(An earlier version of this story ran online.)
Of the more than 60 analysts covering Apple (AAPL), only one rates the stock “Short Sell,” according to Bloomberg data: Edward Zabitsky of Toronto-based ACI Research. That’s a risky call on a stock that’s returned more than 50 percent a year on average in the past decade. Apple has been slumping: In September, the stock hit an all-time high of $705 before sliding to $519 on Dec. 17. Zabitsky, ranked top semiconductor and semiconductor-equipment stockpicker by analyst tracker StarMine, says his bear case for Apple comes down to increased competition, the diminishing appeal of its closed-architecture App Store experience, and questions about the company’s management and ability to innovate more than a year after the death of founder Steve Jobs. His four-part reasoning:
1. Competition from Samsung Electronics
Samsung is the smartphone leader, now threatening Apple’s dominance of the high end. Samsung has sold more than 30 million Galaxy S IIIs and 5 million Galaxy Note IIs. Those phones are leading the way to larger displays for video consumption. The G-Note’s multiwindow home screen may be Samsung’s best user interface to date.
2. Competition from Microsoft
Microsoft’s (MSFT) Live Tiles interface lets consumers get continuous updates from their favorite Web services without opening an app. The company is putting its core products (Office, Xbox, etc.) on multiple platforms. In mobile, Microsoft’s WP8 licensees are getting some handset market share. These strategies disrupt the more closed world of Apple.
3. Management discord
Exhibit A: the ouster of Scott Forstall, Apple’s iOS chief. The company, Zabitsky argues, must “develop a more unified approach between its Mac and iOS groups. More than a great innovator, Steve Jobs was a unifying force who was able to challenge people to bring their best game.” He says the Apple Maps fiasco wouldn’t have happened under the late founder.
4. Web Apps vs. the App Store
Faster mobile networks are allowing Facebook (FB), Amazon (AMZN), Netflix (NFLX), and YouTube (GOOG) to bypass the App Store and offer services via Web apps. Users are noticing. That iPhone 5 customers unhappy with Apple Maps readily switched back to Google Maps shows how Apple’s grip on the consumer—and its ability to extract high profit margins—is tenuous.