“Apple Inc. shares fell to their lowest levels in more than 16 months Monday as two analysts cut their ratings on the Mac maker’s stock due to a growing risk that consumer spending on high-end electronics is slowing down heading into the end of the year,” Rex Crum reports for MarketWatch.
“By the time the market closed, Apple’s shares (AAPL) had fallen $22.98, or almost 18%, closing at $105.26. The stock has plunged nearly 40% over the past month on worries about slowing demand, as well as the technical issues that have plagued the launch of its 3G iPhone,” Crum reports.
MacDailyNews Take: “Worries” in the absence of proof. And, if that’s a “plagued” launch, thank you sir, we’ll have another:
• Apple intends to make at least 40 million iPhones in the next year – September 22, 2008
• Apple iPhone: 8 million total units so far – September 02, 2008
• Analysts estimate Apple will sell 3 million Macs, 5 million iPhone 3G units this quarter – August 22, 2008
• Apple iPhone now available in 43 countries to 660 million potential customers – August 22, 2008
• Apple inks iPhone deals with 3 Russian carriers; expects sales of 1.8 million units per year – August 22, 2008
• Report: Apple plans to build 45 million iPhone 3Gs in next 12 months – August 22, 2008
• Lehman Brothers expects Apple to sell 12.1 million iPhone 3G units this year – August 14, 2008
• Piper Jaffray analyst conservatively expects Apple to sell 4.47 million iPhones this quarter – August 13, 2008
• Analyst: 3 million iPhone 3G units sold in first month – August 11, 2008
• Apple CEO Steve Jobs: Over 60 million apps downloaded from App Store in first month – August 11, 2008
• Apple sells one million iPhone 3Gs in first weekend – July 14, 2008
Crum continues, “Before the opening bell, Kathryn Huberty of Morgan Stanley cut her rating on the stock to equal-weight from overweight. RBC Capital Markets analyst Mike Abramsky made a similar move, lowering his rating to sector perform from outperform.”
Crum reports, “Huberty said several factors present a challenge for Apple as it tries to maintain its growth rates in the PC market. She noted that Apple has about 69% of the market for U.S. consumer PCs that cost more than $1,500, saying that ‘the combination of slowing unit demand and a shift to lower-end price points put Mac growth at risk.'”
MacDailyNews Take: Based upon what? Nothing of any substance.
Crum continues, “She also said that slower growth, along with more investment to expand Apple’s iPhone reach will drive up the company’s operating expenses and put pressure on earnings next year.”
MacDailyNews Take: Proof of Apple’s slower growth? We see none.
Crum continues, “Morgan Stanley was concerned that consensus estimates had not been revised downward to reflect slowing consumer demand.”
MacDailyNews Take: Perhaps consumers will become more discriminating and choose higher quality Apple products over inferior junk that comes with lower sticker prices but higher total costs of ownership? Yes, we agree, it’s probably too wishful to expect most people to actually think before buying, but hope springs eternal.
Crum continues, “At RBC, Abramsky lowered his price target on Apple’s stock to $140 a share from $200, saying that the stock isn’t ‘recession proof.’ The analyst predicted that Apple would report good Mac sales for its fourth quarter, which finishes at the end of September, and said he anticipates unit sales will rise 34% in the quarter from a year ago. However, Abramsky trimmed his estimates for Apple’s Mac sales to 2.9 million units from 3 million, and there is an ‘elevated risk’ that the company will give a disappointing first-quarter forecast.”
MacDailyNews Take: Typical manure shoveling. Apple always gives overly-conservative, sorry, “disappointing,” guidance. Newsflash: They’ll likely do it again next quarter. And the quarter after that. And the quarter after that. By the way, in January, Amramsky spoke favorably of Apple’s potential to weather the ongoing economic downturn, explaining that while the Cupertino-based firm is certainly not “recession proof,” it exhibits signs of being “recession resistant.”
Crum continues, “Abramsky cited an RBC survey of 4,300 people that showed the expressed intentions of consumers to buy a Mac are down. The RBC survey said that 29% of respondents intend to buy a Mac over the next 90 days, down from 34% in August.”
MacDailyNews Take: Duh. That’s no surprise when all we hear via a poorly-educated and unprepared media is that we’re about to enter a “depression.” Morons. In our opinion, these two analysts’ analysis of Apple are highly specious and reek of panic, among other things. By the way: According to Abramsky, 29% of consumers surveyed intend to buy a Mac over the next 90 days. Think about that for a second.
Think about this, too:
• Apple smashes Street; reports record third quarter results, all-time high Mac sales – July 21, 2008
• Apple smashes Street, reports record second quarter results – April 23, 2008
• Apple beats Street; reports best quarterly revenue and earnings in company history – January 22, 2008
• Apple bulldozes the Street; reports revenue of $6.22 billion, record 2.2 million Macs shipped – October 22, 2007
• Apple smashes Street; posts record Q3 revenue and profit – July 25, 2007
• Apple smashes Street, posts revenue of $7.1 billion and record net quarterly profit of $1 billion – January 17, 2007
Full article here.
AAPL lost $20,357,430,480 ($20.36 Billion – with a “B”) in market value today and that, dear friends, is simply wholly disproportionate to reality. Period.
Those who keep their heads when others panic often profit handsomely.
Wall Street is a game. If you decide to participate, play it well.
OUCH! Thank god, I got most of my shares back when it was $84, a year and a half ago. I put a limit order to buy 400shs more at $100, but didn’t hit today. OUCH!
@other side
“Look at it this way:
Food, clothing, and shelter are necessities.
iPhones, iPods, and iMacs are not.
Hence AAPL getting clobbered.”
Well gold is up, last time I checked precious medals tasted like crap.
You can thank those idiot Democrats – Frank, Dodd and Shumer for blocking reform to Freddy and Fannie in 2006. It’s all about the rights of the underprivileged to own property that they can’t afford.
The ex FDIC director who formulated the S&L;bailout has some excellent ideas such as revising the accounting stands for FMV and eliminating naked short selling as starters. But most of those idiots don’t have the sense to figure it out.
Pure, unadulterated bullshit, as usual, from the financial analysts. As if there wasn’t already enough rock solid proof of just far up their asses their heads usually reside, the current meltdown of the whole friggin’ ball of wax should dispel any lingering doubts about that.
And they want to bail out these people with my tax money? No way. Market people need to die. They all need to die.
well – RIMM dropped 13% today also, and don’t forget that’s after it fell about 27% this past Friday. NOK, GOOG both down ~11% today, not just AAPL. Panic, not rational reasons.
but Apple makes for good headlines, to feed the panic.
anyhow, I’m with @MTS
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“Look at it this way:
Food, clothing, and shelter are necessities.
iPhones, iPods, and iMacs are not.
Hence AAPL getting clobbered.”
iPhones and iPods, yes. But computers? iMacs, MacBooks? A lot of people DEPEND on computers to make their living nowadays. And they buy reliable, good computers when it gets tight.
Which is why Apple sales of computers are booming right now.
there is comments here about apple “boat loads of cash”, one can only hope it’s real cash such as euros not banana dollars. I agree with those that our saying buy apple. but i would wait to see it go further down, not because the company deserves it but because speculations and the de-facto financial crash of the us dollar will contribute to putting all kinds of companies in stormy waters.
Yep and MS keeps chugging along. This is how they win. No matter what happens, companies need to buy cheap, crappy hardware that runs Windows. *caching* for each one for MS. Easy money for the monopoly.
MDN never fails to be arrogant about Apple products, and at the same time being ignorant about how the equity market works. What MDN fails to understand is that market is forward looking, the price yesterday and today reflects the expeted earnings of a company for the next several quarters, plus, in the case of Apple, a lot of speculations. If the market condition changes that will affect the company, price will be adjusted. And when that happens, it will usually over-shoot itself, in both directions. No one doubts the fundamentals of Apple, but fundamentals alone will not carry you for the day, although in the long run it will.
Keep in mind that 97% of the five year periods, and 100% of the 10 year periods in the stock market’s history have made money. And this just in: Just looked out the window and the sky is NOT falling.
Soon it will be so cheap that Sony (or someone else) will buy Apple.
“You can thank those idiot Democrats – Frank, Dodd and Shumer for blocking reform to Freddy and Fannie in 2006. “
That is less than half of the problem. As irresponsible as Fannie and Freddy are, it was the Fed’s issuance of unlimited amounts of credit that made their screw-ups possible.
-jcr
” I put a limit order to buy 400shs more at $100, but didn’t hit today.”
Little tip: set your limit orders just above or below round numbers like that.
-jcr
Today’s 17.9% drop in AAPL is indeed a combination of market panic (due to the failure of the U.S. House of Representatives to pass the Emergency Economic Stabilization Act of 2008) as well as sector fundamentals (i.e. the analyst downgrades from RBC and Morgan Stanley).
Basically, the stock market is pricing AAPL and RIMM as being in the same sector — smartphones — and when RIMM imploded after its earnings last week, AAPL got tarred with the same brush.
AAPL’s balance sheet is strong, and so it can easily repeat what it did in the previous economic downturn (2001–2003): ride it out.
Catalysts for AAPL in the intermediate term:
– Passage by the US Congress of some bailout bill. This will probably happen in October 2008, but if politics intervenes, it may not happen until next spring after the 111th Congress is sworn in after the elections.
– New product release? Rumors abound of a “brick” product, which may or may not exist, and which may or may not be released on October 14. Take this with a huge grain of salt until/unless it actually happens.
– Quarterly earnings. AAPL’s fiscal Q4 2008 earnings will be released on October 22, after market close. Current analyst estimates are for AAPL to earn $1.21. If AAPL can exceed both top and bottom line numbers, it will restore investor confidence in AAPL’s ability to ride out the economic downturn.
– MacWorld Expo and fiscal Q1 2009 earnings. These will both occur in January 2009.
Downside risks:
1. AAPL has a history of providing conservative guidance, and this will probably continue. It may get even more conservative, given the challenging economic environment.
2. Margin declines may arise from investment in new products (as hinted at the Q3 earnings conference call) and declining price points due to pricing competition and possibly reduced revenue. Investors always declining margins and will punish growth stocks that exhibit any hint of declining margins (cf. RIMM last week).
3. Political and headline risk. This is market wide and not specific to AAPL, but it will affect AAPL — along with other tech leaders — nonetheless.
If you have cash to invest and wish to purchase AAPL, watch AAPL as it approaches the psychological $100 support level (*). Does it stabilize and start to consolidate for the next several days and/or weeks? If so, that may be a sign that seller exhaustion is setting in, and it may represent a buying opportunity.
It is a truism on Wall St. that the bear market reversals catch everyone by surprise — and result in the biggest gains.
(*) Round numbers can provide some support (or resistance) for sstocks. This occurs for no particularly rational reason, but it does occur and is worth keeping in mind.
tb2 wrote:
“Just looked out the window and the sky is NOT falling.”
Nah, it’s just brokers jumping out of the windows above you.
Truth is, I’m a bit concerned that MDN is offering this “advice” in the form of news (because one could misinterpret their one eyed Apple patriotism and remarks about analysts being idiots etc as implying the stock will rebound soon and you’ll become rich riding that wave.) Ok, they didn’t actually say “buy” but they might influence *someone*. And I wonder if they’ll get sued when things come crashing down further? Hey, if you can sue for slipping on a drink you spilled, then slipped in and win, suing for dodgy investment advice should be a breeze.
Apple is a pretty sound company that makes products that appeal to affluent, educated customers. These folks are not choosing between a computer or food, they are choosing how to spend a more limited discretionary income. Apple’s appeal all along has been a superior value proposition. Apple should do relatively better than Windows box makers who’s appeal is to low-end consumers and the enterprise market.
You can thank those idiot Democrats – Frank, Dodd and Shumer for blocking reform to Freddy and Fannie in 2006.
Placing blame now is like the crew of the Titanic arguing over who the iceberg.
Everyone shares fault for a fsckup this big.
aargh.
“who the iceberg” = “who hit the iceberg”
Apple is a pretty sound company that makes products that appeal to affluent, educated customers.
Like bankers and stock brokers?
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If/when AAPL hits double digits again, I’m loading up. Fsck Wall Street and all its losers. They have never understood AAPL and will understand less how someone like me will become rich while they will be forced to live in subway tunnels.
Ummmm, Ron Paul anyone?
Folks!! the brick is an under $1000 MacBook!!!
Sorry to be so naïve, but what happened to the value of MSFT and other tech companies today?
Quick Summary to Educate:
1. Mortgages were bought and sold – loans given to those who could not truly afford a house based on their income, credit score, job status, etc…
2. The government encouraged this mess with regulation to allow loans of this reckless type to be made – legally so, to be made.
3. Bush, Schumer, Dodd, GOP and DNC fine folk all bragged about the number of new home owners – and took the credit.
4. The economy starts to slow over the past year, housing valuations fall, people bail on their mortgages, small business loans, etc… and the banks that bought all this bad paper are left holding the bag.
FUTURE: The problem with letting the banks simply eat it is simple. Fannie May and the like were developed to buy loans from smaller banks. This gives smaller banks cash, which they can lend for mortgages, car loans, home improvement loans, and perhaps most importantly, small business loans.
Without any of the big banks in existence, banks across this country will have no cash to loan, and no one to sell their loans too… The result is: Want a car? How about 15% interest for very, very, well qualified buyers. How about getting zippo for a small business loan.
In short, how about watching us not slip into a fully realized recession, but cruise right by and hit a full fledged depression.
It isn’t pretty folks, and the last thing we need is Government controlling our banking system all the more. They had a big hand in screwing it up in the first place.
Congress should put forth a bill that lends insurance to various products that have gone south, and manage it accordingly. Gov. need not buy the bad paper, that will only encourage the greed and cycle to begin anew, along with corruption and payoffs to oversight and regulatory bodies. No, we simply need an insurance program. As the economy moves north again, these products increase in value are sold, and the insurance will be used on very few of these loan bundles.
The result will be $300 billion over perhaps 5 years that will be used to insure the bad products, while the rest of the market will return the value and buyers back into homes and borrowing.
There you go.