“As expected, Apple (AAPL) had a very merry Christmas, posting the best quarter in its 32-year history, with earnings up 58% over the same quarter last year. But the good news fell on deaf ears in a market roiled by the broader meltdown,” Philip Elmer-DeWitt blogs for Fortune.
“And the company’s conservative projections for the next three months seems to have spooked investors attuned for signs of a coming recession. Apple’s shares, having closed at 155.64, down 3.5% for the day, plunged more than 12% in after-hours trading. At one point the stock hit 136.75, a four-month low,” Elmer-DeWitt reports.
“If this were any other company, the market’s reaction would have seemed bizarre… But Apple is not any stock. The market has come to expect extraordinary earnings growth, especially in the Christmas quarter. Traders instead seemed obsessed with Apple’s forward-looking guidance,” Elmer-DeWitt reports.
“Piper Jaffray analyst Gene Munster confessed that in his five years of covering Apple he’s never seen anything like the market’s reaction to these earnings. ‘I talked to one of our technical analysts before the call and he told me that the stock was going down to 130 no matter what results Apple posted,’ Munster said in a phone interview. ‘Something bigger is going on in people’s minds. There’s a feeling that stocks need to go back to their 200 day averages as the market corrects itself. This is not a bullish sign for other tech stocks going forward,'” Elmer-DeWitt reports.
Full article here.
Welcome to the Ression. You can thank Banks who with their ballon interest rates on houses, builders who are building houses that start out at $350,000 in the midwest, and rising oil prices.
The broader issue is that Apple is not shooting itself in the foot causing all this. There are other forces afoot. Apple is strong, getting stronger, and is certainly not sitting still.
The stock market is often an illogical place. Witness the article above. In the turbulence of market sentiment following the downdraft of the sub-prime meltdown, even the Fed lowering short-term interest rates 3/4 of a point, and longer-term mortgage rates dropping as well did little to soothe the nerves of Wall Street today. Apple got caught in the downdraft.
But in chaos, there is opportunity.
I am a strong believer in the thoughts of Warren Buffet and Peter Lynch. In a market panic, they see bargains. Instead of worrying about guidance, they look at earnings and earnings history. Lynch always admonished that stocks track their earnings. History bears this out. Please understand that earnings and stock prices don’t move in lock-step – there is often quite a lag. A stock’s price can get way ahead of its true earnings, or vice-versa. It’s this latter category where bargains can be had.
If Apple’s stock price gets pushed down below what earnings suggest is its true value, that’s a buying opportunity. As Warren Buffet always said, “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when
others are fearful.”
This might be that time. Wait a few days to see how the market settles. But you might find a bargain in the produce section. Look for the shiny Apples…
Hmmm, only a buying oppertunity.
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I think that there are forces at work that dislike Apple or at best, use the like of Apple to drive the market in a direction that is favorable to them.
Sell High, buy low. Even if you have to create the very forces that make the market move. 🙁 The FCC needs to catch these people, but, hey, they are only the government, right?? LOL
en
@ en
“I think that there are forces at work that dislike Apple or at best, use the like of Apple to drive the market in a direction that is favorable to them.
Sell High, buy low. Even if you have to create the very forces that make the market move. 🙁 The FCC needs to catch these people, but, hey, they are only the government, right?? LOL “
If you don’t like the rules of the game, don’t play.
One thing’s for sure – absolutely none of this is the fault of the leader of the free world*.
-c
(* – and much of the locked-up world)
“A stock’s price can get way ahead of its true earnings, or vice-versa. “
That’s what had happened with Apple, it needed 30% growth every year for a decade to support it’s price. an 8% forecast of growth doesn’t match that expectation, hence the price goes down.
“The FCC needs to catch these people”
FCC, I think you mean SEC? Anyway, there’s no nefarious moves afoot there, just an overvalued stock beginning it’s fall back to it’s true value.
This is only the beginning. Wait until a tax and spend socialist is in the white house.
Can’t get any worse then having a tax cut and spend Neo Con. Either way the American public is screwed.
Anything to be rid of a borrow and spend fascist.
Not if you don’t vote for that tax and spend socialist!!!
So don’t!!
1. Apple always drops after an earnings announcement.
2. The Second Quarter is always much slower than the first quarter (fiscal year) because Christmas is over, there’s no educational buying yet, and it’s just the slowest quarter of the season.
3. Apple’s drop had nothing to do with its earnings report; it was a knee-jerk reaction to the rest of the market dropping. Just watch, in a week to 10 days, we’ll quietly have two or three 200+ point days which won’t be hyped on CNN.
“This is only the beginning. Wait until a tax and spend socialist is in the white house.”
Yeah, baby. Bring it on!
Meanwhile, the Republican candidates continue to offer to bribe the electorate with tax cuts in the hundreds of $$- while shoveling billions into the pockets of their corporate pimps.
Tax and spend. Cut and spend. Do I hear a vote for the bend and snap?
I vote for bend and snap. And blonde sorority queens.
Let someone else pay the bills and clean up my mess.
I’m taken care of for life.
The rest of you miserables are on your own.
thanks Jeb & dad
bend and snap.
works every time.
@bizlaw
Wanna bet? Tell ya what, I will contract to sell you 1000 shares at us $195.00 on Monday, Feb. 4 2008.
So what’s the vibe in the States at the moment. I have nearly 20000 aussie dollars I don’t know what to do with. Should I support Apple and invest in them? I’d like too. Do it now while it’s cheap?
I mean unless America totally closes down and shuts up shop, I see this just as a slump. Things will eventually get better. This must have happened before, gone up up up, nows it down again. It the nature of the market.
Grand buying opportunity if the stock moves to $120 (more than likely its correction price) within 2 months.
You guys really have to stop generalizing. First off, I don’t want a tax-and-spend socialist either, which is why I don’t like President increase-medicare-by-30%,-double-the-Federal-Department-of-Education,-double-military-expenditures,-and-greatly-increase-the-debt-which-will-eventually-have-to-be-paid-off-with-you-guessed-it-higher-taxes-or-genuine-lower-spending Bush and most others who currently call themselves “Conservative”.
I personally support Ron Paul (go ahead, laugh), which by the way points out another false generalization here: that Republicans all fund special interests. But after him, I would, as much as I hate to say it, rather have any of the Democrats than any of the other “conservative” Republicans.
Sorry for the rant.
Those Wall Street f**kheads! Nothing is good enough for them! Nothing!
Last chance to buy under $175 indeed
@Aussie,
I would still consider investing in Apple considering it has “adjusted”. Guidance for the next quarter is not an indicator of bad things at Apple, just bad things here in the states. Some analysts acknowledge that we have been in a recession of sorts here for the past few months already, so this news of bleaker earnings is not just Apple. If you think Apple has it bad, wait until the effect it has on the entire tech sector. It will be a bloodbath.
But with all cyclical things like the financial markets, things will turn around. Here in the states the Federal Reserve Bank lowered the “discount rate”, the rate the government charges banks for loans. This has an effect on all corners of the economy and generally should help the markets in general.
Wait until Apple goes down to $135 – $140, then consider buying.
fm
Aussie, go for it! I’m a fellow Aussie who almost bought $A3000 of Apple stock in 2003, when it was $US7 (split-adjusted). Even with the current slump it would still be worth nearly 20 times that now.