Apple Shares Fall Hard from the Tree

The stock closed at $100.10, down $9.02, or 8.27 percent. On Tuesday, the shares closed $113.66. On Monday, when the Dow lost 777 points (its biggest loss ever), Apple shares fell almost 18 percent, or $22.98 to $105.26.

GOT A TIP OR RUMOR?

Apple had a rough week, so far, along with most tech companies. But Apple's share price battering is worse than most other computer manufacturers or consumer electronics companies. The uncertain economy, combined with doubts about how much consumers might spend during the holidays, appear to be factors dragging down the stock. Here's how some other tech stocks looked on Monday compared with today:

• Microsoft. Monday: Closed at $25.01 a share, down $2.39, or 8.72 percent. Today: Closed at $26.25 a share, down 23 cents, or 0.87 percent.
• Research In Motion. Monday: Closed at $61.73 a share, down $9.03, or 12.76 percent. Today: Closed at $62 a share, down $4.93, or 7.37 percent.
• Dell. Monday: Closed at $15.41 a share, down $1.59, or 9.4 percent. Today: Closed at $15.79 a share, down 36 cents, or 2.23 percent.
• Salesforce.com. Monday: Closed at $44.76 a share, down $5.89, or 11.63 percent. Today: Closed at $44.19 a share, down $2.22, or 4.78 percent.
• Intel. Monday: Closed at $17.27 a share, down $1.93, or 10.1 percent. Today: Closed at $17.20 a share, down $1.32, or 7.13 percent.
• Google. Monday: Closed at $389 a share, down $42.04, or 9.75 percent. Today: Closed at $390.49 a share, down $21.43, or 5.16 percent.
• Cisco. Monday: Closed at $21.79 a share, down $2.03, or 8.52 percent. Today: Closed at $21.20 a share, down 75 cents, or 1.92 percent.
• Red Hat. Monday: Closed at $15.33 a share, down $1.08, or 6.58 percent. Today: Closed at $15.29 a share, down 30 cents, or 9.4 percent.
• IBM. Monday: Closed at $111.46 a share, down $4.96, or 4.15 percent. Today: Closed at $104.74 a share, down $5.39, or 4.89 percent.
• Comcast. Monday: Closed at $18.01 a share, down $2.69, or 13 percent. Today: Closed at $18.35 a share, down $1, or 5.17 percent.

It was a roller coaster day for many of these randomly chosen tech stocks. Comcast shares traded for as much as $19.56, Google as high as $409.98 and RIM for $66.67. Apple shares clawed their way up to $108.79, nearly $20 off Monday's open.

Shareholders haven't been kind to Apple this week. Here's some perspective for Apple's fall from the tree. On Aug. 13, Apple's market capitalization briefly passed Google's—$158.84 billion and $157.23 billion, respectively. This week's stock market bloodbath reduced Google's market cap to $122.79 billion at the end of today's trading. Apple's valuation is worse than both Monday's and Tuesday's closes: $88.68 billion. That's a whopping $70 billion, or 44 percent, decline in market capitalization in 50 days. Apple has lost about another $12 billion in valuation since Tuesday's market close.

Shares for most of the companies listed above are about the same as Monday or a little better, with the notable exception of IBM. Apple's fall was harder, receding today more than $13, or about 12 percent, from Tuesday's close, and about $5 a share lower than Monday.

This should have been Apple's rockin' quarter, with the launch of the iPhone 3G, which is now available in 53 countries. The company lists 24 other countries presumably getting the iPhone 3G by year's end. Analysts predict Apple shipped as many as 5 million phones during the quarter. The company announces third-calendar quarter results on Oct. 21. Here's something: T-Mobile launches the competing Android-based G1 the next day. Surely those big iPhone 3G numbers will smack around the G1 as it steps into the retail spotlight.

Some analysts also expect Apple to post another record quarter of desktop and laptop Mac sales. During the quarter, Apple released new iPods. The new iPod nano certainly is cute.

Problem: It's the future that has everyone worried. Will the recession sap holiday sales? Of course it will. It's inevitable. The parallels between Apple's last stock crisis, leading into the 2000 recession, are many. Everybody shares the same holiday sales problem. Apple's position is no more exposed than, say, Dell, HP or Sony, and none of those companies has the iPhone 3G or iPod.

Apple has a perception problem, which could be relieved by its autumn Mac refresh (there better be something really new and cool in the lineup) or the Oct. 21 earnings announcement and what that reveals about iPhone 3G sales.

But there's no easy fix. Shares fall a lot faster than they go up. As recently as May 16, Apple shares traded for $189.96 and for $179.42 on Aug. 14. The decline started in earnest on Sept. 3, when shares reached $166.96. After some dips and rises, shares traded for $131.93 on Sept. 25, then plunged to $100.10 today.

What's changed other than the share price? Perception. Apple's product portfolio is as strong today as last week or last month. But Apple won't easily change perceptions or recapture investor confidence without something big (How about that "One More Thing," Steve Jobs?). Larger macroeconomic uncertainties create an irrational climate of fear.

Apple may have fallen from the tree. But it's ripe and ready to eat. You only think it has worms.

[Please send your tips or rumors to watchtips at gmail.com.]

Related Posts:

• Apple Crashed Before—and Survived, Apple Watch, Sept. 30, 2008
• 48 Days Later: Apple's Valuation Drops 37%, Apple Watch, Sept. 30, 2008
• Mac Laptop Retail Share: 35% Measured in Dollars, Apple Watch, Sept. 27, 2008
• Apple Demands a High Price to Be Cool, Apple Watch, Sept. 26, 2008

Posted by Joe Wilcox on October 2, 2008 8:08 PM