Comments on: Apple’s Worst Day in 32 Months http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/ The Business of Technology Thu, 04 Dec 2008 04:31:11 +0000 http://wordpress.org/?v=MU hourly 1 By: Hurry Up and Bounce - GigaOM http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-840682 Hurry Up and Bounce - GigaOM Wed, 09 Jan 2008 20:37:38 +0000 http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-840682 <p>[...] I looked at the tech sector through the lens of bellwether Apple, lots of news has come and gone. Very little of it [...]</p> [...] I looked at the tech sector through the lens of bellwether Apple, lots of news has come and gone. Very little of it [...]

]]> By: What a Recession Means for Tech: 10 Trends to Strategize On « SmoothSpan Blog http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-832526 What a Recession Means for Tech: 10 Trends to Strategize On « SmoothSpan Blog Mon, 07 Jan 2008 16:24:25 +0000 http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-832526 <p>[...] by smoothspan on January 7, 2008 Amid a weakening jobs outlook, Apple’s worst trading day in 32 months,  the NASDAQ had its worst day in nearly 5 years, and a variety of pundits predicting an imminent [...]</p> [...] by smoothspan on January 7, 2008 Amid a weakening jobs outlook, Apple’s worst trading day in 32 months,  the NASDAQ had its worst day in nearly 5 years, and a variety of pundits predicting an imminent [...]

]]> By: Dimitrios Matsoulis http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-831941 Dimitrios Matsoulis Mon, 07 Jan 2008 13:06:03 +0000 http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-831941 <p>Apple is a great company but not invincible. Good economic and market climate or not, there will always be corrections. I think that even if the MP3 music market keeps growing fast, Apple will not be able to keep for ever its huge piece of the pie. AppleTV is not a boogie success either and the new OSX is not anywhere near revolutionary. http://electronrun.wordpress.com/</p> Apple is a great company but not invincible. Good economic and market climate or not, there will always be corrections. I think that even if the MP3 music market keeps growing fast, Apple will not be able to keep for ever its huge piece of the pie. AppleTV is not a boogie success either and the new OSX is not anywhere near revolutionary.
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]]> By: Buzz around me-8 | Silence http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-831446 Buzz around me-8 | Silence Mon, 07 Jan 2008 04:06:00 +0000 http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-831446 <p>[...] Gigaom reports that Apple shares slid 7.6 percent Friday, closing at $180 and capping an 11-percent loss in just one (shortened) week. This a very interesting post that focuses on different aspects of this slide and worries of the investors. I hope those who are interested in looking at the financial aspects of the technology companies can have a happy read with it. Have a look at the post here. [...]</p> [...] Gigaom reports that Apple shares slid 7.6 percent Friday, closing at $180 and capping an 11-percent loss in just one (shortened) week. This a very interesting post that focuses on different aspects of this slide and worries of the investors. I hope those who are interested in looking at the financial aspects of the technology companies can have a happy read with it. Have a look at the post here. [...]

]]> By: waldo http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-831091 waldo Sun, 06 Jan 2008 22:38:27 +0000 http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-831091 <p>Certainly psychology plays a big role in the current price...but a couple of real business factors not yet mentioned above...Apple has yet to book anything on their profit ledgers for iPhone sales or income from the ATT deal. Booking those would project a future price of somewhere between $250 to $280. One must also consider that the iPhone is all software driven technology and the platform is therefore unlike any other cellphone...it is a mini computer/mp3/video player that happens to provide cellphone service. It will be interesting to see if the upcoming quarter report books any iPhone sales.</p> Certainly psychology plays a big role in the current price…but a couple of real business factors not yet mentioned above…Apple has yet to book anything on their profit ledgers for iPhone sales or income from the ATT deal. Booking those would project a future price of somewhere between $250 to $280. One must also consider that the iPhone is all software driven technology and the platform is therefore unlike any other cellphone…it is a mini computer/mp3/video player that happens to provide cellphone service. It will be interesting to see if the upcoming quarter report books any iPhone sales.

]]> By: John http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-829702 John Sun, 06 Jan 2008 00:47:37 +0000 http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-829702 <p>Apple is in a different position than many of the other tech companies. MS, Dell and HP, for example, are in mature markets. To a large extent, everyone who needs a computer has purchased one. Current business is for replacements, upgrades and young people getting their first machine. Thus their business is tied closely to the performance of the economy. In a slowdown one can hold onto an existing machine.</p> <p>Apple also sells to its base in this way. However, Apple is also entering several new markets. The MP3 player market is not yet saturated. The market for iPhones is just opening. Apple is changing to partially replace Sony and Panasonic and others as a major supplier of consumer electronics. This differentiates them from most other companies and gives them a big upside potential even in a weak economy as they continue this transition.</p> <p>Finally, I'll speculate that a weak economy won't damage the sale of iPhones and iPods very much. It might even help them. If you decide that you can't afford that $2,000 big screen media center you might compensate with an iPod touch or iPhone.</p> <p>AAPL is a rather volatile stock. The past year has seen some major pullbacks. This dip is not so large, yet.</p> Apple is in a different position than many of the other tech companies. MS, Dell and HP, for example, are in mature markets. To a large extent, everyone who needs a computer has purchased one. Current business is for replacements, upgrades and young people getting their first machine. Thus their business is tied closely to the performance of the economy. In a slowdown one can hold onto an existing machine.

Apple also sells to its base in this way. However, Apple is also entering several new markets. The MP3 player market is not yet saturated. The market for iPhones is just opening. Apple is changing to partially replace Sony and Panasonic and others as a major supplier of consumer electronics. This differentiates them from most other companies and gives them a big upside potential even in a weak economy as they continue this transition.

Finally, I’ll speculate that a weak economy won’t damage the sale of iPhones and iPods very much. It might even help them. If you decide that you can’t afford that $2,000 big screen media center you might compensate with an iPod touch or iPhone.

AAPL is a rather volatile stock. The past year has seen some major pullbacks. This dip is not so large, yet.

]]> By: Steven Fierberg http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-829431 Steven Fierberg Sat, 05 Jan 2008 20:00:35 +0000 http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-829431 <p>Great Article, the most balanced and clear thinking I have read. And good comments, too. I have held Apple stock for over 8 years, and done extremely well. Nonetheless, I remember going into a CompUSA and seeing tons of Cube boxes sitting there unsold. I should have sold the stock that very next day, but I waited two days, not one, and the stock plummeted to 17 from 70 in the interim. This time, I got out yesterday at 187, half way down on the day. I think in both cases, the stock had finally risen enough to attract the speculative investors who don't really know anything about Apple products, just that they want in on a hot stock. The value is actually 50 times current earnings, no one can be sure about future earnings. Even Shawn Wu, who has been more right than most, only had a 210 target when the stock was hitting 200, which is a tiny premium compared to when he was predicting 170 and the stock was at 120.</p> <p>Apple has several possible problems that could impinge on its success: All the other phone companies are balking at their overly onerous revenue sharing deal, otherwise, why wouldn't they have iphones all over Europe by now-- they can certainly make enough. The Hollywood studios and music companies will do ANYTHING to fight itunes, even stupid things like putting their music on sites that no one will buy from. Clearly, Steve has a terrible relationship with them right now. VUDU is a better video downloading system that all the studios support. DELL is finally designing good looking computers. FRANCE has standardized its entire educational system on LINUX (while this is better for Apple than Microsoft, it still presents a way for people to get a good operating system with a non-apple machine). Apple's deal with AT&T, if it is for five years, will be overly limiting to their long-term growth, and so on.</p> <p>There are many pluses to Apple, I really think they will ultimately do great, but it is possible that with a strong market decline, it might be six to eight months before it begins to rise again, and it could fall a lot more before then. I personally have no intention of buying at 180. Remember, it fell to 120 only a few months ago.</p> <p>Best of luck to all of us.</p> <p>steve</p> Great Article, the most balanced and clear thinking I have read. And good comments, too. I have held Apple stock for over 8 years, and done extremely well. Nonetheless, I remember going into a CompUSA and seeing tons of Cube boxes sitting there unsold. I should have sold the stock that very next day, but I waited two days, not one, and the stock plummeted to 17 from 70 in the interim.
This time, I got out yesterday at 187, half way down on the day. I think in both cases, the stock had finally risen enough to attract the speculative investors who don’t really know anything about Apple products, just that they want in on a hot stock. The value is actually 50 times current earnings, no one can be sure about future earnings. Even Shawn Wu, who has been more right than most, only had a 210 target when the stock was hitting 200, which is a tiny premium compared to when he was predicting 170 and the stock was at 120.

Apple has several possible problems that could impinge on its success: All the other phone companies are balking at their overly onerous revenue sharing deal, otherwise, why wouldn’t they have iphones all over Europe by now– they can certainly make enough. The Hollywood studios and music companies will do ANYTHING to fight itunes, even stupid things like putting their music on sites that no one will buy from. Clearly, Steve has a terrible relationship with them right now. VUDU is a better video downloading system that all the studios support. DELL is finally designing good looking computers. FRANCE has standardized its entire educational system on LINUX (while this is better for Apple than Microsoft, it still presents a way for people to get a good operating system with a non-apple machine). Apple’s deal with AT&T, if it is for five years, will be overly limiting to their long-term growth, and so on.

There are many pluses to Apple, I really think they will ultimately do great, but it is possible that with a strong market decline, it might be six to eight months before it begins to rise again, and it could fall a lot more before then. I personally have no intention of buying at 180. Remember, it fell to 120 only a few months ago.

Best of luck to all of us.

steve

]]> By: Tom Shaughnessy http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-829141 Tom Shaughnessy Sat, 05 Jan 2008 15:08:48 +0000 http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-829141 <p>No more birthdays or graduations. No more gifts of any kind for any reason. Kids save every cent for college. Lexus dealers switch to Ford. All restaurants are closing this Tuesday because because people only have enough money to buy rice.</p> <p>Zero churn - every cell phone buyer stays with their current carrier and keeps their old phone because change is bad. Gateway revolutionizes the media industry using telepathy.</p> <p>Everyone of you shorts needs to go to the mall and sit outside the Apple store this Saturday. And then go take a nap at the Dell kiosk or in the Sony store. If you have the courage, sit in on the earnings conference call - it will be scary, but we'll hold your hand and then buy you a nano if you keep quiet and pay attention.</p> No more birthdays or graduations. No more gifts of any kind for any reason. Kids save every cent for college. Lexus dealers switch to Ford. All restaurants are closing this Tuesday because because people only have enough money to buy rice.

Zero churn - every cell phone buyer stays with their current carrier and keeps their old phone because change is bad. Gateway revolutionizes the media industry using telepathy.

Everyone of you shorts needs to go to the mall and sit outside the Apple store this Saturday. And then go take a nap at the Dell kiosk or in the Sony store. If you have the courage, sit in on the earnings conference call - it will be scary, but we’ll hold your hand and then buy you a nano if you keep quiet and pay attention.

]]> By: Graeme Thickins http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-829130 Graeme Thickins Sat, 05 Jan 2008 14:59:19 +0000 http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-829130 <p>repeat after me.... "Buy on the dips"</p> repeat after me…. “Buy on the dips”

]]> By: Giuseppe http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-828808 Giuseppe Sat, 05 Jan 2008 09:41:58 +0000 http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-828808 <p>In my opinion economic slow down will affect only marginally Apple business. As someone once told me market problems are very different from business problems and I can't see many problems with Apple. People will not stop buying computers and sure not phones and not music devices. There are still many markets where Apple is going to enter and their market share is undoubtely going to increase. They have excellent products, excellent marketing strategy and smart people working. Nothing has happened to Apple yesterday but they lost more than 7% of their value...this is more market panic than business slow down.</p> In my opinion economic slow down will affect only marginally Apple business. As someone once told me market problems are very different from business problems and I can’t see many problems with Apple.
People will not stop buying computers and sure not phones and not music devices. There are still many markets where Apple is going to enter and their market share is undoubtely going to increase.
They have excellent products, excellent marketing strategy and smart people working. Nothing has happened to Apple yesterday but they lost more than 7% of their value…this is more market panic than business slow down.

]]> By: Anshu http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-828685 Anshu Sat, 05 Jan 2008 07:21:51 +0000 http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-828685 <p>What tech sell off? I am not sure if we are all looking at the same metrics because I saw the entire market sell off including tech, financials, biotech, oil, minerals. This article is trying to talk to an Apple sell off when there has been none relative to the market. Its like trying to explain why your house is cold by talking about plumbing when there is a snow storm outside. Context, my friend. Context.</p> What tech sell off? I am not sure if we are all looking at the same metrics because I saw the entire market sell off including tech, financials, biotech, oil, minerals. This article is trying to talk to an Apple sell off when there has been none relative to the market. Its like trying to explain why your house is cold by talking about plumbing when there is a snow storm outside. Context, my friend. Context.

]]> By: nhickmarin http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-828668 nhickmarin Sat, 05 Jan 2008 07:08:22 +0000 http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-828668 <p>Very Informative Article, Thanks!</p> <p>Nhick http://www.itrush.com</p> Very Informative Article, Thanks!

Nhick
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]]> By: Kevin Kelleher http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-828607 Kevin Kelleher Sat, 05 Jan 2008 05:54:51 +0000 http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-828607 <p>@frank</p> <p>Interesting point about the weak dollar driving up component costs. In theory, couldn't it also help Apple in overseas markets by making its products cheaper there?</p> @frank

Interesting point about the weak dollar driving up component costs. In theory, couldn’t it also help Apple in overseas markets by making its products cheaper there?

]]> By: frank http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-828589 frank Sat, 05 Jan 2008 05:34:55 +0000 http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-828589 <p>It is clear that the US economy which generates a good share of apple sales is going for a slow down. Add to this, the rapidly falling US dollar (set to fall further when the fed reduces interest rates at the next meeting), which makes the core components of apple products more expensive. So either apple transfers this cost to the consumer (highly unlikely in a recession) or it bears the extra cost, which eats further into its profits.</p> <p>I think apple is going to fall even further, as are all hardware technology companies. The rapidly falling value of the dollar is going to hit them hard because most of their production is overseas and demand is surely going to slow down in coming months. In addition, in a reccession, discretionary spending falls off, I mean if your home value is dropping rapidly, your job security is in question and there is no more cheap debt, the last thing you would want to do would be to buy a more expensive computer which doesnt hard significantly to your current productivity.</p> <p>So short apple, hp, dell, intel, amd stocks. For non hardware companies like google the horizon is not as bad, because the instead of the dollar affecting them, it actually enhances them, since half of there sales come from overseas. Microsoft is tightly linked with hardware sales, and its productivity products would take a hit once companies start cutting costs on discretionary spending. Amazon like other retailers would also take a hit.</p> It is clear that the US economy which generates a good share of apple sales is going for a slow down. Add to this, the rapidly falling US dollar (set to fall further when the fed reduces interest rates at the next meeting), which makes the core components of apple products more expensive. So either apple transfers this cost to the consumer (highly unlikely in a recession) or it bears the extra cost, which eats further into its profits.

I think apple is going to fall even further, as are all hardware technology companies. The rapidly falling value of the dollar is going to hit them hard because most of their production is overseas and demand is surely going to slow down in coming months. In addition, in a reccession, discretionary spending falls off, I mean if your home value is dropping rapidly, your job security is in question and there is no more cheap debt, the last thing you would want to do would be to buy a more expensive computer which doesnt hard significantly to your current productivity.

So short apple, hp, dell, intel, amd stocks. For non hardware companies like google the horizon is not as bad, because the instead of the dollar affecting them, it actually enhances them, since half of there sales come from overseas. Microsoft is tightly linked with hardware sales, and its productivity products would take a hit once companies start cutting costs on discretionary spending. Amazon like other retailers would also take a hit.

]]> By: e. david zotter http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-828570 e. david zotter Sat, 05 Jan 2008 05:15:41 +0000 http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-828570 <p>Great post.</p> <p>Amazon.com shows Apple products in the Top 10, always..... I just don't see any leading indicators of a sales slowdown, especially as they are accelerating in both Europe and Asia across all products. I believe comscore data also shows an explosion of online sales.</p> <p>The next few weeks are going to be a roller coaster. Macexpo will be very telling... as well as a more dramatic reaction from the fed.</p> Great post.

Amazon.com shows Apple products in the Top 10, always…..
I just don’t see any leading indicators of a sales slowdown, especially as they are accelerating in both Europe and Asia across all products. I believe comscore data also shows an explosion of online sales.

The next few weeks are going to be a roller coaster. Macexpo will be very telling… as well as a more dramatic reaction from the fed.

]]> By: Mike B http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-828523 Mike B Sat, 05 Jan 2008 04:22:06 +0000 http://gigaom.com/2008/01/04/apples-worst-day-in-32-months/#comment-828523 <p>Thanks, that was a very useful article. I think mac sales are going to remain on fire, but I'm a bit worried about ipod sales in 2008. Seems like Apple is running out of "must have" upgrade features for ipods, so people will keep their ipods a bit longer before upgrading again and the ipodless population isn't as large as it used to be.</p> Thanks, that was a very useful article. I think mac sales are going to remain on fire, but I’m a bit worried about ipod sales in 2008. Seems like Apple is running out of “must have” upgrade features for ipods, so people will keep their ipods a bit longer before upgrading again and the ipodless population isn’t as large as it used to be.

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