Apple, Cook and the mystery of mojo

(MoneyWatch) Apple (AAPL) CEO Tim Cook spoke at the Goldman Sachs conference this morning, talking up the company's position in the market, equating a trip to an Apple store to a dose of Prozac, and dismissing hedge fund manager David Einhorn's lawsuit seeking higher dividends for shareholders as "bizarre" and a "silly sideshow." In response, investors sent the stock down nearly 2 percent.

It's only the latest example of how Apple's reputation is slipping. The stock price fallen significantly since the  launch of the iPhone 5 in September, in part because competitors have been making advances in the company's core markets and consumers are starting to rank other tech companies above Apple in reputation.

Recently, Apple has mounted a subtle but considerable PR push to boost its reputation and reassure investors about the company's future prospects. In addition to Cook's remarks, Cook declared that "Apple is the center of innovation." A story apparently leaked to the New York Times and Wall Street Journal suggested that Apple had plans for a wrist-display device, nicknamed by observers the iWatch.

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According to Brand Keys, a brand research company, Apple's current arch-rival Samsung leads in consumer loyalty in some key markets, including flat screen televisions, laptops ... and smartphones.

Although Samsung has been a massive player in many of these markets, moving past Apple on a question of customer loyalty was a first:

"It's not terrible to be number two," [Brand Keys president Robert] Passikof said. "But in both cases I think consumers are looking for higher degrees of innovation. It was only after Samsung and other companies came out with smaller tablets that Apple brought out the iPad mini. It was only in reaction."

More importantly to Apple, Samsung is keeping pace in product sales and even pulling ahead at times. And in China, which offers the smartphone industry the big hopes for growth, there are fewer copies of the iPhone 5 than the iPhone 4. Knock-off vendors may increasingly be looking at other handset vendors, in particular some domestic companies.

Even in company reputation, where Apple has ruled for years, Amazon has pushed it out of first place, according to Harris Interactive.

The company's growth, which has been rapid for nearly a decade, is slowing drastically in the absence of a new groundbreaking product. Wall Street is clamoring for Apple to share more of its cash, which amounted to $137 billion at the end of last year and is still growing fast because of the company's massive profits.

Companies normally don't sit on that much cash, as it's not very productive. They prefer to invest it in their business or give it to shareholders. Einhorn said Apple's cash hoard is a symptom of a defensive, "Depression-era mentality."

Cook rebuted that assertion Tuesday, saying the company invested $10 billion in its business last year, through spending on research and design, equipment and an expansion of its chain of stores. It has also committed to handing out $45 billion to shareholders over three years, through dividends and share buybacks.

Apple has begun to lose what might be its most formidable competitive weapon: a widespread perception that it has superior products and service. The changes that Brand Keys and Harris note are not damning. Apple continues to sell phenomenal numbers of products and to stockpile money at a stunning rate. But the results do show a crack in the image, suggesting that Apple needs to formally announce a groundbreaking product soon to establish itself through action, and not just its CEO's words, as an innovative company that should enjoy the highest in consumer allegiance.

-- The Associated Press contributed to this report

Image courtesy of Flickr user Identity Photogr@phy