UBS: 'Investors question whether Apple has lost its mojo'

UBS analyst Stephen Milunovich has a BUY rating on AAPL, but just before the Christmas break he dropped a brief, downbeat note suggesting Apple is in "a gap period" that may last "years" before the company climbs out of the funk it's in.

"Apple has been a serial innovator, but investors question whether Apple has lost its mojo. We don't think the answer will be clear for a few years," he wrote in a short note to clients.

Generally, Apple has confounded its critics. Ever since the first iPod was launched in 2001 Apple has enjoyed glowing critiques from Wall Street. Not anymore.

Sales of the iPhone are in decline, as are revenues at the company as a whole. iPhone 7 has been seen as an incremental update to iPhone 6s rather than an all-new product. There are as many rumours suggesting the 2017 iPhone will be another ho-hum release as there are hinting it will be a dramatic update to the world's best-selling smartphone.

Now Apple is in unfamiliar territory. Analysts are questioning Apple's profitability. They are suggesting the company has failed to communicate that it has a strategy for the future. It has lost share to Android even during a period when its main rival's phone was taken off the market. Apple can't even grow sales as fast as the smartphone market as a whole. And it is a still a new experience for CEO Tim Cook to fend off skeptical questions on earnings calls.

This is a company that is used to winning, not being used a punching bag.

For the past few weeks Milunovich's notes on Apple have focused on the unanswered question of whether the company is able to create the new Next Big Thing. Apple always refuses to say what it is working on, of course. (And, historically, only fools bet against Apple.) Nonetheless, it looks as if the main areas Apple has looked at - TV, cars, AR - are a long way from turning into exciting consumer product launches.

Here is how Milunovich put it most recently:

iPhone 8 good enough for now but then what? Category creation is the brass ring in business. The best even become synonymous with the category-Kleenex, Xerox, and Google. Apple has been a serial innovator, but investors question whether Apple has lost its mojo. We don't think the answer will be clear for a few years because consumer tech is in a gap period in which the capabilities are not yet there to deliver VR/AR, autonomous cars, and even the Internet assistant. ... mobile is maturing with the next era possibly driven by augmented reality. Apple will need new product or service categories.