Apple (AAPL) stock fell lower than $400 for the first
time since 2011 on Wednesday, less than a week before a quarterly earnings
report that is expected to show the tech giant's first decline in profits since
the iPod helped push Apple back to the top of the technology mountain more than
a decade ago.
Apple shares declined as much as 6.6 percent to $398.11 by 10 a.m. Pacific time
Wednesday morning, when shares had recovered slightly to $402.86.
The decline easily eclipsed the company's previous 52-week low of $419 and
pushed Apple lower than $400 a share for the first time since Dec. 23, 2011,
while again costing it the title of highest market capitalization for a United
States company.
Wednesday's descent continues Apple's long decline into deep bear market
territory: Since hitting an all-time high of $705.07 on the day the iPhone 5
launched in the United States, Apple shares have declined more than 40 percent.
The fall indicates that investors believe Apple has peaked after a decade of
spectacular success that began with the iPod and continued with the introduction
of the iPhone and iPad, mobile devices that proved incredibly successful and
changed consumers' computing habits, to the detriment of the personal computer
industry. Analysts expect Apple to report in its quarterly report Tuesday that
earnings per share were $10.13, according to Thomson Reuters, compared with
profits of $12.30 in the same quarter a year ago.
Those sentiments are declining as next week's report nears, with Bernstein
Research releasing a note predicting a "tepid quarter" on Wednesday, joining a
trio of analysts who cut their price targets on the stock Tuesday.
"We note that March Street expectations still appear too high and that Apple is
likely to guide June down," Piper Jaffray analyst and noted Apple bull Gene
Munster wrote Tuesday.
Investors dumping Apple stock Wednesday could have their eyes on the companies
that provide components for the tech giant's signature mobile devices.
Audio-chip provider Cirrus Logic declined more than 15 percent Wednesday after
reporting projected revenues far below consensus estimates, a possible signal
that Apple is ordering fewer parts due to lessening demand. That news follows
Japan Display's announcement Monday that it was looking for new buyers for its
displays, which are used on the iPhone.
Cross Research analyst Shannon Cross told Reuters that the Cirrus report is "a
reminder of weakening demand, and the challenges around product transitions" for
Apple.
"There's not a lot of conviction about what the second half is going to look
like," she added.
Jefferies analyst Peter Misek wrote in a note that Apple's sales could suffer in
the current quarter, based on the Cirrus news. The company's
lighter-than-expected revenue projection means Apple will likely not launch a
refreshed iPad Mini in the quarter, Misek posited, while any new iPad launch
would likely happen late in the quarter.
Apple's outlook is still strong, however, with revenues expected to set another
record in the second quarter and more than $150 billion in cash sitting in the
Cupertino company's coffers. Even that cash horde has become an issue, though,
activist investors have agitated for Apple to return some of its cash to
stakeholders; CEO Tim Cook has said the company is looking for a way to do that,
but has said little about the effort since the company's annual shareholders
meeting in late February.
Apple was not alone in its Wednesday descent, as Wall Street's main indexes and
other tech companies also fell. The tech-heavy Nasdaq composite index declined
1.8 percent in the morning session, while the Standard & Poor's 500 fell 1.5
percent and the Dow Jones industrial average -- the only major U.S. index to not
include Apple -- moved lower by 1.1 percent.
