In July 2006, Apple (NASDAQ: AAPL) dropped below $60 just after announcing quarterly earnings. The market was disappointed. Operating margins for the period were only 13%.
It would be hard to find people who think Apple will fall back to $60, but the dynamics of the company's earnings are such that poor holiday sales could push the stock back in that direction.
For the last calendar quarter of 2007, net income rose 58% to $1.6 billion. Mac sales were unusually strong and iPod units sales were still growing quickly. The growth of the Mac was actually extraordinary. Apple sold 44% more Macs than it had in the last calendar quarter of 2006. The new iPhone had its first really big quarter selling 2.3 million units.
Apple may be facing a holiday season where Mac sales grow very little, iPod sales actually fall and iPhone sales miss Wall Street targets. The Mac may simply be hurt by the recession. There have been over 170 million iPods sold since the product was introduced six years ago; it may be reaching a point of market saturation. No really significant changes to the iPod have been made in over a year.
Problems with the iPhone's connections to 3G high-speed internet networks could hold back its sales.
Apple's stock is down almost 50% since last December. That may just be the beginning.
Douglas A. McIntyre is an editor at 247wallst.com.
Nuclear power is on the comeback trail
Apple backs AT&T in continuing spat with Verizon
Closing Bell: The recession is still over, still... do you feel it?
Reader Comments (Page 1 of 1)
9-30-2008 @ 2:24PM
sfmitch said...
I really find posts that lay out what MAY happen instead of what LIKELY happen to be a big waste of time.
Apple may have a bad quarter, on the other hand, they may have a good quarter.
Have a sack and let us know what you think WILL happen or don't bother.
9-30-2008 @ 2:09PM
Zoltar said...
I have never read an intelligent AND positive text - let's not call this article or report - from this Douglas A. McIntyre.
He is always biased and negative when he writes about Apple. Anybody with a brain will realize he'd like Apple to be doomed. Just look at how manipulating the title is along with his "maybe this" "maybe that".
Indeed, this is a wishful thinking blog. Should he be paid to do this? He definitely is but he shouldn't.
Anybody can have a blog on the internet - it's the only thing that has been proven here, nothing else.
9-30-2008 @ 2:25PM
ZX said...
Apple didn't have a bad quarter in 4 years people!!! 4 years!!!
This gossip BS is getting so old...
9-30-2008 @ 2:51PM
chano said...
I ask the question yet again. Just how many people like this serf are on Microsoft's grey payroll for posting malicious disinformation about AAPL?
9-30-2008 @ 4:24PM
dig said...
Hey Doug,
Seriously what have you been smoking?
You're an Editor and the best you can do is this? What are you desperate for some eyeballs?
9-30-2008 @ 7:56PM
bobert said...
"No really significant changes to the iPod have been made in over a year."
Uhm, did you not notice the ipod touch + app store and games?
Would you not classify that as a "significant change?"
please.
9-30-2008 @ 11:20PM
Shelley said...
Instead of trying to 'predict', just make sur you always have a smart exit strategy in place protecting your position. One that allows profits to grow but stay protected and losses kept to a minimum. Check out the recently launched service SmartStops - http://www.smartstops.net . Finally all investors and traders have an intelligent exit strategy system based on years of real market experience at their fingertips
9-30-2008 @ 11:48PM
George H said...
Doug..
If you were living in New Zealand I would've called you a w*nker.
Altho.. I have to admit.. all your posts make me laugh... and I can see you sneakily reading peoples comments... Laugh...
I wonder if Apple kicked your a*s one day! That's why you're out to plant all this malicious, bad publicity towards them.. let it go Doug.. Let it go.. G
10-01-2008 @ 12:41AM
KenC said...
McIntyre has always spun negatively on Apple. Don't know why, because most of it is nonsensical gibberish, he heard on the subway. He doesn't know the first thing about the stocks he comments on.
10-01-2008 @ 12:48AM
KenC said...
Here's a quick thought. If Apple drops to $60, then that would put their market cap at about $53B. Take away $20B in cash, leaves an operational value of $33B. Last 12 months, Apple made $3.5B, so that would value at about 9.5x trailing 12 months earnings. Wow, that's dirt cheap. Thanks Doug for figuring that out for us.