How dire is Apple’s current situation?
Apple’s performance has been subject to widespread negative criticism over the past two years, most attribute to Apple top three crises, with some even pessimistically suggesting it’s overvalued and on the verge of following the footsteps of BlackBerry or Nokia.
While this isn’t the first time Apple has experienced this, it is one of its most severe, perhaps second only to the mid-1990s, when the company nearly went bankrupt and forced Steve Jobs to bow to Microsoft and request an investment from Bill Gates to save the company.
This also marks the longest period of decline since Apple was ranked first in market capitalization, breaking the previous 13-year record.
Management Team
Cook’s Moves
After Cook’s contract with Apple expired in 2021, he hinted in media interviews that this was his reluctance to sign a long-term contract with the board. However, his tone seems to be shifting recently, likely due to the significant operational crisis Apple has faced over the past two years.
Cook has previously stated that he will not remain CEO as the company enters its next decade, leading to widespread expectations that he will retire in the next few years and assume the role of board chairman, succeeding the aging Arthur Levinson. With Levinson already exceeding the recommended retirement age of Apple’s board of directors, Cook’s transition to the board would allow him to “continue to lead Apple’s strategic direction from another level,” creating a perfect transitional opportunity.
It’s worth noting that Apple still has several products in development, including an affordable Vision Pro, AR glasses, and a smart ring similar to the Samsung Galaxy Ring, which is expected to form a new wave of wearable ecosystem integration with Apple Watch. Although the current situation is hampered by the pressure of Sino-US trade and competition in generative AI, Apple still has potential for growth and market capitalization in the long term.
Changes in the Company’s Senior Management
Apple underwent its largest internal personnel changes in nearly a decade this year, including the retirement of Chief Operating Officer Williams and the forced departure of the head of AI to join Meta.
Potential Board Reshuffle
Apple’s board of directors is largely composed of loyal Tim Cook supporters. For example, Chairman Arthur Levinson and directors Susan Wagner and Ronald Sugar have not publicly challenged Cook’s operational decisions for years. The report states that while Apple is in a critical transition period, facing challenges such as lagging in AI and slowing innovation, the board of directors currently has no intention of seeking a leadership transition.
The company’s board of directors will see some major changes over the coming year, with two members reaching or exceeding the recommended retirement age of 75. Apple Chairman Arthur Levinson will turn 75 in March 2025, which would typically mean he would announce his retirement sometime this year. Apple’s current CEO, Tim Cook, is expected to take over as chairman in 2026.
Capital Market Performance
Q2 2025 result
On July 31, 2025, Apple released its second-quarter 2025 financial results, which blew past expectations. The results showed:
- A 10% increase in overall revenue
- a 13% increase in iPhone sales
- Apple’s hardware revenue grew 8% year-over-year, accounting for nearly 71% of total revenue this quarter
- Apple’s Services segment achieved a record high, with revenue reaching $27.4 billion, but hardware revenue remains—and will likely continue to do so.
Apple Chief Financial Officer (CFO) Luca Maestri stated that the company’s installed base of active devices reached all-time highs in all regions during the second quarter of 2025. Global iPhone shipments increased 15% year-over-year in April and May, the strongest growth since 2021. The company also announced that Apple has sold 3 billion iPhones since its launch in 2007.
Apple’s capital expenditures in the latest quarter were nearly $3.5 billion, the highest since the quarter ending in January 2023.
Stock Performance
Excluding the 13% gain over the past week, Apple’s stock price has only risen about 30% over the past three years, making it the second-worst performer among the “Big Seven” (behind only Tesla) and underperforming the S&P 500. This isn’t what investors are used to seeing from Apple.
What are these top 3 crises and risks?
In order of severity, I consider Apple’s current major operational crises and risks to be the following:
- Artificial Intelligence
- Tariffs
- China
- Lack of breakthrough products
- Others
Postscript
I will be publishing several posts on this blog about Apple, discussing these crises one by one.
Related articles
- “Apple top three crises since its founding“
- “Apple’s Crisis Part 1: Apple Tariff Crisis Management Strategy Offers a Lesson for Business“
- “Apple’s Crisis Part 2: Apple’s AI is seriously lagging behind“
- “The importance of cash, Apple’s experience in using cash“
- “Apple search engine, the possibility and necessity to inhouse develop“
- “Apple’s multiple LT compound capital alchemy is repurchase, 41.9% shares reduced in 12 years“
- “Apple repurchase, Nvidia capital operation, Tesla, AI bubble, Willow quantum chip, this blog turns off comments“
- “The importance of cash, Apple’s experience in using cash“
- “Apple company culture deep dive“
- “Identify good companies with corporate culture, how to do in overheated market?“
- “Why Apple plummeted by Google antitrust ruled a monopoly?“
- “The Importance of Small Language Models (SLM) in AI, how is Apple AI different from others?“
- “How does Unity, the only software partner of Apple Vision Pro, make money?“
- “How does Apple make money?“
- “Apple’s upcoming products, services, and technologies“
- “Apple’s product design philosophy, How does Apple think?“
- “Why Apple’s new features always come later? “
- “Steve Jobs’s Apple innovation gone with him?“
- “Apple’s small privacy change caused US stocks evaporate 200 billion U.S. dollars in one day“
- “Did Apple really lose the lawsuit with Epic Games?“
- “The importance of the App Store legal battle between Apple and Epic Games“
- “Why is Apple’s privacy policy so important?“
Disclaimer
- The content of this site is the author’s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.
- I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers’ direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.
