Wall Street has become schizophrenic about Apple Inc. (NASDAQ: AAPL). It is either doomed, since it has run out of the imagination to create new products, or it is the builder of the iPhone 7, which will revolutionize the smartphone industry. Short sellers slightly favored the pessimistic view as short interest in Apple shares moved up 3.8 million to total 56.4 million late last month.

Apple’s shares are down 15% over the past month to about $93. Despite support from some analysts who believe the company has promise and is worth $100 a share, there are others who believe Apple’s extraordinary run is over. Apple has had trouble lifting sales of the iPhone 6 family. Its iPad tablets face a shrinking market. The Mac has stopped taking a large part of the computer business from other personal computers. Apple TV will never match the popularity of Netflix or Amazon.com’s video offerings.

Apple’s latest quarterly earnings do give pessimists fuel:

The Company posted quarterly revenue of $50.6 billion and quarterly net income of $10.5 billion, or $1.90 per diluted share. These results compare to revenue of $58 billion and net income of $13.6 billion, or $2.33 per diluted share, in the year-ago quarter. Gross margin was 39.4 percent compared to 40.8 percent in the year-ago quarter. International sales accounted for 67 percent of the quarter’s revenue.

And guidance was weak:

Apple is providing the following guidance for its fiscal 2016 third quarter:

• revenue between $41 billion and $43 billion
• gross margin between 37.5 percent and 38 percent
• operating expenses between $6 billion and $6.1 billion
• other income/(expense) of $300 million
• tax rate of 25.5 percent

In addition, Apple’s revenue in Greater China was weak. Management has pointed to the region as critical to Apple’s future.

The shorts may be right.

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