Top tech firm loses its bite

You can go all the way back to the Garden of Eden if you’re looking for the first time speculators had a bite of Apple and wished they had their shorts on. Now, the full Adam and Eve expulsion experience may well be on its way for managers who were overweight before Cupertino’s finest dropped the bomb.

Apple’s share price has dropped a cheeky 39% from its highs in October, and the question is whether this is a temporary blip, or a sign that the company has lost its innovative edge.

The company has suffered major speed wobbles in the past, notably before the second coming of the Jobs, but since it launched the iphone in 2007 it has been on an unprecedented winning streak.

Since Tim Cook took over after Steve Jobs’s death in 2011, Apple has been criticised for its failure to produce another real blockbuster product. It has, however, become uniquely successful at generating cash, with a pile of $130bn giving it plenty of firepower for acquisitions and product development.

The current problem is China, where its smartphone market share has dropped from 14% to 7% in three years. This may be due to a slowdown in Chinese growth, but also to the ubiquity of Wechat, which works just as well on a cheap Android phone and makes the stratospheric pricing of the top iphones hard to justify. Even in developed markets, customers are hanging on to phones longer and delaying upgrades.

Apple’s services business is thriving, and it may be that the future lies in these less glamorous areas rather than pulling rabbits out of hats.