By Jim Karpen on Thu, 11/08/2012
Today is sort of a good-news-bad-news day. Apple's stock keeps plunging downward, yet already the buzz is beginning for a forthcoming Apple product: the iPad mini 2 with retina display. Macworld UK says that Apple's suppliers have said they're already working on a retina display for the iPad mini with a resolution of 2,048 by 1,536 — which would give it even greater pixel density than the fourth generation iPad. It's hard to imagine that this wouldn't happen, since all the other iOS devices are now using retina displays. The question is when we'll see it. Some think that Apple will continue with the tradition of announcing new iPad models in March/April, while others think that the cycle will shift to October. My guess: Apple itself doesn't yet know. It likely all depends on how well production goes. And possibly also depends on how current sales are going. Of course, no one yet has any clue about the price, but my bet would be that Apple will follow its traditional pattern of bringing out a new model at the same price as the previous generation.
It's fun to think of an iPad mini with retina display. And it seems likely that Apple's iPads will move to IGZO displays next year, which consume less power — which in turn would mean that they could use a smaller battery and make the devices even thinner and lighter. The reviews of the iPad mini are generally positive, and the main criticism is the lack of a retina display.
Meanwhile, Apple's stock is plunging. It's down over 20% since an intraday high of 705 in September. It's at its lowest point in 5 months, and seems headed lower.
There are any number of theories why. Some say it's because Apple is having a hard time making enough iPhone 5 units to meet the demand. Foxconn, which makes the phone, attributes this to the fact that the iPhone 5 is technologically advanced and difficult to manufacture. Investors are afraid that rather than waiting for the iPhone 5 to become available, customers will simply buy a different phone.
Another theory is that investors are worried that the lower margin on the iPad mini will impact Apple's profits. And one bit of speculation I heard is that now that Obama has won reelection, investors are afraid that the capital gains tax will be raised, so they're taking out their profit before that happens.
All of this assumes that markets are rational, though, and often they're not. It seems likely that Apple will have a huge Christmas quarter, with their new iPhone, iPod touch, iPad fourth generation, and iPad mini. Now might be a good time to pick up some Apple stock. But ultimately, the law of large numbers suggests that such a high stock evaluation is untenable over the long run. No other company has been able to stay in the stratosphere. We like to think that Apple's an exception, but after a while everything regresses to the mean.
I'm holdling on to my Apple stock for now, and might consider picking up a bit more. You can read more about the current situation with Apple's stock on Business Insider.