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Stock briefly dips below $400 USD, analyst predicts earnings miss

After quarters of confounding Wall Street "expert" analysts with better-than-expected earnings, could Apple, Inc. (AAPL) be on the verge of a highly uncharacteristic miss of its own earnings target?  That's what Citigroup Inc. (C) analyst Glen Yeung predicted in his research note, citing supplier information as pointing to weaker-than-expected iPhone and iPad sales.

That prediction has been boosted by Cirrus Logic Inc. (CRUS), which provides audio chips for the iPhone and iPad.  Cirrus warned investors Wednesday in its fiscal fourth quarter earnings results that its margins had weakened and that it was taking a large charge on unsold inventory of audio chips.

Cirrus's chip stock fluctuates primarily with the sales of its largest customer Apple's devices.  Thus the large stock of unsold chips indicates weak sales of Apple's flagship devices.

Vernon Essi Jr., an analyst at Needham & Comp. told The Wall Street Journal, "[The warning] indicates that the recent fears of Apple's lackluster iPhone demand...are warranted."

Since the passing of iconic leader and late CEO Steven P. Jobs, Apple has continued to grow steadily under the quiet leadership of new CEO Tim Cook, but some fear the company is losing its marketing luster.  Apple's faces tough competition from Android rivals -- particularly Samsung Electronics Comp., Ltd. (KSC:005930) and Google Inc. (GOOG) -- who have been more aggressive in updating their products' hardware and software.

Tim Cook
Apple CEO Tim Cook has voiced concern about his company's plunging share prices.
[Image Source: Bloomberg]

Apple, which last year bumped the screen size of its iPhone to 4-inches, has largely been coasting on a "if-it-isn't-broken-don't-fix-it" approach to its operating system.  While sales were strong last quarter, investors hammered the company's stock, concerned about weakening margins (profitability).

For a while it looked like $420 was a solid floor that the stock would resist breaking through.  But amid the supplier warning Apple's stock plunged briefly below $400 USD.  It is currently trading around $403 USD.  Apple has lost over a quarter trillion dollars in market capitalization over the last half year, since hitting a record $700 USD per share last September.

Overall, the tech sector was down on Wednesday, but Apple's stock sunk more than most, dipping over 5 percent on the bad news.  Rival Google Inc.'s (GOOG) stock is trading around $780 USD, down ~1.5 percent.  Google's market capitalization is currently around two-thirds that of Apple, as its stock hovers around record highs of $800 USD per share.

Source: Cirrus Logic [press release]



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RE: Poor, poor Tony
By Mitch101 on 4/17/2013 4:24:39 PM , Rating: 4
So what happened to $1000.00 a share? Correct me if Im wrong but doesn't the stop have to go UP in value from where its at to do that?


RE: Poor, poor Tony
By retrospooty on 4/17/2013 4:44:30 PM , Rating: 2
LOL... Wouldnt it be funny if Google actually hits it ? Not far off at almost $800 a share and the next few years looking really sweet for them. As for Apple, I am pretty sure you have to keep pushing the envelope and making people really want to buy your products for that to happen. Apple has been in "coast" mode for years and shows no signs of ... starting.


RE: Poor, poor Tony
By Mitch101 on 4/17/2013 4:57:51 PM , Rating: 2
Hitting $1000.00 a share isn't magical but given the size of Google its certainly an achievement Apple could do a reverse split and be $800.00 a share and Apple still has an valuation much higher than Google. Still it would be worth a chuckle to the Apple people who didnt see this coming. Surprised it took so long to occur but this happened with the Stock and Housing bubbles too they somehow lived longer than expected before the burst.


RE: Poor, poor Tony
By retrospooty on 4/17/2013 5:10:24 PM , Rating: 2
Actually, they aren't worth much more at all now. Its pretty close.

http://avondaleam.com/apple-now-worth-just-slightl...

Looking at Google, and their product pipeline and momentum and Apple and its stagnating product pipeline and slowing momentum it may not be long at all before Google comes out on top of that measurement too.


RE: Poor, poor Tony
By TakinYourPoints on 4/17/2013 5:33:25 PM , Rating: 2
They weren't worth that much more last year either. They were actually priced the same as Microsoft and IBM when the stock was all the way up at $700.

Looking only at market capitalization without taking its price-to-earnings multiple into account isn't looking at the whole picture.

The only thing truly outrageous about AAPL's price is how quickly it rose up, even when its price multiple hit (and then crashed through) historical lows. Time was my basis for shorting it, that and the retail investor/media sentiment of "we're going to $1000!".

Sell when people are celebrating, buy when there's blood in the streets. :)


RE: Poor, poor Tony
By retrospooty on 4/17/2013 5:41:07 PM , Rating: 2
"The only thing truly outrageous about AAPL's price is how quickly it rose up, even when its price multiple hit (and then crashed through) historical lows. Time was my basis for shorting it, that and the retail investor/media sentiment of "we're going to $1000!".

Sell when people are celebrating, buy when there's blood in the streets. :)"


Exactly... The current "letdown" is really only an effect of the "over-hyping" of last year. It seemed like the market expected Apple sales to grow at that same rate forever, which is just impossible. At that rate they would have owned everything on Earth by the year 2025. It just couldn't continue. It has to level off and that is what we are seeing. They arent in trouble and they arent going anywhere, just coming back down to Earth.


RE: Poor, poor Tony
By TakinYourPoints on 4/17/2013 5:27:02 PM , Rating: 2
I shorted AAPL last year and my next potential tech shorts are GOOG and AMZN. Google is an easier target at a price multiple over 2.5x that of Apple and Samsung, yet Apple's net profit exceeds all of Google's gross revenue (Apple made more in two weeks than Google did in an entire quarter), and Samsung's net profit is several times that of Google's.

This is all even with dropping profit margins for Apple and Samsung.

GOOG is riding investor momentum right now, but its also just as easy to short the QQQ since they're pretty much in step with each other.

As for Amazon, I've sold call spreads against it but I have no idea how to actually short the stock itself, haha. It is so far beyond rational thinking, I have no idea when investors will finally give up on seeing a profit from them and start pricing the stock like any other normal company.


RE: Poor, poor Tony
By retrospooty on 4/17/2013 5:35:41 PM , Rating: 3
Meh... I don't even care. I actually want Apple to keep pushing, because it makes the others keep pushing and that is what gets us all better products faster to market, regardless of what platform we prefer... It's a bit of a let down to see Apple not pushing it anymore. It's almost a guarantee, the iPhone 5s will have the same size, same screen, same res, same everything with a faster CPU/GPU. Oh boy. Lather, rinse, repeat, yawn.

The only thing I really do like about Apple slipping is to watch Tony get upset and try to spin it. LOL.


RE: Poor, poor Tony
By Reclaimer77 on 4/17/2013 6:03:31 PM , Rating: 2
quote:
Apple has been in "coast" mode for years and shows no signs of ... starting.


Well they did add an extra row of icons to iOS. I mean..that's something right?


RE: Poor, poor Tony
By retrospooty on 4/17/2013 6:21:31 PM , Rating: 2
Ya, but they did it when the "time was right" and an extra row of icons was really needed. ;)


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