Here’s a Vote of No-Confidence for Apple

The U.S market was now saturated and Apple (NASDAQ:AAPL) needed to focus on emerging markets such as China and India, Franklin Templeton Investments has said, adding that it had cut its holdings in the iPhone maker on growth concerns. The fund instead bought shares of Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN).

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“We trimmed on a few occasions last year,” George Russell, a portfolio manager for the Franklin Equity Group, told Bloomberg. “We are concerned about their lack of a strategy in the lower-end phone, which tends to be sold much more in the emerging market. U.S. is pretty saturated. It’s emerging markets where there’s incremental new growth.”

Apple shares gained 31 percent last year, but have dropped almost 30 percent of their value since reaching a record high in September. The stock fell to its lowest price in 11 months earlier this week after news reports that it had cut back on production orders of components of its iPhone 5 on weak demand.

Apple’s share price movement from September 19, 2012 to January 17, 2012:

The firm’s Franklin U.S. Opportunities Fund cut its Apple holdings to 4.2 percent at the end of last year from 7 percent in 2011. The $2.51 billion fund still had Apple as its biggest holding at the end of 2012 and has gained 10 percent over the past year.

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Several analysts have suggested that the company needed a cheaper smartphones targeted at cost-conscious markets to continue growing and emerge out of its image of being a high-profile device manufacturer. Apple hasn’t “addressed how they are going to attack the low-end phone market,” Russell said to Bloomberg. “For that reason, we feel the margin structure of their high-profit type of product could be under pressure.”

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