Why Apple shares are sliding

The stock falls more than 4% on more optimism for Android tablets and tighter trading requirements at one clearing house.

By Kim Peterson Dec 5, 2012 2:20PM
The Apple Inc. logo is displayed on the back of the new MacBook Pro David Paul Morris/Bloomberg via Getty ImagesApple (AAPL) shares dropped more than 4% Wednesday, causing more fretting from investors who have watched the stock-market darling plunge since September.

The stock was trading at around $551.50 at midday, down from Tuesday's close of $575.85 and continuing a drop from $700 in mid-September. And anyone who thought Apple would cruise straight to $1,000 has learned a hard lesson.

There were several reasons why shares fell. Research company IDC issued a report saying that tablets running Android software from Google (GOOG) are gaining traction in the market. Android's tablet market share will probably increase to 42.7% this year from 39.8% last year, IDC added. In that same period, Apple's share will fall to 53.8% from 56.3%.

And don't forget about Windows-based tablets from Microsoft (MSFT), IDC said. They only get about 2.9% of the market this year, but they'll eventually take share from both Apple and Android to get 10.2% in 2016. (Microsoft owns and publishes moneyNOW, an MSN Money site.)

There were other theories for Apple's slide. One investing website, StreetInsider.com, says that the clearing house COR Clearing increased its margin requirements for positions in Apple to 60% from 30%. In other words, investors have to put in twice as much capital to hold a position there. Online brokers and smaller investing shops often use clearing houses to execute stock trades, and COR Clearing was apparently concerned at the high concentration of Apple shares traded by its clients.

And AT&T Mobility's CEO might have played a part here as well, Forbes reports. He said at a technology conference Wednesday that while its Apple business is growing as strong as ever, AT&T has "some fantastic Android products," according to a research note from Stifel Nicolaus. AT&T's iPhone activations rose to 4.7 million in the third quarter from 3.7 million in the second quarter.

At any rate, Apple's disappointing showing was adding to a general market malaise Wednesday. The Standard & Poor's 500 Index ($INX) had fallen as much as 0.6% in the morning, but by midday was up nearly 0.5% to 1,414. The Nasdaq Composite Index ($COMPX) was down by 11 points, or about 0.4%, and the Nasdaq-100 Index ($NDX), which is heavily influenced by Apple, fell by 16 points, or 0.6%.

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Dec 5, 2012 3:01PM

Apples problems include:

- competition producing products just as good and in some cases more powerful for a lower cost to consumers

- competitions devices are getting easier to use, one of Apples long time features

- Apple taking 30% from app makers may drive some to other platforms as those platforms gain market share.  Also the sheer number of apps on Apple products means the chances of duplicate apps increase meaning newer apps may want to be on other platforms first, apps are very often the flavour of the month

- Apples products are increasingly incremental and not innovative, a sign they have lost what made them great

- It's image of late has suffered with the Chinese factory concerns

Apple will still be a profitable and huge company, just not with the monster numbers we have seen.  It will lose market share, and it's stock is reflecting this.

Dec 5, 2012 3:52PM

Consumers were over paying for apple Products because it was something new. Since Apple has not came up with anything new, consumers go to the company that offers something new. Microsoft has huge chance of success, as long as the play there cards right.

Dec 5, 2012 2:35PM
Dec 5, 2012 5:23PM
The problem with Apple's stock has a lot more to do with hedge funds, HFT, technical charts, and pre fiscal cliff profit-taking than anything with the fundamentals.  Everytime a bunch of funds get together and try to manipulate a stock higher or lower, you get a bunch of articles about how great or poor the business is doing to try to give a reason for the price action.  Apple as a company, is not a lot better or worse than it was a year ago.  Just people trying to make up a reason.
Dec 5, 2012 3:53PM
I think Apple is starting to feel the loss of Steve Jobs. It's been a year and he was the one who had the vision and gave direction to the company. That doesn't mean that the stock wouldn't have been impacted by competition but he would have come up with something to counteract the outside pressure. I think Apple will continue to drop because of this.
Dec 5, 2012 6:01PM
Great time to buy Apple!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!Its just a hiccup!
Dec 5, 2012 5:47PM
Who says there was a shortage of iPhone 5. I went into a Walmart in massappequa ny  and there had plenty of them sitting there, then u go online or to carriers stores and they say two weeks wait.  Makes u wonder about inflated hype , iPad mini also.   
Dec 5, 2012 3:03PM

I hear the Microsoft tablets will take the iPad market over much like the Zune crushed the iPod market.

Dec 5, 2012 7:04PM

Too Many Apples Fell From The Tree,

Let's face it, just about everyone on the planet that wanted an Apple product, be it an iTunes, iPhone, iPad or anything else ... has gone out and bought one. The market is saturated and there are simply fewer potential consumers out there that are salivating for more product. Like every other successful product or service, there eventualy comes a time of lessened demand and resultant diminished profits. Apple is an icon but they are not invulnerable to the market forces that define the overall economy.


Peace to all ~


Dec 5, 2012 5:29PM
In a nut shell 2 products are responsible for most of the billions in market Cap. Any loss in market share in either one of them is a disastrous recipe for the company if they don't continue to come out with other revolutionary products. That's a lot of eggs in those 2 baskets.
Dec 5, 2012 7:56PM
Too many institutional investors moving the market because of the size of their positions.  We'll see what happens to this stock once the Christmas sales are reported.  I just got an iPhone -- after having 2 Android phones -- and it's so much better.  Take a look at the company, people, not the rumor and innuendo that the media feeds on.  The stores are jammed; they're still selling more stuff than anyone else.  There's nothing wrong with Apple...and anyone who is selling their shares as a result of this "news" is just stupid.
Dec 5, 2012 7:06PM

This is the gift horse buying opportunity for Apple.The sale of their products will be thru

the roof for Christmas.Every tree will have Apple products under it.Buy the the stock or

regret it the rest of your life.

Dec 5, 2012 7:51PM
Dec 5, 2012 5:18PM
but St. Steve of Jobs is in heaven blessing everyone who obeys his commands and owns apple crap, isn't he?
Dec 5, 2012 3:12PM

Too funny your anology with this in golf...you divot this and divot that. The grass does not care and will grow, again.  You just have to take care ot the varmits that invade..they are pesky. Don't get over concerned about this guy in office.  He already knows that. He is fun to watch, knowing that this is just exactly what he wanted. 

Dec 5, 2012 2:34PM

I still think Sam Snead was and always will be the best and greatest golfer ever,  then Ben Hogan,  then all the others dow the list, Jack Nickolas,  _____


Oh, I almost forgot,  Eldrick would be 37th on the list.  However he always played the 19th hole very good.

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