Apple's downward spiral accelerates

Dec 05, 2012 by Prune Perromat
The "Apple" logo is seen on a tablet screen on December 4 in Paris. Apple shares suffered their worst decline in years as selling momentum gained steam for the longtime tech star and world's largest company by value.

Apple shares suffered their worst decline in four years Wednesday as selling momentum gained steam for the longtime tech star and world's largest company by value.

stock tumbled 6.43 percent to close at $538.79, and is now down some 23 percent from its record high earlier this year above $700.

It was the worst single-day decline for Apple since December 17, 2008, according to Michael Gayed, strategist at Pension Partners.

The decline also wiped out some $35 billion in value for Apple, whose market value is now some $506 billion.

There has been no single catalyst for Apple losing its luster, although some analysts say it has lost its edge in innovation, and that its iconic and are facing tougher competition.

Another factor was a disappointing in October from Apple, which in recent years has powered past analyst forecasts.

"There are plenty of reasons to say the stock is done," said Michael James, at Wedbush Securities.

"It's becoming a show-me story, they're going to have to meaningfully beat estimates on the next report."

James said a lack of information from the secretive California giant also has the market nervous: "Chatter, rumors and traders sentiment are all going to move the stock meaningfully without any comments from Apple."

A report from the research firm IDC underlined those concerns, saying that tablets powered by the Android system are gaining on the market-leading iPads.

IDC now expects Android's worldwide tablet share to increase to 42.7 percent for 2012 from 39.8 percent in 2011. Apple's share is expected to slip to 53.8 percent from 56.3 percent in 2011.

Trip Chowdhry at Global Equities Research said the market was also jolted by reports that Apple had shifted production of some iMac computers to the United States.

"Apple quality is phenomenal, but you can't overnight produce something in a different location and expect the same kind of quality and cost structure, and that is creating anxiety," Chowdhry said.

Jody Giraldo at EquityStation said some investors are merely locking in gains before the end of the year.

"The stock had a very good run over the year and it seems a lot of people continue to sell to lock in some returns," he said.

"A lot of managers here in the states are behind in terms of their return versus the S&P (index) and they take all the profits where they can."

Jon Ogg at 24/7 Wall Street said Apple's stock problem is more technical than fundamental, but also said the market is no longer expecting a one-time special dividend which would be a boost.

The analyst noted that technical trades focus on performance metrics and that because Apple shares have been underperforming, some portfolio managers and computer programs are driven to sell.

"The issue we see on the chartist side of the equation is a coming death-cross chart pattern in the next few days," he said.

"This is a bearish chart pattern that occurs when the 50-day moving average crosses under the 200-day moving average, hence the death-cross."

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User comments : 10

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Caliban
not rated yet Dec 05, 2012
Jody Giraldo at EquityStation said some investors are merely locking in gains before the end of the year. "The stock had a very good run over the year and it seems a lot of people continue to sell to lock in some returns," he said. "A lot of managers here in the states are behind in terms of their return versus the S&P (index) and they take all the profits where they can."


I'd like to see the breakdown on the numbers, ie, when shares purchased, number of shares puchased, how long held, etc. Most likely this is the inevitable profit-taking following the inflation of the share price balloon.

Eikka
4 / 5 (3) Dec 05, 2012
Apple quality is phenomenal


As I recall, apple has twice the profit margin on its products from other manufacturers in general. Which means that dollar for dollar, you get less with Apple.

But of course any Apple product is also so phenomenally expensive that you may just get what everyone else has.
VendicarD
3.3 / 5 (6) Dec 06, 2012
Apple has nothing meaningful on the horizon, and people are realizing that the competition has better and less expensive products.

Further, Apple has lost it's sense of good design since the loss of Jobs.

Basically IFads and Tables are fads, and the craze is coming to an end as more and more people wake up to how foolish they have been.
Osiris1
3.7 / 5 (3) Dec 06, 2012
I wish folks would not keep blindly making a plaster saint of the thankfully deceased Steve Jobs. The real soul of Apple is, was, and always and forever will be Steve Wozniak. When together, Jobs was always the unimaginative, plodding, bean counter. It was Jobs influence that destroyed the Apple][ !! He refused the Woz's repeated requests to upgrade the Apple][ to the 65816 processor back in the early 80's, and banefully demanded the keeping of a keyboard processor chip that overheated and repeatedly reset the system, and was the cause of fires.

It was the programmer, Wozniak, that made the original Apple great. Had the Woz's advice been followed on: upgrading the system to 16bits in 1982, & other video upgrades; junking the Jobs chipcount system of giving the customer the least while charging the most; and eliminating defective parts like that keyboard chip; then Apple would have been an effective and reliable competitor for IBM early on. And KEPT its lead!
VendicarD
5 / 5 (1) Dec 06, 2012
"He refused the Woz's repeated requests to upgrade the Apple][ to the 65816 "

The Apple2 GS used the 65c816, which was a CMOS version of the 65816.

The 2GS was targeted primarily at schools and came at the end of the Apple2 era.
VendicarD
3 / 5 (2) Dec 06, 2012
IBM took the lead in the Computer Biz, not because Apple was unreliable. But because the B in IBM comes from the word BUSINESS and BEAN COUNTERS immediately concluded that such a machine was good for BUSINESS, and not them childish Video Games that the Apple ran.
Eikka
not rated yet Dec 08, 2012
BEAN COUNTERS immediately concluded that such a machine was good for BUSINESS


Yes, because IBM was selling whole systems, from mainframes and servers to the workstations and the networks that connect them. Everything was compatible, with software to match, and it wouldn't change on a whim, which would be a problem with a company like Apple that could change its entire lineup overnight and stop supporting the old ones.

But the real killer was the cheap IBM compatible clones.
VendicarD
not rated yet Dec 08, 2012
"Everything was compatible" - Eikka

Sorry, but the IBM PC wasn't compatible with anything. It was an entirely new direction for IBM. They didn't even put much effort into it. Which is why the design was so screwed up. - video memory in the middle of the address space, etc.

"with software to match" - Eikka

There was virtually no software for the IBM PC when it arrived. There may have been a rudimentary text editor and spread sheet available for a fee. DOS 1.0 didn't provide anything on it's own, and IBM's alternate OS. never sold.

Eventually IBM PC clones hit the market, but there were already many LNW Clones of Tandy machines around at the time, and they were all compatible as well.

But to start, several million PC's sold on the name IBM alone, and did so with virtually no software and no compatibility with anything else.

VendicarD
not rated yet Dec 08, 2012
During the rise of the IBM PC archetecture, I never saw a PC for less than $4,000 in current dollars. Usable configurations with hard drives came in at $10,000 or more.

"But the real killer was the cheap IBM compatible clones." - Eikka
dschlink
not rated yet Dec 09, 2012
I suspect that the current decline is largely due to people taking profits combined with the realization that a company that isn't even in the top 15 by sales, shouldn't #1 in capitalization.

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