Why Apple Shares Fell

Four months ago, Apple shares stood at over $700.  Today they sit at about $460, one heck of a drop. Given they've sold more iPhones in the last quarter than in any previous quarter that seems a little mean.  It's affecting their suppliers, too, including Samsung who spend half their time defending themselves in court against Apple.  Perhaps Apple have found the way to wipe the smile of Samsung's face?

Related stories - How many lawyers does it take to design a phone?,  Apple Samsung battle reconmences,     Apple case weakens

But all of this is unlikely to be the reason the shares fell.  Litigation aside, Apple have been extremely industrious the last quarter in introducing the new iPhone and the iPad mini.  Both have sold well, unfortunately not well enough to satisfy the money merchants but better than most normal people might expect in such a tough economy.

What won't have helped would have been the problems associated with the latest incarnation of their iOS, especially the mapping app that didn't work.

Related stories: Apple told to get lost, Apple to buy Tom Tom

However it's market expectations that they have fallen foul of, something I suggested semi-mockingly in a couple of posts (OK, I was actually taking the p*ss about the obsession with queues forming for new Apple products that actually became accurate, but mainly because Apple decided to market the iPad mini on the internet so aggressively that it likely affected their Apple Store sales).

Related Stories: Apple queues 'disappointing' say analysts, Apple and Gap to merge

And no, I don't think bloggers taking the micky out of Apple influenced the market.  Not much, anyway.

The real reason the share price is now a third lower than it was four months ago is twofold.

First, the price four months ago was too high.  I said that when it started falling - see Apple shares dive south

Second, Apple products are too expensive.  Sure they're selling, even breaking records, but the rate of increase in sales is slowing to a point that the money people recognise as a change in direction.  In calculus we call this the point of inflexion, where a curve changes direction on an axis.  Next quarter they will sell less than before.  Their competitors are catching up rapidly, the tablet computer is no longer a unique offering and the Apple customer base is starting to look static compared to Android.

The share price will sort itself out, so no offers of advice needed there (apart from think carefully before buying, but probably they are close to the right number now).  Apple need to look at dropping the price of its premium products if it wants to attract more new customers to the fold, otherwise Android based products will mop up new customers instead.  Selling the iPad Mini was a brave move as it allowed access to Apple for less than the standard iPad, but it is still a significantly more expensive item than its Android competitors.

My guess is that the rumoured cheaper iPhones will arrive this quarter along with cheaper full sized iPads by summer.  Let's wait and see.

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Apple Queues 'Disappointing' Says Source

Insiders at Apple have been quietly upset at rumours that their flagship stores in the US and Europe have failed to generate significant queues, despite the launch of the iPad mini.

'It is hard to understand,' said one Apple employee who just had to leave the store to check out the minimal queue for himself.  'We engineer these things to the nth degree, tweak them and even check them for quality,' he said, running his hand alongside an Apple devotee stood outside.  He indicated two others also stood in an orderly queue while freely acknowledging that there was plenty of room inside the store, apart from the large pile of unsold iPad minis.

In London the surprise was less obvious; in a country that is dedicated to queuing from birth, standing in a line around a glass fronted building  is considered normal activity even for those who don't like Apple products.  The Regent Street deputy manager shook his head at this analysis, though.

'It doesn't bear credibility, the suggestion that there are some people who don't love Apple products,' he said, hugging a couple of unsold iPad minis to his chest for solace.  'I know that there have been a lot of Android devices,' he said, clearly choking on the very words, ' being sold at the moment, what with the Amazon Fire and the Google Nexus tablets, but they are for the poor of this planet who unfortunately cannot afford an iPad mini,' he suggested, while making noises similar to a cat clearing fur balls.  'In fact,' he added, brightening up, 'Apple are thinking of donating some of its products to the third world.'

Apple shares slid on the NYSE when the first analysis of the queue length was announced.  'We factor in a lot of variables when determining the price of stock,' said one trader, adding, 'including demand, but mainly the length of the queue outside the stores.  That's why we don't trade shares on a Sunday,' he added sagely.  He acknowledged that strong sales of the new iPad mini would be welcome, but really the industry standard was based on queue length.

Outside the New York Apple Store it started raining again and the Apple employees inside stood looking worriedly at the glass frontage and the three or four eager potential Apple purchasers huddling together for protection.  At the sight of the rain starting to fall a carefully planned Apple protocol slid into action and a bevy of iPad minis were passed out of the door to provide cover for the waiting customers.

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I can be followed on Twitter too - @RayASullivan
or on Facebook - use raysullivan.novels@yahoo.com to find me

Why not take a look at my books and read up on my Biog here

Want to see what B L O'Feld is up to?  Take a look at his website here

Worried/Interested in the secretive world of DLFs?  Take a look at this website dedicated to DLFs here, if you dare!

Apple Shares Dive South

In the US Bronze is on a countdown promotion starting Sunday 14th September 2025 at $0.99 for the eBook, rising to $1.99 on the 17th September before reverting to the full price of $2.99 on the 20th September.  All promotions commence at 8:00 am PDT on the stated days.

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I don't know about you, but whenever I read anything about Apple that includes numbers, my head spins.  I'm not bad with numbers generally, my degree is in maths, but it's just that whatever seems reasonable in the normal world just doesn't cut it in Appletown.

Take the number of iPads sold since the device was released two and a half years ago - over 100 million devices.  Given that the iPad is expensive by any measure (another Apple number that makes my head spin) and that the world has in general been in the longest financial squeeze since the depression, that's a remarkable number.

Now look at the optimism surrounding the iPad mini, with ten million units ordered and the intention that five million will be sold before Christmas.  At the time of writing this optimism is technically unproven as there isn't a single iPad mini physically sold, but judging by the discussions I'm being dragged into I have no doubt that Apple's optimism will be justified.

But the biggest numbers that stop me in my tracks is the stock price, the value per share that determines what Apple is technically worth.  We all know a little about stock prices - they reflect more than the value of the company inventory and it's liquid assets. In fact, the stock price, in very bad circumstances, can actually value a company at less than the known value of it's inventory, however in reality the valuation is way above that simplistic number and factors in intangibles such as intellectual property rights and customer loyalty.  Of course these intangibles are determined by highly qualified individuals following agreed protocols and algorithms that make the whole process easy to understand.  Or not, but there you go.

Mid September Apple was estimated to be worth somewhere in the region of $563 billion.  That's one heck of a lot of greenbacks, with shares trading at $702 each.  Since then it has launched the iPhone 5 and the iPad mini to an expectant world and with little in the way of criticism.  In fact, despite a few bloggers carping about the launch price of the iPad mini, mainly by me, by all accounts,  there has been little but raised expectations about the company.

However, when Apple ceased trading on Friday it had lost nearly $80 billion off its mid September value, nearly 14%.  Market analysts are throwing reasons into the air like confetti at a wedding, with about as much effectiveness.  Some are suggesting its a small slump (small??? - $80 billion ain't small by any reckoning).  Others are suggesting that Apple are releasing too many products in succession - that may be true and if they weren't selling it might have been a good analysis, however there isn't anything to suggest there's likely to be a stock surplus hanging around in iPad minis or iPhone 5s anytime soon.

Some are suggesting that having peaked at over $700 a share, investors have taken their profits and are now looking to reinvest - either in artificially depressed Apple stock or maybe in Amazon or Google stock as they gear up for the Christmas war for tablet sales.  I think there could be a fair amount in this.  I don't know if Apple are worth $563 billion - hell, I'll stick my neck out and say that they are almost certainly not worth that much.  Don't ask me how much they are worth, my teeth fit my mouth and I don't wear brightly coloured braces over a striped shirt, but I'm certain that no company making mobile phones, tablets, laptops and selling other peoples music and books is ever going to be worth that much.  So some speculation in early September and profit taking over the last five weeks sounds likely to be the main reason for the price drop.  Normal activity for the parasites that  drive the economy, I guess.

My other guess is that within the next few weeks some of that 14% will recover, but probably we won't see Apple hit anywhere near $700 a share until after the Christmas results are released.  If they continue to slide, then there is a deeper problem than pure greed, I guess.  Surely not the new connector!! So, if you're in the market for Apple stock, be on the phone to your broker first thing if you want to make a small profit quickly. Or do like me and just watch on the sidelines.  $600 a share might look like a steal, but I'll hang onto my cash for the time being.

Warning/caveat/get out of jail free card below.

Please note I'm a Sci Fi thriller writer who also writes comedic novels, I'm not a financial expert.  While I take a passionate interest in the technology around eBooks, eReaders and tablet computers I am not a financial advisor.  And virtually every share purchase I've made has failed to make any money, or I've hung on so long I've missed the boat.

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In the US Bronze is on a countdown promotion starting Sunday 14th September 2025 at $0.99 for the eBook, rising to $1.99 on the 17th September before reverting to the full price of $2.99 on the 20th September.  All promotions commence at 8:00 am PDT on the stated days.

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Follow me on Twitter: @RayASullivan

email me at raysullivan.novels@yahoo.com

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