Why is Apples stock doing soo poorly? (serious question)

[AnimalPaintball]

Im not trying to start a flame war. I am really curious as to why the stock is falling badly in the last 2 years or so.

I think they have great products and good customer service. I have been a big fan of their advertising campaigns and have too many iPods to even count. I currently have an iPhone and am looking to get a MacBookAir.

So what is the problem? Anybody have some info to share.

I only ask because I have been searching several stocks to invest in (yes I know there is a recession) and I believe in supporting the companys that I buy products from, but Apple seems to be quite bad.

Thnx
Mondo

 

[Teh Don Ditty]

Apples stock has been rising for 2+ years. I think you meant more recently (in regards to a decline). The credit crunch has really gotten to Wall St and it just started to effect the Tech Sector. Also analyst don't believe that consumers will be buying as many iPods and iPhones as originally expected.

Edit:

Stock Data:

52 Week High: $202.96 (12/27/07)
52 Week Low: $87.40 (3/6/07)

 

[Stampyhead]

If you really plan on investing in the stock market you need to learn how to do better research on the companies in which you are interested. Apple's stock has been rising steadily every year for the past several years, and will continue to do so barring some unforseen financial disaster on the part of the company or the economy in general. With the downturn of the economy in the past several months Apple's stock has responded in kind, these short term peaks and falls are natural. You need to look at a stock's long term performance to assess its real value.

 

[edesignuk]

Apple make premium products on the whole, the world is in panic mode and recession is lingering on us all. When people start being thrifty with their money they don't tend to blow it on expensive computing gear. Forecasts are probably that sales will at worst go down, or at best stop growing at previous rates. It's just reduced confidence, the crunch, everyone is getting hit.

 

[Mykbibby]

Apples stock had tripled in the past 2 years. In the last 2 months, in dropped 80 points. The recession has taken a huge hit on the technology portion of Wall Street. Apple, despite all the attention it has taken for it's free fall, actually has fallen the least of the major players (Google, Microsoft, etc). I believe Steve when he tells us to hang in there, because he knows a lot of stuff we don't know. Something big is going to happen, probably around WWDC (safari pad?).

 

[IJ Reilly]

Fears of a recession, mainly. I think Apple has a lot of things going in its favor, and I believe the stock will bounce back, eventually. The low US dollar is only going to help their bottom line. But the markets have to see some daylight from the current crisis in the financial and housing markets first, and nobody knows how long that will take or how much structural damage will be done in the meantime.

 

[Peace]

Apples stock had tripled in the past 2 years. In the last 2 months, in dropped 80 points. The recession has taken a huge hit on the technology portion of Wall Street. Apple, despite all the attention it has taken for it's free fall, actually has fallen the least of the major players (Google, Microsoft, etc). I believe Steve when he tells us to hang in there, because he knows a lot of stuff we don't know. Something big is going to happen, probably around WWDC (safari pad?).

In the last 3 months Google has gone from a high of around 718 to a low of around 442. That's about 60 %.

Microsoft has gone from a high of 37 down to 27. That's about 71 %.

Apple has gone from about 200 down to about 122. That's about 61 %.


The tech sector is getting hit hard due to the recession.

 

[IJ Reilly]

The tech sector is getting hit hard due to the recession.

Or the fear of one. Even if we're in a recession now, we won't know it until months later.

 

[AnimalPaintball]

Stock

I do apologize, I did mean to say 3months and not the 2year mark. I was typing and thinking of something else at the time.

You all have good points about the tech sector in general getting hit hard, which is what I was thinking, I guess I just wanted to hear it from some other investers as well.

I too think that they will rebound and go back up after this recession is done, I just wanted to hear from you all as well.

Thnx again
Mondo

 

[Rodimus Prime]

Long list of reasons.
1.Tech sector market falling across the board.

2. Apple has failed to meet its hype with Leapords Release and the last Mac world. Both where no where near the hype level they put them at.

3. Most of apples goods are "luxury items" and the credit crunch is hitting a lot of people hard. Now instead of how good is your credit that controlled buying power. it is what is your monthly income controls it. People are trying to get some in savings after learning hard lessons.

 

[IJ Reilly]

I do apologize, I did mean to say 3months and not the 2year mark. I was typing and thinking of something else at the time.

You all have good points about the tech sector in general getting hit hard, which is what I was thinking, I guess I just wanted to hear it from some other investers as well.

I too think that they will rebound and go back up after this recession is done, I just wanted to hear from you all as well.

Most of the drop occurred within about a four week period after the middle of January. If we are in a recession (still unknown) then stocks usually rebound about half-way through. The trick of course is knowing when the half-way mark comes.

I don't agree that MacWorld or Leopard are any significant factor in AAPL's poor performance so far this year. Investors don't really care about MacWorld, and they've never cared about new OS releases. What they care about is earnings and forecasts for future earnings. Apple guided lower in January for the coming quarter, reflecting their belief that sales will slow along with the economy. That's when the wheels came off.

 

[TEG]

Im not trying to start a flame war. I am really curious as to why the stock is falling badly in the last 2 years or so.

I think they have great products and good customer service. I have been a big fan of their advertising campaigns and have too many iPods to even count. I currently have an iPhone and am looking to get a MacBookAir.

So what is the problem? Anybody have some info to share.

I only ask because I have been searching several stocks to invest in (yes I know there is a recession) and I believe in supporting the companys that I buy products from, but Apple seems to be quite bad.

Thnx
Mondo

Apple is down because of the sub-prime lending implosion. People who have invested in the stock market in the past, are pulling out their money in order to pay bills and get back on their feet. It is starting to build momentum again, so I expect Apple to rise in the near future.

TEG

 

[IJ Reilly]

Apple is down because of the sub-prime lending implosion. People who have invested in the stock market in the past, are pulling out their money in order to pay bills and get back on their feet.

This is not why stock markets drop. They sell off when economic activity, and consequently corporate profits, are expected to slow.

 

[TEG]

In a perfect world you are right, but this is far from a perfect world. Remember that right now, a lot of idiots, with absolutely no knowledge about how stocks work are in the market. They are blindly doing what they see others do.

TEG

 

[IJ Reilly]

In a perfect world you are right, but this is far from a perfect world. Remember that right now, a lot of idiots, with absolutely no knowledge about how stocks work are in the market. They are blindly doing what they see others do.

Markets always move with herd instincts. The analysts and traders like to call this "momentum," but that's just a polite way of describing the often irrational emotions (fear and greed) which drive markets higher and lower. Until the end of last year, we were in greed mode. Now we're solidly into fear.

 

[ntrigue]

As an investor I am not pleased with the way AAPL handles their stocks.

No dividends to stockholders - 18.5 billion cash reserve - No stock splits

How do you expect confidence in your stock when you won't even buy into your own products?

AAPL will continue its growth as a blue-chip-tech for years to come; simply not as aggressively.

Although I sold back in December (stated-income mortgage and needed cash in hand) I did a exploratory purchase at $119.25 and expect to see $160 by AUG2008 and $190 by JAN2009.

 

[00hkelly]

Even though Apple had a really great last quarter. Their usual tactic of underestimating and overperforming with regard to their projections for the next quarter meant that analysts at the big banks were not so kind on Apple. This also had an effect on the stock price.

 

[MBX]

Good bye american economy. It's going down the drain. Thanks to this administration and the feds.

 

[CrackedButter]

I'm hoping it drops even lower, I'm going to purchase $4000 worth soon ( I hope).

 

[foidulus]

Actually, Apple may benefit from the recession

Apple is sitting on a huge pile of cash(hopefully in Euros not dollars, but anyway....)

If the tech stocks continue to drop Apple may be able to snag up an interesting company for much less than they could have a few months prior. Now time to start speculating on what company will buy

 

[IJ Reilly]

No dividends to stockholders - 18.5 billion cash reserve - No stock splits

Splits are worthless, but declaring a dividend would be a confident message to the markets. It would also reward investor patience, which is being sorely tested right now.

 

[Much Ado]

Splits are worthless, but declaring a dividend would be a confident message to the markets. It would also reward investor patience, which is being sorely tested right now.

But Apple would lose all that cash that could come in useful in the future. I'd rather they keep it for acquisitions.

It doesn't matter if the market don't have confidence right now. Apple are in a fine (if not, better) position for the future. Investors who know what they're doing recognize that the SDK announcement alone is huge for AAPL, long term.

 

[IJ Reilly]

But Apple would lose all that cash that could come in useful in the future. I'd rather they keep it for acquisitions.

It doesn't matter if the market don't have confidence right now. Apple are in a fine (if not, better) position for the future. Investors who know what they're doing recognize that the SDK announcement alone is huge for AAPL, long term.

Who said anything about "all?" Apple could declare a $2.00/share dividend (which the markets would love), and still have more that $16 billion left over, even before the coffers were refilled, which would happen in a matter of months. If you're an investor, market confidence is everything. They are doing absolutely nothing with this money now. Hoarding cash is not good management.

I am a very long-term AAPL investor who thinks it totally sucks that I have to sell my investment to reap even a single cent of reward for my confidence in the company. This is Apple's message to investors, and it's not a good one, especially considering the huge drop in the stock's value this year, and the mountain of cash they are hoarding for no apparent reason.

 

[Much Ado]

What sort of effect would you expect to see a $2/share dividend have on the stock in this climate? I have little idea, as I have no experience in times like these economically. (And sure, a little payment is always nice, I grant you).

Also, do you think the money is simply being hoarded? Or are they saving for something? Oppenheimer and co. must know more than we do.

EDIT: (Devil's Advocate: would a dividend send out the message that Apple are leveling out, which is not true considering they have so much more room to expand and grow?)

 

[IJ Reilly]

What sort of effect would you expect to see a $2/share dividend have on the stock in this climate? I have little idea, as I have no experience in times like these economically. (And sure, a little payment is always nice, I grant you).

Also, do you think the money is simply being hoarded? Or are they saving for something? Oppenheimer and co. must know more than we do.

EDIT: (Devil's Advocate: would a dividend send out the message that Apple are leveling out, which is not true considering they have so much more room to expand and grow?)

All other things being equal, a nice bump upwards could be expected. Microsoft got a good boost when they declared their first dividend a couple of years ago. I don't think a dividend sends a leveling-out message. It sends a message that the company believes its revenue stream can support the pay-outs to investors long-term. Sitting on the money suggests that they believe their business might go south and they'll need it to replace revenue.

I believe the cash is being hoarded because the total has been increasing steadily for ten years, and throughout that time, Apple hasn't used it for any major strategic acquisition; few have ever even been rumored. If they were using the money strategically, I'd have fewer complaints, but I just don't see any evidence that this is Apple's intention. They seem to like the security, and I find that somewhat worrisome.