Late yesterday, Apple (AAPL) announced record earnings of $57.6 billion for the last quarter of 2013. The company sold a record number of iPhones (51 million) and a record number of iPads (26 million), both of which contributed to a very healthy profit of $13.1 billion. By almost every measure of financial success, Apple is doing extremely well. Why, then, on the back of record earnings, did Apple’s stock price tumble almost 10%? Why, after being one of the most successful companies in the world for the last 10 years, has its stock price been trending downwards for almost two years? For some reason, despite being one of the most popular, well-known, and desirable brands in the world, nothing Apple does ever seems to be good enough.
The short answer is that Wall Street is a cruel and unforgiving mistress. For two years now, the stock market has been waiting for the next iPhone or iPad, and it simply hasn’t come. As a result, as you can see in the graph below, Apple’s earnings rose meteorically on the back of the iPhone and iPad — but for the last two years, without a new profit driver, growth has trailed off dramatically. Between December 2009 and December 2011, Apple’s revenue tripled from around $40 billion to $120 billion per year; between December 2011 and December 2013, Apple’s revenue only grew by another $40 billion
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