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**Apple Inc. shares dropped 12% at the start of trading Today**

January 24, 2013

Apple Inc. shares dropped 12% at the start of trading Today (Thursday, Jan 23, 2013), triggering a stock exchange circuit breaker designed to slow short sales of falling stocks. Shares of the company, the largest by market capitalization on the S&P 500 SPX +0.41% and Nasdaq Composite COMP -0.15% , traded at $453.27, off $60.74 from $514.01 Wednesday. Late Wednesday, Apple released results which included a disappointing sales forecast. The Nasdaq Composite, of which Apple makes up about 10%, was down 0.6%. The Nasdaq 100 NDX -0.66% fell 1.2%. Cirrus Logic Inc. CRUS -8.68% shares also hit the short-sale circuit breaker, according to the Nasdaq OMX Group NDAQ +0.37%.

Well, if you are a "trader" you’ve got lots of action on this issue; and if you get stuck, you’re in a position with a company that knows how to create earnings.

IMHO, the "Street Analysts" from NYC to California, set their own growth, income and earnings estimates for companies including Apple; the problem is that "The Street" is so used to huge, unusually huge, sales and earnings growth numbers, that when Apple reports their numbers, rather than spectacular "street-estimated" numbers, their back-rooms do the math and get panicky. Last night’s after-market trading on Apple was dramatic on the down about $55, about 10% by 6:50pm.

For investors and traders, Apple "creates" great products, really amazing products. We’ve heard comments that without Steve Jobs, Apple cannot/will not create truly unique products… Please, not to disparage SJ one bit; however, Apple did not invent the PC, but Apple refined the desktop computer with the creation of the MAC; a beautiful machine indeed. Apple did not invent the pocket/portable audio player, SONY did it with their Walkman; Apple did not invent the Smart Phone in 2007; but Apple did refine it in so many ways, its almost as if there was never a "smart phone" before 2007; Apple did not "invent" the Tablet in 2010 either; however, Apple created a tablet that is so highly refined, internally engineered to such exacting specifications, with battery/energy efficiencies unheard of then, and today for that matter. And today, 85 million iPads later, when the geniuses of the "Street" said Apple’s Tablet, the iPad would maybe sell, their highest guess was 7 million units/year "if they are lucky." So you do the math, the "Street" guesstimates the iPad sales of 15 million units, and Apple actually sold 85 million units in 30 months; and are at a pace of selling 25 million units each quarter.

In sum, after having looked over the figures this morning, sales are up, but costs are up too, making for flat earnings growth QoQ looking back to last years same quarter… The reason for this is Apple released more new iterations on existing products than anytime in their history; their supply-line was therefore constrained, and could meet the incredible demand; over the next few months Apple will, Tim Cook will, get the supply-line back on its feet, to meet these Hugh demands; Add to this likely a number of new products, like a high-resolution version of their iPad-mini; perhaps a larger screen version of the iPhone 5, or a smaller version too…]

Here is what the Associated Press reported this morning. NEW YORK (AP) – Apple shares plunged Thursday after the company reported quarterly results that point to growth slowing after five blowout years. The stock was down $53.55 or 10 percent, at $460.46 in midday trading. Apple Inc. is still the world’s most valuable company, a position it’s held for more than a year. It’s now worth just 3.5 percent more than No. 2 Exxon Mobil Corp, however. Late Wednesday, Apple reported October-December earnings that were flat compared with the year before. Sales grew 18 percent from the year before, but the startup of production lines for multiple new products like the iPhone 5 and iPad Mini held back profits. Of more concern to investors is Apple sales growth forecast for the current quarter of around 7 percent β€”far from the 50-percent-plus rate it’s often hit in recent years. Apple usually lowballs its forecasts, but Chief Financial Officer Peter Oppenheimer indicated that it’s moving toward providing more realistic figures from now on. Analysts believe Apple is unable to fully capitalize on the global smartphone boom with just one new β€”and very expensiveβ€” phone model every year. There has been speculation among company-watchers that Apple may launch a cheaper iPhone, or a premium model with a bigger screen, but CEO Tim Cook put a damper on those rumors in his comments on a conference call following the report.

2 Comments
  1. You actually know any stuff… keep in the good deliver the results!

    • You can press the gray rectangle with the +sign, to register your email address… then everytime I publish an article, you will be emailed to take a look.

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