The problem with Apple shares

Former Microsoft COO Bob Herbold said Apple's biggest problem is a lack of innovation.

Former Microsoft COO on the Demise of Apple

By Business Leaders

There are mounting doubts within the tech sector that Apple (AAPL) is the innovator it once was and is no longer the ‘IT’ stock for investors. Former Microsoft (MSFT) COO Bob Herbold weighs in on the state of the tech giant.

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“Well the problem is lack of innovation Neil.  If you looked at the iPhone 4S versus the iPhone 6S, you’d see the only changes are that instead of offering 8GB to 64GB of memory they’re now offering twice that.  And you say to yourself ‘Am I gonna see a difference?’ The answer is no,” Herbold told the FOX Business Network’s Neil Cavuto. 

Herbold says there hasn’t been any innovation at Apple since the initial releases of the iPhone.

“The real innovation ended for Apple in 2007-2009 with the first versions of the iPhone and we haven’t seen anything since,” said Herbold.

And Herbold says that because of this Apple shares “start looking like a value stock and that’s why you see Berkshire Hathaway (BRX.A) buying a chunk of Apple.

Herbold points to Apple’s investment in Didi Chuxing as another signal the company is struggling to innovate on its own.

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“You also see Apple investing in another company, an Uber-like competitor in China, an unusual move for a company that’s supposed to be an innovator, but the fact is they’re not,” Herbold said.

Even in areas such as watches, where there were initially high expectations for Apple, the company has struggled, seen as follower to other companies such as Fitbit (FIT).

“You can look at the Watch and people had expectations of the Watch, but the hot item there is the Fitbit and other entries such as that.  So, they’ve been a follower in many of these categories of recent and that’s a clear signal that there’s an issue in regard to innovation,” Herbold said.

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Herbold notes that another symptom of this lack of innovation is the loss of top talent which could make it even more challenging for the company to innovate over the long term.

The big risk for Apple is talent loss.  When the really talented people within the company see that nothing fun is happening they vote with their feet and that’s a huge risk for this company,” Herbold continued, “You have to have the very best talent, and the signals are pretty clear that Apple has a real problem.”

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