Apple shares plummet

[Asher]

Ruh oh, there goes Agathon's life savings.

http://news.cnet.com/8301-13579_3-10053366-37.html

Apple shares plummet 17.5 percent



Apple's shares took a plummeted 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 intra-day 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 guild 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 RBC IQ/Changewave data showed 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 falling to 26 percent from 30 percent in the same period.

As usual, I am ahead of the game.

It's time to revisit Agathon's comment from less than a year ago as AAPL hovered around $200, in response to me claiming Apple's stock price was overvalued and not sustainable (which has been proven to be CORRECT):

This is just crying because Apple has been doing so well lately.

I remember that some foolish Apolyton poster said that the stock was massively overvalued...

Just shows how much some people know.

Resistance is futile.

Never trust a communist talking about the markets.

[-Jrabbit]

This is obviously caused by the Gates-Seinfeld commercials. Until Apple comes out with a Platinum Clown Club card, they are toast.

[Victor Galis]

I'd imagine this might also have something to do with the phone Google and T-Mobil are launching

[snoopy369]

OMG, the world is ending! < /chickenlittle >

[Colonâ„¢]

I wasn't aware Apple owns toxic debt.

[Asher]

Eh?

[Asher]

It's back to 105 now

http://www.bloomberg.com/apps/news?pid=20601103&sid=aJ86Cy4Dawr0&refer=news

Apple Falls Most in 8 Months on Morgan Stanley Cuts

Sept. 29 (Bloomberg) -- Apple Inc., the best-performing technology stock last year, dropped the most in eight months in Nasdaq trading after a Morgan Stanley analyst said price cuts will curb profit growth.

Analyst Kathryn Huberty in New York cut her estimate on the stock 35 percent today, to $115 from a previous target of $178. The shares fell as much as 18 percent to $105.77, the biggest intraday decline since January.

Apple, which gained last year on rising sales of the Macintosh computer and optimism for its iPhone handsets, will be hurt by slowing orders, Huberty wrote in a report. Cupertino, California-based Apple will have to cut prices to compete this holiday season, weighing on earnings per share, she said.

``Even in the best of scenarios, Apple's EPS growth will decelerate meaningfully from June quarter levels,'' Huberty wrote. ``Multiples for high growth stocks will continue to compress in the current environment.''

Apple fell $17.60, or 14 percent, to $110.64 at 12:28 p.m. New York time in Nasdaq Stock Market trading, the lowest since May 2007. The stock had lost 35 percent of its value this year before today.

Stocks worldwide tumbled the most in 11 years as governments worked to shore up banks saddled with growing mortgage losses. Google Inc. dropped below $400 for the first time since September 2006.

Huberty reduced her rating on Apple shares to ``equal- weight'' from ``overweight.'' RBC Capital Markets also cut its rating on Apple today to ``sector perform'' from ``outperform.''

Jobs's Plan

Chief Executive Officer Steve Jobs used promotions to win personal-computer sales in the back-to-school shopping season and poured money into new product development. This month, he introduced slimmer iPod media players and cut the price on the touch-screen model 23 percent, appealing to cost-conscious consumers before the holiday shopping season.

Apple may have further to go. The company needs to move away from products that cost more than $1,500 as consumers lean toward lower-priced PCs, Huberty said.

She lowered her fourth-quarter profit estimate by 12 cents to $1.62 a share and cut her sales projections to $10.7 billion from $11 billion.

In July, Apple's forecast for the back-to-school season missed analysts' estimates. Officials said promotions and product development would curb profit margins, disappointing investors after the company posted a quarter with record sales of Macs and iPhones and benefited from stronger-than-anticipated demand for iPod media players.

Apple has predicted a gross margin, the percentage of sales left after deducting production costs, of 31.4 percent in the quarter, down from the 34.2 percent in the third quarter.

Jobs has relied on iPods to spur holiday demand in what is typically Apple's biggest period for sales. Cheaper models may help win over U.S. consumers, who have cut budgets to cope with rising oil and food prices. A sleeker version of the 8-gigabyte iPod Touch will sell for $229, compared with $299 before.

[Asher]

Down almost 20% now to 103...

[Japher]

That's the price GOOG should be at!

[Impaler[WrG]]

This is clearly speculation on a Depression making the traditionally high priced high quality Apple products un-affordable, aka Apple products are a superior good in an economic downturn. Personally I think Apple will do ok, its always had a rabid fan base which overpays and they will continue to do so even in a depression to satisfy their insatiable fruit lust. So long as Apple can continue to produce innovative products they can't fail and an economic downturn dose not rob them of their brain power.

[Asher]

No one is saying they're going to cease to exist or even do poorly.

Some of us are just reminding certain other people that they were right. When Apple was hitting $200/share, I called it overvalued. And it is.

I was mocked by someone for saying that, and it's time for them to own up and admit I was right.

[-Jrabbit]

Dude, the whole market is in the toilet. This is not the most convincing time to point out that any given stock is falling. Frankly, you sound almost as desperate to make your point as Aggy usually sounds in making his.

[Asher]

Originally posted by -Jrabbit
Dude, the whole market is in the toilet. This is not the most convincing time to point out that any given stock is falling. Frankly, you sound almost as desperate to make your point as Aggy usually sounds in making his.

Yes, the whole market is in the toilet. But Apple is down 20% while MS and Dell are down 5%.

It's a 52 week low for Apple, almost half of the value from when Agathon encouraged people to buy it and mocked me for saying it was overvalued.

I don't give a **** if the whole market is in ****, he was giving utterly bull**** advice that I called him on. Apple's stock was OVERVALUED because most of its value came from expected future earnings, which as I said as ridiculous and OVERVALUED since it was unpredictable. We're seeing that now.

So overall market woes have nothing at all to do with it. It's part of the reason the stock was overvalued...its value wasn't in its present performance, but future performance -- which comes crashing down as reality sets in.

I predicted a big crash and we've gotten several big Apple crashes since I said it.

[Impaler[WrG]]

because most of its value came from expected future earnings, which as I said as ridiculous and OVERVALUED since it was unpredictable.

EVERY stock is traded on that same principle. The physical assets of the company are not important because stock is NOT a share of company assets, future profits and dividends (and the public perception of them) are the only thing that gives stock value. Under your standard no stock is worth anything (which I might be inclined to agree with if you applied your standard universally and made a good argument for why stocks are a sham).

[Asher]

Originally posted by Impaler[WrG]
EVERY stock is traded on that same principle.

Yes, but some EXCESSIVELY so. As in, the P/E is obscenely high. Google and Apple both fit this bill perfectly, and I told people I thought they were overpriced accordingly. The price was nowhere near what it should be given the earnings potential of the company. People were buying it not just for "future earnings", but they justified the price by thinking that the earnings growth would continue as it had. It wouldn't, it didn't, and it burst. Precisely as I predicted, and precisely what I was mocked for saying.