If Current Chatter About iPhone 7 Is True, Apple Shareholders Could Be In For A Lot More Pain

I have been writing for almost a year about how Apple management's decision to tinker with its flagship product, the iPhone, is going to come back to bite the company and us shareholders in the rear-end.

Bite us it has. In a very big way, indeed. Shares of Apple are once again below a C-note and heading lower, dead cat bounces notwithstanding.

Oh yes, let's not forget the buyback increase and the increased dividend which thus far seems to have only allowed Tim Cook and his management team to continue selling stock pretty much as they vest.

Getting back to the iPhone 7 chatter. Two weeks ago, 9to5Mac.com reported that KGI Securities analyst, Ming-Chi Kuo, was out with a report that stated Apple will not have any major upgrades to the iPhone 7 (coming this fall) but will, in fact, have a totally revamped iPhone (iPhone 8, anyone?) in 2017. He expects the iPhone 7 will have very "modest changes" at best.

From 9to5Mac, "So far, the biggest new thing for the iPhone 7 appears to be the addition of a dual-camera for better pictures, although rumors have indicated this will be exclusive to the 5.5 inch iPhone 7 Plus."

If Cho's report turns out to be true, we shareholders need to be prepared for continued severe disappointments going forward from Apple. Of course, that will only increase the insider selling spigot as Apple management's stock awards continue vesting.

Yes, Tim Cook sounded very optimistic on India and on the prospects for the iPad ( IBM partnership) when the company reported numbers for the March quarter. However, don't let his optimism fool you into thinking that either of the two are going to move the needle in the next few quarters. They just will not. No matter how well the iPhone SE is doing in India, priced at INR 35,000 or roughly $500 per unit, it is still out of the reach of the majority of smartphone users in India. There is no denying that China was a shocker (based on March quarter results) although not as dire as Uncle Carl (Icahn) made it sound last week on CNBC.

There is no also doubt that Apple shares are cheap and the company has quarterly cash flows that are the envy of pretty much every other company on earth and a gigantic cash hoard (overseas or at-home cash is cash) but if the company continues only tinkering with size, shape, color, resolution, cameras, connectors, and doodads, rather than coming out with a revolutionary iPhone or any other product category for that matter, the growth is gone for now. And if the growth is gone, the shares will get cheaper even still.

I just don't see the majority of current iPhone users running to the store to buy or upgrade their existing models just because the iPhone 7 has a new camera, dual or single, or some other minor change to the same old form factor, etc.

I continue selling weekly calls against my Apple shares which helps lessen the hit but certainly does not eliminate the losses entirely.

In addition, the painful opportunity cost of continuing to be invested in Apple at the moment is also something that each and every one of us shareholders has to consider, our love for Apple products completely notwithstanding.

You can follow my trades at jaysomaney.com.

(Long aapl, calls, short weeklies)