Investors told to show patience while Apple faces ‘significant and competent competition’

Apple Innovation Analysis

One of the things that has made Apple (AAPL) such a success over the years — that is, its quiet focus and its general refusal to overreact to investor noise — has recently got the company into trouble. Why? Because some Wall Street analysts want Apple to respond more quickly to the challenges being presented by the rise of Samsung (005930) as a legitimate force in the smartphone market. But Barron’s points us to a new research note from UBS analyst Steve Milunovich, who says that investors will need to be patient and not expect the sort of explosive growth that the company exhibited last decade because it is facing more “significant and competent competition” in the consumer electronics realm than it has ever faced before.

In fact, Milunovich thinks that the only way Apple can ever return to the sort of growth it experienced between 2007 and 2012 is with “innovation in new categories,” which is something that will inevitably “require investor patience” since the company has historically refused to rush products onto the market to capitalize on market trends.

“Most companies would rush out a 5-6” phone,” writes Milunovich, referring to the current popularity of “phablets” such as Samsung’s large Galaxy Note II.  “Apple probably won’t.”

Source:
Barron's
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