Can Apple dodge the abyss?

Apple fans watch the scene at the company's Fifth Avenue store the day the iPhone 5 launched. Greg Sandoval/CNET

(MoneyWatch) Apple (AAPL) shares scale new heights one day, then slide down the next. Its gear is the hippest in town -- until Samsung products are the newest "it" gadget. The contrasting views of Apple may say less about the tech maker than about pundits' habit of praising companies to the heavens, at least until it is time to predict their decline.

But what is clear is that Apple, until recently the undisputed king of consumer electronics, now faces rising doubts about its primacy in the sector. When the company's recent performance failed to meet Wall Street's ever-outsized expectations, for instance, its stock took a drubbing. Meanwhile, Apple supporters have begun to rally to denounce such blasphemy.

The most obvious and painful recent criticism of Apple came from investors after the company's performance last quarter fell short of analyst forecasts. Its stock price dropped sharply and has yet to recover. Apple fans in the press quickly came to the defense, with Farhad Manjoo stating in Slate that Apple is stronger than ever and Fortune's Philip Elmer-DeWitt calling analysts lazy for setting expectations too high because they didn't take into account a quarter with an extra week last year.

It's not as though they are just waving their hands in some form of prayerful spin. Apple did make a walloping amount of money last quarter: $54.5 billion in revenue and $13.1 billion in profit. It is an impressive showing that adds to the company's formidable performance in recent years. And for better or for worse, Wall Street expects continued fast growth from Apple, seeing it as a prime mover in the still young high-tech industry.

Yet while investors long for the days when Apple's gross profit margins routinely topped 40 percent, the company has acknowledged that it is moving into a period of lower profitability. Those days seem gone, and although comparing two 13-week quarters would probably have made the year-over-year comparisons more impressive, they wouldn't have increased gross margins.

But will things get better?

A Morgan Stanley analyst thinks that Apple's margins will improve with the iPhone 5, noting that the company's latest quarterly earnings statement "discloses $904 [million] of commitments for equipment purchases compare to $4.5 [billion] just two quarters ago when Apple invested in new in-cell touch displays for the iPhone 5." Yet here's what the filing for the quarter ending in September 2012 really said:

In addition to the off-balance sheet commitments mentioned above, the Company had outstanding obligations of $4.5 billion as of June 30, 2012, which were comprised mainly of commitments to acquire capital assets, including product tooling and manufacturing process equipment, and commitments related to advertising, research and development, Internet and telecommunications services and other obligations.

Note that Apple highlights financial commitments not just for manufacturing equipment, but for ads, among other obligations, going into a quarter of launching new products, and says not one word about the relative spending. That means investors can't count on significantly higher margins because much of the lowered expense may not have been in areas that would affect the company's margins.

Furthermore, The iPad mini's popularity likely pushed down margins in the tablet area. In other words, forget the pundits' hopes or the Streets' pessimism. Pay attention to the actual performance.

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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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