A dominant theme a couple of months ago was that Apple stock was being held back from a higher valuation due to the fear of a Steve Jobs-less company.  However since the passing of Steve Jobs on October 5th the stock is actually higher even after a rare earnings miss last quarter.  That being said the company still trades at multiples that belie its high stellar track record especially compared to a competitor like Amazon.

Malcolm Gladwell in a long review of the Walter Isaacson biography of Steve Jobs takes look at how his desire for perfection drove his design choices.  Gladwell writes:

The great accomplishment of Jobs’s life is how effectively he put his idiosyncrasies—his petulance, his narcissism, and his rudeness—in the service of perfection…He was a tweaker to the last, endlessly refining the same territory he had claimed as a young man.

The fact of the matter is that now Apple shareholders are looking beyond the Steve Jobs era into an increasingly uncertain future.  The company is doing that by granting senior management stock options to keep them in place and investing heavily in their supply chain.  However in the end sales are what matters.  In that regard Apple shareholders may have something to worry about.

Jeff Matthews is a blog post this morning looks at the reaction to his earlier post on the abrupt decline in sales at Apple-owned retail stores.  While a big fan of Apple and its stores Jeff is wary of dramatic departures in sales from plan. He writes:

But to a retail analyst, any abrupt slowdown—for whatever reason—matters.  After all, no retailer—except, maybe, Sears—plans for a decline in profits.  And we’d bet the decline in profits—as well as the flattening out of visitors to the Apple stores—was not in the company’s budget.

Others are finding that competitors products are just as good (or better) than Apple products.  Blogger Cullen Roche has recently been blogging about his switch from an Apple iPhone to an Android-based phone.  He has been pleasantly surprised about his experience.

Those fears are showing up in the stock as well.  Peter Brandt who noted an “island top” in Apple stock a couple of weeks ago takes another look at the charts.  Brandt sees the potential for Apple to return to its prior lows and lays out a few relatively low-risk ways to play Apple on the short side.

Maybe investors are right to take a wait-and-see approach to what is going on at Apple.  The stock has not been pricing in future rapid earnings gains for some time now.  Perhaps investors are simply unwilling to pay much more for an industry leader that has been vying with ExxonMobil for the top spot as the world’s largest company by market cap.

That being said Apple still dominates the smartphone market in terms of profitability.  Siri, despite some glitches, seems to be a hit and could make significant inroads in Google’s mobile search business. In addition hints that Apple is looking to enter the television market in a big way provides another potential growth market for the company.  It is hard to get too bearish on a company that holds $82 billion in cash on the balance sheet.

Apple has not been a boring company or stock for some time now.  The past few months have been filled with all manner of news and volatility.  Everyone involved with the stock is fatigued and is due a breather.  Maybe marking time isn’t a bad thing.  Because when Apple stock does begin moving again, up or down, you can be sure that it will once again dominate the headlines.

Apple items worth a read:

Apple is still a cheap stock.  (Asymco, ibid)

[repeat] The big difference between Apple and Amazon ($AMZN).  (Abnormal Returns)

Malcolm Gladwell on the “tweaker” that was Steve Jobs.  (New Yorker)

Walter Isaacson’s biography of Steve Jobs.  (Amazon)*

Apple grants senior execs stock options.  (WSJ)

Why Apple ($AAPL) spends so much on its supply chain.  (Businessweek)

On the abrupt drop in Apple store sales.  (Jeff Matthews)

Apple vs. Android – a week later.  (Pragmatic Capitalism)

Short Apple – a fabulous risk/reward trade.  (Peter L. Brandt also Minyanville)

Is Apple too big to succeed?  (World Beta)

Smartphone proftability.  (Asymco)

How Apple is taking on Google ($GOOG).  (Cult of Mac)

Did Steve Jobs ‘crack’ the TV market?  (Bits)

What is Apple going to do with it cash?  (Deal Journal)

[repeat] Is Apple the new Microsoft ($MSFT)?  (Abnormal Returns)

*Amazon affiliate. You know the drill.

**No position in Apple, Amazon, Google or Microsoft stock.  However Abnormal Returns is long all manner of Apple products.