this information. And none of it takes any sense anyway. In what world doesn't expectation of 65 million iPhones in the March quarter make sense? This number certainly wasn't even close to baked into the price. So why would a supposed 50% cut from a very large, unbelievable, and unexpected number result in such a reaction?

    It seems to me that absolutely every body is reacting to a simple headline and not even considering the details. Well, the truth will be known in about 10 days. And I expect that the last thing we will find out is that iPhone demand is "tepid". Absolutely every piece of data that we've had from the marketplace so far has suggested the opposite. And this rumor based on a hypothetical starting point of 65 million is dubious to say the least.

    Thompson

  • Report this Comment On January 14, 2013, at 7:34 PM, dwilh51183 wrote:

    I think all these reporters and journalists are" Apple bashing" to try and get a huge sell-off or capitulation so they can jump in and buy AAPL at a lot lower price... and then they will all start writing positive articles about Apple. it's a game , manipulation by wealthy investors.

  • Report this Comment On January 14, 2013, at 7:50 PM, Ostrowsr wrote:

    There are many explanations for cutting orders. Was ...."on weak forecast demand" Apple's words or just made up by the author?

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