Apple shares drop 17.5 percent
Apple's shares fell 17.5 percent in early trading Monday, as two noted brokerage firms scaled back their recommendations to a "hold" from a "buy."
Apple fell as low as $105.77 a share in intraday trading, down substantially from its close of $128.24 on Friday. Apple's shares sold off sharply after Morgan Stanley and RBC Capital Markets downgraded the stock.
Morgan Stanley not only revised its recommendation for the stock, but also lowered its fiscal 2009 earnings estimate to $5.47 a share from $5.91 a share.
In listing its reasons for its revisions, Morgan Stanley said in a research note:
First, PC unit growth is decelerating and the remaining source of growth is increasingly in the sub-$1,000 market where Apple does not play. Second, even in the best of scenarios, Apple's earnings per share growth will decelerate meaningfully from June quarter levels. A combination of tough compares (with the previous years figures) and investments in iPhone growth drive our December quarter earnings per share to a decline of 8 percent year over year, down from +29 percent growth June.
Morgan added that it expects Apple to offer a more conservative guide to Wall Street and investors for the three-month period ending in December.
RBC Capital, meanwhile, downgraded Apple's stock based on "elevated risks" from a slowdown in consumer spending.
According to RBC's research note:
In a worsening consumer spending environment we are downgrading from outperform to sector perform on: 1) reduced visibility growth, margins. 2) elevated risks to valuation.
RBC noted in its report that its September data showed the number of those intending to purchase a Mac laptop within the next 90 days has dropped to 29 percent, compared with 34 percent in August, and those expecting to purchase a Mac desktop fell to 26 percent from 30 percent in the same period.
Dawn Kawamoto covers enterprise security and financial news relating to technology for CNET News. E-mail Dawn. 
Don't read more into the prices than what is there.
You call the Dow dropping 800 points a "minor dip"?
I call the drop in Apple's stock value today to be a mnior dip in percentage to their value over the years. Looking only at today will cause you more panic than need be.
Today, Apple's market cap has hit less than $100 billion at just $98 Billion, while Google's market cap is still solidly above $100 Billion at $128 Billion.
Meanwhile, Microsoft is over $200 bilion, happily sitting at $245 Billion in market cap today, even after all the batering stocks have taken recently.
The trouble with Apple is that the average price of Apple Macs are just too high, much higher than what the average man in the street will be willing to pay at a time when the economy is shaky. Plus with their super high prices, Apple has managed to garner only a tiny market share in the fastest growing, huge new markets like China, India, Russia, where the economies are stil growing at over 9% ( In China for example).
I just don't see how Apple can gain market share in China, selling Macs at an average price of over $1000, when the Chinese can buy a cheap full featured Windows PC for less than $300.
That is because you PC fanatics lack vision. You just can not accept the idea that Steve Jobs does not want to be the next Bill Gates. Not everyone thinks you have to be the biggest to be the best. So get over it and move on. There is nothing to see here.
People have been saying this for twenty years. Aside from the $600.00 Mac Mini, Apple particpating in this space makes no sense:
-No profit. Once someone picks up the phone for tech support or brings the product in for warranty service, you've lost the profit you made from playing in such a cutthroat market space. If the whole point of selling sub-$1000 machines is to increase market share, is it worth losing a few points of profit margin to do so?
-Sub-$1000 PCs are usually subsidized by cr*pware and ads. I don't want that stuff on my computer. That's one more reason I like to buy Apple's stuff.
-Wise investors would punish Apple for making a move that increases their exposure to low-cost players and tarnishes their premium image.
The current Apple stock price is a gift from Santa Clause if you willing to receive it 8-).
Nope.
Apple Mac market share in China is tiny. The Chinese simply can't afford Apple's fancy prices for the Mac's, when they can get a better , higher spec Windows PC for a much lower price. In developing countries, price is king.
"The image of Apple products are so good that no one can even come close to it"
Yeah?
Is that why the iPhone has had more glitches and malfunctions than almost every other 3G phone on the market?
Er.. which more glitches and malfunctions? Oh, yeah, the missing/dropping calls issue that only happens in AT&T...
Right, whatever.
"Er.. which more glitches and malfunctions? Oh, yeah, the missing/dropping calls issue that only happens in AT&T..."
And corrupted firmware, handset locking up, apps crashing, bricking of units, security holes, etc, etc, etc.
If you don't recall any of this, just start with the search bar at the top of the screen and type in 'iphone'. Look at all the news stories and reports since the 3G release. Make up your own mind after reading that.
I'm fully willing to believe the other 3G phones have had just as many problems, but the iPhone is in the forefront of the consumer's attention right now, so that spotlight will highlight any flaws or probles that come up.
Thankfully there are plenty of alternatives out there at a fraction of Apple's replacement price.
"If you don't recall any of this, just start with the search bar at the top of the screen and type in 'iphone'"
You have to love when someone says that. Anyway... just to indulge you, I did. Didn't find that much, though.
About the problems you and pjhenry are talking about, the app store and the technical process of installing the software and reloading the springboard were at fault there, so I concede that point (reportedly, 2,1 solves this). What I wonder, though, is that although I personally don't own a 3G (I have the original), a couple of friends have the 3G and I have not seen any problems with those units (We live abroad, and don't use AT&T)... maybe there is something wrong with the downloads?
About the charger, you should get it replaced... (although I haven't used mine... is still wrapped in plastic)
Cheers,
Uh, yeah right.
Good luck trying to talk your stock up.
Previous close of day (Friday): $128.24
You say you are buying 5000 shares. At the time of your comments, it was at $119.68.
Your total price of investment was: $598,400.00. More than half a million dollars of investment money.
A little bit more than an hour later, Apple's stock had dropped further. As of this writing, it is 101.28.
Your total investment of 5000 shares is now worth $506,400.00.
You just lost $92,000.00 in less than 90 minutes.
I question your investment methods if it yields nearly a $100,000 loss in 90 minutes. Are you sure you're a smart investor?
I bought in at $119 even (set order)
Don't worry about me, I've been doing this a long time and a little loss will helo me with the capital gain I made on AAPL
(over $350,000 profit) during the 2nd quarter of 08.
"I'm not a daytrader, I'm in for at least 2-3 months or longer."
Then you are in for a very bumpy ride indeed. As you just lost $100K today alone, how much more can you afford to lose before cutting your losses?
***?
of course other stuff is being downgraded
You already have a notebook that has MAC, what you want is a MacBook.
The cheap PC is a commoditized market, in other words, it doesn't matter which one you buy -- they are all the same garbage. Why would Apple want to compete for the already slim pickings of 5 - 10% profit margins when it can focus on 30 - 35% profit margins in its current product line?
Here's also a few reminders of how healthy Apple is:
1) No debt...Most companies of this size have debt to help purchase capital and move quickly into markets.
2) Huge cash reserves...Apple has over $25billion in cash. This gives Apple a cushion on a downturn in the economy without having to lay off people or reduce R&D. Dell and HP have already announced that they are doing this which hurts them in the long run. Apple will still be coming out with more advanced products while market players are just trying to get back on their feet when the economy improves.
Even if you don't like Apple products, from an investor perspective Apple is a fantastic stock. They are stable, growing much faster than other market players. They have cash and retail outlets (the highest revenue of ANY retailer per sq. ft. in the US). Their products are in demand and growing market share. It doesn't matter what the Chinese will and won't buy, Apple doesn't care right now (not to mention that most PC's in China run off of pirated OS software, so Microsoft isn't doing well there either). There is too much opportunity to gain market in the US and Europe to focus on cheap hardware. You focus first on your best opportunity, easy and simple.
Long term investing -- Apple is a great bet...
FACT: In the next 10 yars, most of the growth, and the sales in the global PC market will come from huge new markets like China, India, Russia etc. China's economy has been growing fast for over 20 years, and will become the second biggest economy on the planet in just a few years.
In 2 years's time China will be the biggest PC market on the planet, overtaking the US PC market, and after that, it will still gorw a lot faster than the very mature US PC market. Apple doing really bad in the Chinese/Indian market is going to continue to hurt Apple for a very long time.
Windows PC' s dominate the PC markets in China. And as at last year, the Chinese goverment nudged the big Chinese PC markets to pre-install Windows in their PC's instead of selling "naked" PC's with no OS pre-installed.
Plus US firms like HP and Dell already pre-install Windows in their PC's they sell in China anyways.
Dell and HP sell low cost PC's and still manage to make huge profits. HP has beeh on a tear since Hurd becae CEO a few years back. Apple on the other hand seem to think they are entitled to robbing the average consumer by charging ridiculously high prices. That is why their market share worldeide continues to be stuck under 3 %, even after over 30 years in the pc bussines.
Apple doesn't have "over $25 billion in cash". According to Apple's latest SEC filing, Apple has $9.3 billion in "cash and cash equivalents".
In fact Apple's *total* assets (including the buildings they own, manufacturing plants, inventory, goodwill, etc.) is only $31 billion, just 1/3 of its $90b market cap. So much of Apple's valuation is based on future expectations, but Apple hasn't been able to live up to it's 20+ P/E ratio.
Which is why Apple is getting hammered, as well as they should.
Apple is a fantastic stock from an investor's perspective? Get real. Apple shares have lost almost 50% of it's value from the beginning of the year, far worse than it's competitors (e.g, Microsoft and HP.) I don't know that planet you're from, but investors on Earth don't think losing 50% of value in less than a year as "fantastic."
Also, you are totally forgetting about the rest of Apple. It isn't called Apple Computers anymore, it's just called Apple, and for good reason. There is still all of iTunes, whose variety of products keep growing all the time, (apps, music, movies, tv shows, ...) and of course iPods, which had 100 million sold a long time ago, and iPhones. And there's the huge amount of money from service that Apple gets from AT&T. By the way, I'm a student in High School, and I am so surprised at how people own iPhones. I saw my first iPhone in September 2007, two or three months after it came out. Now within the last month, I've seen at least 5 people who I know personally with iPhone 3G's. And they didn't trade in their previous iPhone. There's still Christmas.
So Morgan Stanley and RBC Capital have just done a favor for Apple. They underestimated Apple by a long run after years of high expectations. Next thing you know, in December or January, their stocks are going to skyrocket. The lower Apple gets, the higher it can go. Just watch. Or you can listen to me and be a part of the growing change which really isn't a change cuz its been happening for years.
I just checked the stock price again and it keeps fluctuating up and down, but now their loss is $124,817.00. Wow. That's just insane. I hope that was their own personal money and not someone else's. I expect by end of day it will be down a little from the start, but not that much overall.
If you don't buy now then you lose.
Buy on the lows sell on the highs.
I bought 5,000 shares in March at 123 sold at 191. That's a tidy profit in a few months!
In again today, probably bail at around 150 or so (depending on developments yet to come)
And yes it is my money, (profit from past AAPL and V IPO purchases and sales)
If you are indeed making so much money because of your excellent investment expertise, why are you only buying 5000 shares? Shouldn't you be buying even *more* stock? As Apple's stock dropped nearly 20% today, then you could really make a killing by buying several hundred thousand shares.
I fully believe the 5000 share purchase person was just making it up. Having lost $100,000 in 90 minutes, I think they would be watching the market more than posting here on CNET.
This is the financial equivalent of betting on your own team to lose. Eventually it turns into a zero-sum game, but produces lots of whoop-de-dos in the process.
As for the bailout, a small spike will probably happen after it is passed, but don't expect any sustained growth until after the election. It makes no difference who is elected, just removing the uncertainty will ease some of these frantic gyrations.
- by AppleSuxLeo September 29, 2008 12:29 PM PDT
- AAPL went down the Crapper , where they belong today ! Barely above $100. Ran out of ideas ? Too much "white plastic everything". Jobs to minions...Lets make it round...no , square ? Lets make it round AND square. Lets throw new colors at them. Bwahahahaha !!!!
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- by megfilmwrk September 29, 2008 12:46 PM PDT
- What a useless comment. You should be on Facebook.
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- by Vegaman_Dan September 29, 2008 1:11 PM PDT
- Hate to say it, but AAPL's stock price has nothing to do with the company or its products. Wall Street doesn't work that way.
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