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Apple and ST face challenges, but each company has a very different response

Have we experienced ‘peak iPhone’? Sales of the iconic mobile phone – if not declining – are certainly slowing. In China, the second largest market for Apple, the iPhone is number three in sales behind locally developed smartphones.

While Apple isn’t ‘in trouble’, investors appear to be backing away from the consumer electronics giant, if only slowly. Its stock price – the primary indicator of market sentiment – has dropped from more than $130 a few months ago to less than $100 today.

What next, analysts ask, for Apple? One of Apple’s great assets is its innovative nature; it has continually reinvented itself over the last four decades and most of its ideas have captured – if not defined – the consumer zeitgeist.

The one thing on which most agree is that it won’t be too long before Apple launches the ‘next best thing’ and that the move will be successful.

Compare Apple’s fortunes to those of STMicroelectronics, whose latest financial results show a continuing decline in performance. Revenues for 2015 were down by around $500million, or roughly 7%, and the only standout in a sea of red figures was a slight increase in sales of microcontrollers and memories. And president and CEO Carlo Bozotti points to more of the same, expecting revenue to continue to drop in the next quarter.

While industry watchers confidently expect ‘something new’ from Apple, the only actions that ST seems to embrace are reorganisations and product group closures – the latest being its set top box operation.

Despite continuing speculation about his future, Bozotti has survived, even though he has presided over what can only be said to be a significant decline in ST’s fortunes since the days of Pasquale Pistorio. Similar performance in any other semiconductor company would, you have to believe, seen him sent packing long ago.

Author
Graham Pitcher

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