Wednesday, January 21, 2009
What's Wrong With Apple's Stock?
What's wrong with Apple's stock? Apple's stock has been taking a beating for the past several months, resulting in it's market cap nose diving from approximately $172 billion to around $70 billion today - a staggering loss of $100 billion smackeroo's! This has been the result of many negative factors, of course, including all of the recent speculations and rumors over it's iconic CEO's health, the lack of new product updates, and, of course, the biggest one of them all, and one that has effectively been inflicting major pain on every other business, big and small, namely, the recession resulting from the 'credit crisis' that has ended up in economic gloom gripping the world as a whole.
All of this cannot but help make me wonder, wonder what will happen to Apple's stock after it reports on it's quarterly earnings this evening, and wondering just what it is that is having the biggest negative factor on Apple's stock? If anything can negatively or positively affect a company's stock, of course, well its got to be their their quarterly earnings and it's future guidance, and tonight should be particularly interesting, giving all that's going on with the economy and Steve Jobs' health. This will naturally give all more impact coming from this evenings earnings report, but just what single factor, if any, is it that could possibly be having the biggest negative impact in the minds and hearts of all of the street's analysts, and thus Apple's stock?
Could it be the Mac's slightly slowing growth, or maybe the economy's impact on the iPod or the iPhone? Or could it be all of the fuss over Steve's health, or a combination of them? Again, just what is it that is having such a negative impact on stock analysts impression of Apple's stock?
Actually, all of the above is naturally having some type of impact on Apple's stock, but the biggest possible negative impact is something besides those. After all, despite all of that gloom and doom of the economy, Apple, as it usually does, is apparently doing much, much better than the rest of the industry and Apple's iPod and Mac sales are looking good ahead of it's earnings call, and according to a post by the Silicon Valley Insider:
"Good news for Apple (AAPL) investors ahead of Wednesday's earnings report: December quarter iPod sales could surprise, and Mac sales look in-line with expectations, according to Piper Jaffray analyst Gene Munster. In a report today, Munster estimates:
* 19-20 million iPods shipped during the December quarter, beating the Street's 18.6 million expectation, based on analyzing retail data from research firm NPD Group.
* 2.5-2.6 million Macs shipped, in line with the Street's ~2.5 million expectation: "
"Hopefully, this news will help Apple to avoid the wrath of all of the skeptical analysts, and, hopefully, as well, they won't have some knee-jerk response that will result in the stock spiraling downward after it's all over? Unfortunately, I'm personally very skeptical about all of these skeptical analysts, because, as a post in Macnightowl.com recently put it:
"The problem is, of course, that the stock market doesn’t necessarily recognize reality."
Yes, in other words, the biggest problem with Apple's stock isn't the stock itself --- it's with the analysts and the market itself! Their perceptions don't seem to be based on any reality at all, leaving me for a loss of words (a rarity indeed!). Often, unfortunately, many of these analysts (but, of course, not all) seem to be completely and utterly out of touch with reality and, time and time again, this has been clearly demonstrated by the fact that Apple quarterly reports consistently have been beating the streets estimates now with very few exceptions! In many cases, Apple has virtually crushed the streets estimates and it makes me seriously question the credibility of these so-called analysts. Why anybody would even listen to these guys, and especially after all of their past failures in predicting Apple's sales and earnings, is something that is completely beyond me! Apple has consistently made fools out of these analysts, and yet, for reasons that simply defy logic, people still continue to hang on to their every word and thus, sadly, Apple's stock will, in the end, be invariably effected.
Unfortunately, these analysts will be in full force tonight and after picking apart every word that Tim Cook and Peter Openheimer utters, they will probably get it yet all wrong yet again, and yes, Apple's stock will probably end up suffering, no matter what the facts and logic suggests otherwise! These analysts, sitting in their ivory towers, predictably seem to minimize the positive's and maximize the negative's and this seems especially so in case of Apple!
Of course, I could be just over reacting here to what I perceive is their over reacting, and maybe it is I who am the one who is being paranoid here? Anyway, as far as Apple's quarterly earnings go for this evening, I'm expecting that it will be no different than at other times and because of these experts, and despite all of their utter past failures, these same analyst will probably end up punishing Apple's stock tonight, resulting in a stock carnage that will be seen come tomorrow morning.
Unfortunately, people have given these stock analysts too much credibility, and now their very words (as foolish as they often seem) can now effectively either send a company's stock soaring to the high heavens or to the depth of the toilet bowl!
I'm hoping, really hoping, that I'm completely and utterly wrong on all of this, but my gut feeling is that after tonight's earning call, whether rightfully or wrongfully, these ineffective analysts will effectively send Apple's stock tanking, yet once more, even lower then what is legitimately called for.
In conclusion, the biggest negative factor in Apple's stock woes, at the present, has been with these analysts themselves - not the stock itself! This, to me, is nothing short of a crying shame, and I totally agree with Jason Schwarz, who writing for Seeking Alpha, says in the title of his post:
"It's Time for a New Apple and a New Wall Street!"
And that's my 2 cents 4 this Wednesday, January 21, 2009
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