BusinessWeek: Why Dell, HP, Apple declined

“There’s growing concern that the U.S. computer industry is in for a bigger slump than previously thought,” Catherine Holahan reports for BusinessWeek.

“The second quarter is rarely a good time for computer makers. Back-to-school buying won’t get started in earnest for months, the holidays are half a year away—in both directions—and corporate IT budgets are still far from spent. But there’s growing concern that this year’s lull is hitting especially hard,” Holahan reports.

“Concerns over the U.S. computer industry surfaced on July 12, as some prominent Wall Street analysts made bearish remarks about Dell (DELL), the world’s largest PC maker, and Apple (AAPL), which makes computers and the popular iPod digital music player,” Holahan reports. “By the end of the trading day, tech stocks had taken a beating, with computer makers some of the biggest losers. Dell shares fell more than 4%, while Apple slumped almost 5%. Hewlett Packard (HPQ) dipped 2.7%.”

“Credit Suisse issued a report [recently] that did a number on Apple’s stock. The computer maker, which reports fiscal third-quarter results July 19, will probably issue sales and earnings forecasts for the current period that falls short of analysts’ expectations, Credit Suisse analyst Robert Semple wrote,” Holahan reports.

“Apple is likely to tell analysts that fourth-quarter sales will be $4.6 billion to $4.8 billion, compared with analysts’ estimates for sales of $5 billion, the report says. ‘We expect Apple will once again use the September quarter to reduce iPod inventories as the company prepares for a refresh of its product lineup,'” Holahan reports. “Apple has [also] been dogged by reports from analysts at other firms that the next version of the popular iPod music player will be delayed.”

Full article here.

Related articles:
Reuters: Apple’s ‘beleaguered’ stock sheds 4.8 percent to hit lowest mark in nine months – July 12, 2006
Mad Money’s Cramer: hammering Apple stock is much like ‘shooting Apples in a barrel’ – July 12, 2006
Tech stocks retreat as European Commission fines Microsoft – July 12, 2006
CSFB Analyst: Apple could warn on 4th quarter profit and revenue – July 12, 2006
JMP Securities: Apple Computer initiated at ‘Strong Buy’ – July 11, 2006
Analyst Wu: New iPods may face delays of as much as six months – June 28, 2006

32 Comments

  1. Boy, all wall street can do is — doom and gloom. Even when things are looking up. !!!

    Still, I see Dell continuing on going down with the MS ship and Apple continuing to move up. But hey, thats just me. ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

    N.

  2. Apple’s problems are linked to their ipods, not to their computers. The question with Apple is if they can replace falling ipod sales with either a new ipod, or with [probably surging] computer sales. Vista shipment and Dells myriad of problems are completely unrelated to Apple’s.

  3. Wow. You only sold $4.8 billion worth of product, and I expected you to sell $5 billion. You’re pathetic and on the way out.

    What kind of logic is this? Wall Street logic, apparently. They’re making plenty of money, just not as much as Wall Street would like them to. It makes no sense to me.

  4. Wow.
    So the know-it-all analists say Apple should do this and that and when Apple doesn’t meet THEIR expectations they dump on Apple.

    God I’d love to have a job like that.

    “So Smithers I predict that you will work 80 hours next week.”
    Next week happens and Smithers only worked 77 hours.
    “So sorry Smithers, you didn’t meet expectations, your fired.”

    Only in Wall street dream world.

  5. We all know that if one company on earth controlled everything and all currency in the world was spent with them then these so called analysts would still have a problem since they’re not growing – they’ve levelled off at 100% of everything.

  6. ‘We expect Apple will once again use the September quarter to reduce iPod inventories as the company prepares for a refresh of its product lineup,'”

    Semple’s logic is horribly flawed, and reason enough for investors to do their own research. In my opinion analysts are lazy and border on stupid.

    Case in point: Semple believes that by lowering inventories during FQ4, Apple’s revenue will decline.

    Fact: Let’s assume that Apple has been doing this for many years, after all Semple says this is Apple’s standard procedure. If that’s true, then how does Semple account for the fact that for the past 6 years, Q4 has accounted for 25.67% of Apple’s revenue. The only quarter that generates more revenue is Q1 (Christmas quarter) and it generates 25.68%.

    In my opinion Semple, like most analysts, is an idiot. Investors are better off doing their own research. It isn’t hard, and you’ll be surprised at how much closer your estimates are than those of Wall Street.

  7. I told you it’s the US economy heading into post real estate boom recession.

    Second buisnesses are clamping down due to higher costs, PC upgrades are on hold because they are waiting for dual core processors to become standard and Vista arrives.

    Apple has to react to market forces just like any other buisness, that’s why they came out with so many iPod revisions so fast. They were taking advantage of the high amount of disposable income people had at the time from a highly accelerated economy.

    Now interet rates are high, inflation is high, cost of living is high.

    A recession is a very real possibility, and what’s the use in creating hype over a new product/machine if people and buisnesses need to watch the bottom line?

    What’s good about this is Apple will survive and Dell might suffer even more.

    HP may do well when Vista arrives.

  8. You know, I have theory on knowledgeable stock analysts/brokers. All the good ones became Billionares during the .com boom and have retired to their newly purchased tropical islands. They are out of the business. The dumb asses that couldn’t figure out how to shoot ducks in a barrel during the .com boom are our current resident experts in the media.

    These idiots are going to ruin a perfectly good business boom with their lack of knowledge and experience. Just because they are all that is left and media outlets have to print something.

    Don’t believe me? Check the facts. They mis-called every economic trend in the last 4 years. Mis-called the effect of Iraq, oil prices, and tax breaks. They overtstate the possible negative effect of every market event, like naive freshman that just learned a new “fact”. It is like having 1000’s of Chicken Little’s telling us how to invest our money.

    Just my $0.02

  9. If Apple doesn’t come out with a Cell processor based Mac Pro and XServe, expect their stock to tank even further.

    Apple needs to move hardware and Mac OS X alone (combined with not nearly enough software) just doesn’t cut it when most everyone uses Windoze.

    Dual boot is not a solution, Apple is going to have to get into bed with Parallels/virutalization fast to grab as many Windows users as possible before Vista messes up the works.

  10. It is actually manipulation of the stock price by large block investors. If they dump enough they can get some momentum downwards in the stock price. This causes small investors to get worried when they see a stock head downwards as high-flying Apple has done in recent months.

    It’s not really a matter of what analysts say or project in sales that governs stock price, but it is very important that Apple has year over year growth and meets their guidance. The rest is just jibberish.

    With the downward pressure and trend in full steam it’s probably not a great time to load up on Apple shares, but have your finances in place to buy shares when the trend changes direction. If Apple meets its goals and guidance there will be a good lift in AAPL as the rest of the computer industry can’t seem to figure out what to do to excite sales. If Apple proves they have a way to sell Intel powered PCs when others can’t that will be like a money printing machine.

  11. Yea Apple moved a lot of hardware because they were the only one’s that had the G5 processor in Towers and Servers.

    I’m sure they would like to repeat that success with the Cell, provided it’s ready, which I hear November is when the Playstation3 is due.

    The Dual core Intel processors are really not that much faster than G5 processors. Only cooler, which Apple needed for laptops and their consumer designs.

    The towers and servers are different animal, they cater to the enterprise and professional markets. A couple of Cell’s would do good here. No video card needed either.

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