By Philip Elmer-DeWitt
February 13, 2013

FORTUNE — The chart at right, posted before Apple’s (AAPL) shares lost another $12 (2.5%) Tuesday, comes out of Morgan Stanley’s “What’s in the Price?” stock analyzer. It suggests that at Monday’s $480 a share, the market was pricing in long term earning growth for Apple of -4%.

Anything is possible, of course.

But in a note to clients early Tuesday, Morgan Stanley’s Katy Huberty characterized the situation as a “free option” on Apple’s track record of innovation.

By my calculation, Apple’s net income has grown an average of 64% per year since 2005 — although as Huberty points out, the implied long-term earnings growth baked into the stock over the past eight years has lagged considerably at 7%. She adds that the end markets Apple serves are growing 14% per year.

As if to underscore that point, Gartner reported early Wednesday that sales of Apple’s iPhone — the company’s biggest money maker — grew 22.6% last quarter. For the year, according to IDC, iPhone shipments grew 46%.

Android’s market share grew faster, of course, reaching 69.7% worldwide in Q4 according to Gartner, compared with iOS’s 20.9%.

But remember, even with that smaller market share Canaccord Genuity estimates that Apple took home 72% of all the profits in the cellphone business last quarter. Worldwide. Smartphone and dumb.

So it’s possible, as Apple’s share price is telling us, that the company is headed into a period of long-term negative earnings growth. But it doesn’t seem likely.

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