What's the matter with Apple?

Once a stock market darling, the company seems to have wound up in Wall Street's doghouse.

By Jonathan Berr Dec 17, 2012 11:54AM
The Apple Inc. logo is displayed on the back of the new MacBook Pro David Paul Morris/Bloomberg via Getty ImagesWhat's going on with Apple (AAPL)? The iPhone, iPad and Mac maker, which Wall Street had thought for years could do no wrong, lately can do no right.

Shares of the Cupertino, Calif., company have slumped more than 26% over the past three months as investors worried about a litany of woes -- both real and imagined. Writing on The Street, Jim Cramer noted that Apple has "become among the most hated stocks in the universe," which isn't overstating the situation. The latest problem depressing the stock price is China. 

Last week, the media reports indicated that the debut of the iPhone 5 in the world's most populous country fell flat. The usually press shy Apple struck back at the naysayers and issued a statement over the weekend proclaiming that it sold 2 million iPhone 5s in China, the largest wireless market.

"Customer response to iPhone 5 in China has been incredible, setting a new record with the best first weekend sales ever in China," said Tim Cook, Apple’s CEO, in a statement.

Nonetheless, shares of Apple were down in early trading Monday because the China figures are not as impressive as they seem. The momentum in China is clearly going to rivals. Google's (GOOG) Android operating system controls more than 90% of the market, up 58.2% from a year earlier, according to Boy Genius Report.

China has about 1 billion wireless connections and is the world's largest market. Citigroup's Glen Yeung slashed his ratings on Apple to "neutral" from "buy" because "near-term supply-chain order cuts, while inconclusive, raise questions about iPhone 5’s strength, according to Bloomberg News. The stock was trading down Monday in early market action.

Wall Street has not thrown in the towel on Apple yet. The average 52-week price target on the stock is $754.02, about 47% higher than where it currently trades. Profit is expected to decline in the next two quarters, while revenue is expected to gain double-digit gains. Meanwhile, the drumbeat of bad news continues.

If Apple falls below $500, that would represent a decline of 27% since both the $702.10 peak price on Sept. 19 and the $705.07 intra-day high on Sept. 21. Shares of Apple are dirt cheap, trading at a price-to-earnings ratio of about 11, near its five-year low.

The stock has proven doubters wrong for years. Whether the company can continue to pull rabbits out of hats remains to be seen.
 
--Jonathan Berr does not own share of the listed stocks.  Follow him on Twitter@jdberr.

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14Comments
Dec 17, 2012 3:47PM
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The band wagon is emtying out. 2 products account for a majority of Apple's profits in a very competative sector. Nothing revolutionary hitting the market for apple products,  just updated versions of the same. 
Dec 17, 2012 4:03PM
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I bought a I phone 4S last year, getting rid of it asap. Can't stand the much smaller screen then the likes of the Samsung Galaxy 3.
Dec 17, 2012 3:29PM
Dec 17, 2012 7:54PM
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Products which have no necessary function other than silly gimmicks and  consumers with the fickleness of middle school girls  cannot support any long term stability.  Add in the bad rap for its Chinese labor camps and you have a stock on the fiscal cliff.
Dec 17, 2012 4:38PM
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What's the matter with Apple?

Same thing as oil & silver ETFs , and dozens of other stocks and commodities on the darling list of  hedge funds and spec traders. If you're in these securities, you're in for a bumpy ride no matter what the fundamentals tell you. This is what happens when the Fed prints so much easy money which has no place to go.  
Dec 18, 2012 7:03PM
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I have never bought any of Apple's products and don't intend to start doing so now. They will never see a penny from me.
Dec 20, 2012 5:34PM
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Perhaps it's getting rotten.????????????
Dec 20, 2012 8:39PM
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Apple has failed to maintain its edge over the competition in leading the pack in terms of quality and technology.  They no longer can boast the latest and greatest over the others, in in some ways they are now lagging behind.  They release products before they have all their ducks in a row, and are arrogantly priced higher than other products that are better.  They no longer provide the most bang for the buck, now they are just the must bucks.
Dec 20, 2012 4:50PM
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I have recently converted every thing that I own to Apple.  Best products out there.
No more changing at the whim if Microsoft.  Sick of them and their totally unreliable products.

You folks need to stay out of this foreign companies business.  Not your country, and none of your
business.  Take care of you own sick country!!!!!

Dec 19, 2012 3:25PM
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Apple made over 8 billion in profits this year.  They just opened up in China and sold 2 million iPhones.  There's nothing wrong with apple, just stock speculators.
I bet same idiots who won't buy apple will run out and buy amazon stock which has a 3k p/e ratio as opposed to apples 13.  You're playing right into the stock manipulators hands, these guys are going to snap up apple stock after the year ends and make a killing.
Dec 18, 2012 9:29PM
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Apple has to much eye candy and it finally bit them in the ****. I have loved the IPhone since the first one . I now own an S3 what a game changer
Dec 17, 2012 4:17PM
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There is fundamentally NOTHING WRONG with Apple. The only thing wrong is the world of so-called experts all trying to second every minute detail of everything that Apple does or doesn't do. Like any other company, Apple has, does and will continue to make mistakes - but nothing that has or is happening with the Cupertino company justifies the knee-jerk reaction that it afflicting it. I constantly read that Apple is the "sweetheart of Wall Street". What a crock. The Street has always gone out of its way to find something, anything, wrong with Apple and then to magnify the magnitude of how they slid in to oblivion.

 

If Tim Cook's fart smells just a touch off - oh my God - sell, sell, selll - the end of Apple has arrived.

 

Come on people - wake up and smell the semi-conductors. Stop over-celebrating the good and above-all stop pannicking the "bad". This is the ebb and flow of business and not every single secondof every minute, hour or day is going to knock your socks off. What we now have however, is nowhere near a reflection of Apple is about, what it has achieved or where it is going.

Dec 18, 2012 2:32PM
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Recently switched everything over to Apple at home.  It is awesome.

edit: Mac book Air, New I-Mac, Apple TV and Airport Express with Air tunes, All phones are Iphone 4s and one I-Pad
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