When it comes to staying relevant (and profitable) in today's rapidly changing technological world, one of the key requirements is constantly being one step ahead of the competition. Which, for tech stocks, implies investing significantly in research and development. So, off the top of one's head, when one thinks who invests more in R&D as a percent of revenue, say between Nokia - which failed to innovate fast enough and as a result got run over, and Apple - which is best known for its innovative (if NSA infiltration-riddled) products, one would be tempted to say Apple. However, the reality is quite the opposite. As the chart below shows, when plotting the R&D to sales ratio for the diametrically opposite Nokia and Apple, one sees a constant increase in research spending at Nokia on one hand, and a consistent decline at Apple, on the other.
So what is the explanation? Is it "spend smart not hard", or maybe Nokia's products were so ahead of their time that nobody could appreciate them at their time, or perhaps what we are now seeing is Apple merely resting (actually sleeping deeply) on its once innovative laurels - too focused on what balance sheet gimmick it should come up with to make its activist investors happy - and its lack of spending for innovation is precisely that, because when a company is forced to resort to imitating its formerly biggest imitators such as Samsung, or making a phone cover an upgrade feature, then it is only a matter of time before Apple, too, is just another Nokia.
But then again what do we know: after all, as Carl Icahn has said about 30 times in the past 24 hours, buying AAPL here, and its declining desire to invest in R&D, is the biggest "no brainer" trade out there. Whatever that means.