Apple Investors: Here’s the Top Wins and Losses in 2012

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The year 2012 has been one of several unmatched successes and a few unexpected missteps for Apple (NASDAQ:AAPL), a company that manages to attract both passionate fandom and strong aversion from watchers. With the iPhone maker set to announce its fourth-quarter earnings report later this month, we look at the brightest highs and sorriest lows for it this calendar year. Let’s start with the successes:

Tablet Triumph

“We have something you really have to see. And touch.” These ten words were enough to send Apple watchers in a tizzy in late February, when the company sent out teasing invites to a media event scheduled for a week later. The anticipation for the launch of the third generation of Apple’s industry-changing iPad reached its peak quickly, and the company’s shares reacted by spiking to untouched heights. Shares in the iPhone maker rose by nearly 2 percent that day to $535.41, lifting the company’s market value above $500 billion for the first time ever. Upon launch, the new iPad, sporting a high-resolution screen, an ultrafast processor, and LTE compatibility, sold three million units in three days. Apple has since continued to be the runaway tablet market leader, according to IDC, with close to a 70 percent share despite the arrival of several new Google (NASDAQ:GOOG) Android-based products led by Amazon’s (NASDAQ:AMZN) Kindle Fire.

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Better Than All

Anticipation for a sixth-generation iPhone, persistent rumors regarding a smaller, cheaper version of the iPad, and analyst notes that kept referring to a forthcoming full-fledged television set from the company meant that Apple was seeing a continuous buzz of positive news through the summer. It all peaked one fine day in late August when the iPhone maker became the most valuable U.S. company of all time. Apple’s market value was $623.5 billion at the market’s close on August 20, eclipsing the previous record of $618.9 billion set by Microsoft (NASDAQ:MSFT) in December 1999. Several analysts responded by branding Apple a trillion-dollar baby, predicting the company’s market value would touch the 12-zero mark by 2015.

Samsung Sucker Punch

August turned out to be a great month for Apple, with the company receiving a huge dose of confidence boost in the court against its biggest current rival. Samsung and Apple, which left all other manufacturers behind to become global smartphone sales leaders this year, had spent almost the whole year until then suing each other in multiple patent-infringement cases around the world. Then in August, in Apple’s home state of California and in a case that was being watched very closely by the industry, a jury delivered a loud and clear verdict in Apple’s favor. Not only did the jury clear the iPhone maker of all charges Samsung had leveled against it, it found the Korean company guilty in five of six infringement counts. Apple was awarded $1.05 billion in damages and the company quickly reacted by announcing it would ask for violating Samsung products to be banned from being sold in the U.S. The story is not yet, with Samsung recently alleging jury misconduct. Expect another critical decision on that in December.

Five is Right

Come September, excitement was ready to bubble over for Apple as analysts started getting increasingly sure of the iPhone 5’s impending launch. An unending stream of rumors and speculation regarding the standout features of the new smartphone meant that Apple was always seeing a positive buzz in the stock market as well. Then, as soon as word spread that the company was planning a launch event to announce the iPhone 5 in the second week of September, its stock began rising. On September 12, Apple announced the phone matched most of the key pre-release expectations with its new four-inch tall screen, a faster processor, and LTE capability. The Monday after opening up the device for pre-orders, the company said it had received two million orders in the first 24 hours, double the record set by the iPhone 4S. That sent its share price above $700 in intraday trading for the first time ever and ultimately closed just 20 cents shy of the mark.

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Then there were the low points:

Worker Woes

In March, a labor rights association published a report with findings that factories of Apple’s main manufacturer, Foxconn, were rampant with labor rights violations in areas like working conditions, safety issues, overtime, and salaries. The investigations were first prompted by news that 10 workers committed suicide at plants owned by Foxconn and in a separate incident, three employees died and more than 70 were hurt in explosions at two Chinese factories. Along with the bad press came concerns from other labor bodies around the world, which felt the iPhone maker could do more to improve the conditions for workers producing its high-profit, best-selling products. While Apple, led by chief executive Tim Cook, followed up by instituting several changes and initiating internal checks, a subsequent report found that some issues remained unresolved.

Earnings Exception

Among the things Apple is famous for is the company’s barely blemished record when it comes to meeting analyst expectations. But in July, the iPhone maker reported fiscal third-quarter net income of $8.8 billion at earnings of $9.32 per share, figures that fell well short of Wall Street expectations. Shares dropped 5.3 percent to $568.88 in after-hours trading after having been up 48 percent for the year until the day before. It was only Apple’s second miss in 20 quarters, and chief financial officer Peter Oppenheimer tried to explain it away by saying the bad economic conditions in Europe as well as in countries like Brazil and Australia had had an effect on sales. But analysts worried if weaker iPhone sales had contributed a bit too much, and there were expressions of deep worries from investors that the company was relying too much on phone subsidies given by U.S. wireless providers.

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Retail Flub

“We messed up,” new Apple retail chief John Browett reportedly said in an internal letter to store employees in August, referring to the confusion that had been created regarding work hours and positions. Apparently, a new employee management system put in place by Browett was automatically reducing hours for some Apple Store employees and understaffing at some locations. Worried workers thought they were being laid off, forcing Apple to release a statement denying that, but also admitting to errors. “We recently implemented some changes in retail staffing,” company spokeswoman Kristin Huguet told the Los Angeles Times. “Making these changes was a mistake, and the changes are being reversed.”

Browett’s letter instructed his leadership teams to tell employees that while shift schedules were affected, no one had been, or was being, laid off. In fact, he stressed, Apple was in the process of hiring new staff. The incident may have been harmless ultimately, but it definitely did not count as a high point for the company.

Maps Mess

Users had been looking forward to iOS 6, the latest version of Apple’s mobile operating system ever since its many features were announced by the company at its developers’ conference in June. When it finally arrived in September, coinciding with the launch of the iPhone 5, one of its most-awaited features became the talk of the town. Only, it was the wrong kind of talk, with users complaining loudly and clearly about the new maps app that Apple had added to the software as an automatic replacement to Google Maps. The home-grown app was full of errors, lacked data, and did not let people access public transit options. After days of criticism, chief executive Tim Cook was finally forced to release an apologetic letter to customers. Cook accepted that the company had let its consumers down, said improvements were on their way, and made the incredible suggestion that users rely on alternative services from rivals like Microsoft, Nokia (NYSE:NOK), and even Google in the meantime. Google has been gloating since.

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