The Real Reason Behind Apple's Fall From Grace

It took just nine months from the first day of 2012 for Apple's (AAPL) stock to rise more than 40 percent, making it the largest public company (by market cap) in the world. Since its September peak, the company has taken almost the exact same amount of time for the stock to lose every bit of those gains.

Along the way, Apple's revenue and profit hit record highs in the fourth quarter of 2012 and the first quarter of 2013, and the company announced it would return an additional $55 billion in profits to shareholders through 2015.

We know Apple has lost its market-darling status, and that there are signs of slowing sales. But what is really behind the company's fall from grace? And more important, can it be fixed?

Incremental Doldrums

Apple's rise to dominance was not necessarily the result of doing everything first, but of successfully taking fresh technologies to the consumer's front door.

The company introduced the first mp3 player that didn't look like a Sharp Wizard mated with a Walkman. Apple made laptops a fashion accessory. It introduced touchscreens as the industry standard, before anyone else was ready. (The same goes for tablets.)

That all happened in less than a decade, and now some of these products are approaching or past their 10th birthdays.

With each of these devices, the name of the game has (naturally) been incremental improvement. The iPhone 5 is far better than the original iPhone, and my first-generation iPad seems like a Flintstones-style newspaper when compared to my friends' second-gens. But improvement isn't what brought Apple to its height in the eye of the public -- Apple became a leader through original innovation. Simply by virtue of its current position in the product cycle, Apple can't excite people the way it did three, five, or 10 years ago.

Consumers and analysts have become unimpressed by the existing lineup of iProducts. That's not necessarily a fault, just a reality of the current state of the company. The playing field has been leveled in the smartphone industry, and it's quickly approaching a plateau with tablets as well.

In a January op-ed from CNBC contributor Herb Greenberg, the network's senior stock commentator nailed the issue on the head: "The average consumer always wants something new and better. They don't just want the same car after three years. It had better look different or have better features inside. It's human nature."

What some seem to have forgotten (hopefully not Tim Cook) is that even "new" gets old.

Apple Minus Jobs Just Isn't Apple

Cook will forever be compared to Steve Jobs. The corporate world has painted a post-mortem picture of Jobs as the Savior CEO -- the infallible leader of the greatest company the world has ever seen.

Jobs didn't have to ask shareholders for approval because investors and analysts were of the opinion that Jobs knew better than all of us. The concept of a dividend was preposterous, he thought -- why would the company give shareholders a dollar today when it could return $10 (in stock price appreciation) in five years? Jobs didn't give lengthy interviews about how the company was going to continue innovating: He let the world speculate while Apple was busy at work.

In contrast, Cook has apparently decided to play the role of the typical public company CEO: He placates investors.

It's Cook's management style -- this out-of-character-for-the-company shareholder-friendly stance -- that is the biggest threat to Apple's future and its stock price.

Cook makes the rounds at institutional investor conferences, industry meetings, and media interviews using the "big things coming" talking point. He's attempting to reintroduce mystique and confidence into the company. But his actions do the opposite.

In response to attention-deprived investors and analysts, Cook broadcasts the message, "We're trying."

In the meantime, its archrival has stolen center stage as the Edison of New Tech. Google (GOOG) is rolling out Google Glass, a computer that you wear on your face, listens to what you say, and paves the path for the future of mobile computing. That's tough competition. Google has the metaphorical "new car" Greenberg was talking about, and people are intrigued.

Bring Back the 'Surprise' and the Stock Will Follow

Investors today can be a whiny bunch. They want right-now results -- after all, they are a product of the 24-hour news cycle and high-frequency trading.

Jobs had the confidence and stature to ignore these guys, plus an arsenal that allowed him to exceed their expectations a few months later. But the company's current leadership seems afraid of a negative story on CNBC, and is all too willing to try to satisfy shortsighted demands.

If Cook takes the shareholder shackles off Apple and allows the company to do what it does best (innovate), it will soon be back on track for long-term success.

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Motley Fool contributor Michael Lewis has no position in any stocks mentioned. You can follow him on Twitter @MikeyLewy. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google.