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Our Blogs The BeerFiles So why have Apple shares dropped?
Our Blogs The BeerFiles So why have Apple shares dropped? | So why have Apple shares dropped? |
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| by Stan Beer | |
| Thursday, 24 January 2008 | |
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In this particular case, the market was already expecting great financial results and had previously factored it into the share price of AAPL. What the market is reacting to, however, are three things: a lack of any new killer products or announcements at Macworld 2008, a lack of belief that Apple can sustain its breakneck growth rate, and last but not least a very real fear that Apple, being a luxury consumer goods provider at the premium end of its market, will be hit by what is now believed to be an inevitable economic downturn in the US. Looking back at 2007, the market was expecting big things from Apple and the company delivered in spades. Its new range of Intel computers - desktop and notebook - had proven to be a hit in 2006. Then at Macworld 2007 Steve Jobs announced the iPhone that everyone had been waiting for and the market loved it. Apple had entered the smartphone space with an innovative product and opened up a whole new line of business. Later in the year came the iPod Touch and the long awaited Leopard, which didn't disappoint. Apple TV was a bit of a let down but nobody really cared - the market could see where growth was going to come from. Comparing Macworld 2008 to Macworld 2007 was like comparing chalk and cheese. Like the iPhone, the ultra slim MacBook Air was predicted months in advance but few cared. Everyone knew it was going to be a premium priced product that would have no great growth effect on Apple's business. Perusing Apple watching blogs, many consumers had been asking for a smaller form factor sub-notebook with a 12-inch screen or less. They had also been expecting an announcement of a release date for a 3G iPhone. Both of these products could potentially provide growth avenues that the market is looking for. Of course the market is still expecting a 3G iPhone to be announced this year. However, with a US recession around the corner, the market is obviously worried that US and European consumers will greet the announcement with relative indifference. Back in 2007, the iPhone was a must have novel product. While sales should still bubble along in 2008, it is not clear whether the gloss has started to wear off and sales growth will plateau. As UK-based telecoms analyst Ovum says: "The iPhone may not be on the stellar path that many predict." The release of a 3G version will certainly make things a bit more clear. Returning to the original question, AAPL shares have dropped because at their present level of around $139 with a PE of more than 35, investors want earnings growth to continue at the breakneck speed of 2007 if they're going to pay a premium for the stock and they're uncertain as to whether Apple can achieve that in the coming year.
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  written by TheBen, January 25, 2008 written by Mr Roberto, January 25, 2008
Thank you TheBen for confirming what non-rabid Apple fans have believed all this while: that Apple is just another tech stock that doesn't do anything special.
written by HeartMan, January 25, 2008
Over the very short term, Apple's losses compares to the other stocks. Take a look at Apple's performance against the same stocks of the last 1 or 2 years. It's been pretty special.
written by Juan Carlos de Burbon, January 25, 2008
...in an economic landscape that may be indicative of a recession? They might be sinking more into current operational efficiencies and R&D;to improve and defer until a better economic scenario.
Apple is quite progressive in its operations and planning. This might be a good time to sit on the warchest and weather the storm. written by Truth Police, January 25, 2008
Execs in the PC, Software, Telcom, Cell Phone, Music, Retail, Movie and TV industries are losing sleep over how Apple is changing and becoming a major player in their industries. In the meantime, their business model continues to move from hardware only to repeating sales (songs, movies, upgrades, rev share with AT&T;, etc)... Yeah, they are just another tech company. Ignorance on display.
written by Mitch, January 25, 2008
"the market is often ahead of the game."
You are giving the insane stock market a lot of credit. It's as nutty as the people who somehow think they know why a specific stock did something. i.e. The dow dropped due to a government report about unemployment numbers. These people can't know that unless they are psychic and if they were they wouldn't be writing about the stock market, they'd be having articles written about them and how they are so successful making money on the market. written by Roger, January 25, 2008
It's the old "Apple products are expensive" bullshit. In every case over the last several years, and absolutely since switching to Intel chips, Apple's products are AS CHEAP OR CHEAPER--that's FEATURE FOR FEATURE, trolls-- as the competition. I'm not a fanboy but I'm tired of the same shit from forum posters and "analysts". Go google it yourself and stop writing such crap.
Have you written that Microsoft Windows XP and Vista have like 250,000 viruses and worms in the REAL WORLD (not lab exploits reported by companies selling security software), and thus everyone should sell off Microsoft because it makes using a computer of any price not viable. No, of course not. written by rocco, January 25, 2008
Apple's earnings were fine. ipod sales were down a bit, and the killer was the forecast of slow growth in the coming quarter. The shares have skyrocketed in the past because they've beaten estimates and projected good future growth. This is an aberration which Bernanke and Bush can share the blame in. Momentum stocks like Apple suffer in this environment. Hold your Apple stock. It will eventually come back with a vengeance.
written by Joe S., January 25, 2008
Im sorry Apple's iPod sales were actually up not down.
http://www.macworld.com/article/131780/2008/01/1qanalysis.html http://www.roughlydrafted.com/2008/01/23/analysts-investors-take-apple-to-task-for-its-best-quarter-ever/ written by Joe S., January 25, 2008
http://www.businesswire.com/po...124005480& ndmHsc=v2*A1201179600000*B1201212484000*DgroupByDate*J1
*L1*N1000001*ZApple&newsLang;=en&beanID;=1802668732&viewID;=news_view
written by John R., January 25, 2008
I place no credibility in a reporter who doesn't use English correctly - as shown through his incorrect use of the word "its". However, much more serious is a person who has referred to Apple's stock with the code of APPL (last paragraph), when the actual code is AAPL. You have a little refining to do to enhance your credibility, sir.
written by Stan Beer, January 25, 2008
Thanks for pointing out the typo of the share code in the last par which shall be corrected (note that I got it right in the first and third pars). I also corrected one instance where I found that I incorrectly put an apostrophe in its (the others were all correct).
written by Mmmmmark, January 26, 2008
Many of the holders of AAPL bought at a much lower entry point than the sky-high prices the stock has been sailing in recent months. With even a hint of uncertainty in the markets and the R word (recession) hinting on people's lips, it only makes sense to take your large profit and repurchase when the stock bottoms out (along with the rest of the market).
Of course, this collective mentality in all stocks creates market instability, but no one thinks about anyone but themselves. So the story goes. For the most part, the days of hold this stock forever are gone. A prudent investor should invest without emotion and follow the general rule of stocks: buy low, sell high. I'm a huge Apple fan, own many Macs, but I also sold my AAPL and counted my money. If the buy looks good at a future date, I'll certainly jump back in, but I won't let my heart over-rule my head. Tell us what you think! better to paste your comment - this page will refresh every 15 minutes
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I know nothing about finance but 15 minutes on Google Finance shows me that Dell's stock has dropped 30% since November 2007 and HP's has dropped about 21% over the same time period.
Singling out Apple is just an attempt to get more eyes on your article, which is sad.
Do some real analysis, spend 15 minutes here: http://finance.google.com/