Apple Stock Price Hits Lowest Levels Since 2011, Falls Below $400

[TallManNY]

I think there's a higher chance that earnings are lower in the next 5,10 years. If 60% chance earnings are 20% lower than 2012 (44*0.8) and 40% of the chance earnings are same (44), normalized earnings would be (44*0.8*6+44*4)/10 ~ $39/share. 15x might be ok if you look at this number as a coupon for a risk free bond, so $585/share could be fair. But then the smart buyers would wanna buy close to mid 300s for a margin of safety. I think Apple would buyback at $350-$380.

I hope I'm way off and the conditions are way better than I expect. Maybe earnings never go 20% lower than 2012 and the odds are not what I expect. I could be too pessimistic.

Keep in mind that if earnings really did level out at $39 per share, that Apple could keep its $145 billion cash pile and put out yearly dividends of $39 per share. After ten years an Apple shareholder would have (a) the same Apple share worth something pretty good and (b) $390 less taxes (under current rates leaving you $312). So you can buy at $395, get $312 in cash and still have the same share which you can probably sell to the market for something higher than $395. Every investor in the world would love to get an investment like that.

The current shares are only correctly priced if Apple's revenue drops significantly over the next several years. With reports coming in like Verizon sold 25% more iPhone's in 1Q2013 compared to 1Q2012 and T-Mobile selling iPhones for the first time ever, that supports that this year isn't going to be a big role back in revenue.

 

[Dmunjal]

Not going to get hung up in the definition of innovative - but I think Steve would have rolled out some or most of these:

iTV
MacPro
iWork
iLife
CHINA MOBILE CONTRACT
iPad Mini retina
Streaming Radio
Aperture Reliable Maps

Why hasn't Cook been successful in signing up TV networks and studios on a subscription model for iTV? That's the model that made the iPod successful. It would make the iTV a success, too.

Jobs would have muscled through it like he did with the music studios. You know at least Disney would have been on board as the largest shareholder. He might have just bought Disney to kickstart the model and force the others to play.

I don't see Cook playing this game.

 

[Rogifan]

Not going to get hung up in the definition of innovative - but I think Steve would have rolled out some or most of these:

iTV
MacPro
iWork
iLife
CHINA MOBILE CONTRACT
iPad Mini retina
Streaming Radio
Aperture
Reliable Maps

How come none of this stuff happened on his watch? If he could wave his magic wand and get content providers on board how come AppleTV was basically a "hobby" while he was CEO? Why didn't he give us streaming radio? How come the iPad 2 didn't have a retina display when the iPhone 4 did? Are you suggesting none of the stuff on your list could have happened prior to Steve's passing in 2011?

Oh and here's an interesting post from a former Apple employee about MobileMe (a failure that was rolled out on Jobs watch) (h/t imore.com)

https://medium.com/editors-picks/9ae1727d2479

 

[lildimsum7]

Keep in mind that if earnings really did level out at $39 per share, that Apple could keep its $145 billion cash pile and put out yearly dividends of $39 per share. After ten years an Apple shareholder would have (a) the same Apple share worth something pretty good and (b) $390 less taxes (under current rates leaving you $312). So you can buy at $395, get $312 in cash and still have the same share which you can probably sell to the market for something higher than $395. Every investor in the world would love to get an investment like that.

I didn't account for share buybacks. Assuming they use excess cash to buyback shares, Apple is definitely worth over $600 with my assumptions. So a good time to buy would be now if I'm right. I think they have to beat last year's 2Q earnings and announce buyback or dividends to jumpstart the stock. People are crazy thinking the stock is riskier than ever even though the price is a decent bargain!

 

[Apple Corps]

How come none of this stuff happened on his watch? If he could wave his magic wand and get content providers on board how come AppleTV was basically a "hobby" while he was CEO? Why didn't he give us streaming radio? How come the iPad 2 didn't have a retina display when the iPhone 4 did? Are you suggesting none of the stuff on your list could have happened prior to Steve's passing in 2011?

Oh and here's an interesting post from a former Apple employee about MobileMe (a failure that was rolled out on Jobs watch) (h/t imore.com)

https://medium.com/editors-picks/9ae1727d2479

Give it a break Rogifan - Steve was critically ill for at least year prior to his death - Cook has been at the tactical helm now for well over two years and ain't making it happen.

 

[cat3600]

Homie, don't call me a liar.

I used Windows 8 Beta for several months on my main computer, I then installed the final release on my home computer and one of my work computers.

If there is anyone that gave Windows 8 a fair shot it is me.

I went back to Windows 7 on my home PC, but still have windows 8 on a virtual machine that I use for testing at work.

I repair computers for a living and have used nearly all versions of Windows including windows 8 and a couple of different versions of Windows Server. Several versions of Linux and a little bit of OSX.

Well did you use it with an articulating PC or at least a touchscreen, I am betting not! As most people do not have a touch screen monitor, very few are available unless you go the all-in-one route.

Have you also looked around almost every laptop on the market is now touch screen capable and in absolutely mind boggling no of combination. Once haswell comes out all of them will be thinner and lighter and the best computing experience one can have with touch to booth as well.

Those who don't like windows 8 have not used it with a proper set up, going back to MS after 7 years, it is vastly superior than OS X. Don't see any virus etc problems and super stable plus very fast.

Not one crash since last year October and I have my Dell XPS 27 on 24 hours running! Just because you repair PC has nothing do do anything with windows 8 not being good. In the good old days before a Mac user I have made close to 30 computers for myself, friends and family. The old desktop version is still there, there is no reason to go back to windows 7.

This is the first version of Win 8 and it will only get better.

 

[Rogifan]

Give it a break Rogifan - Steve was critically ill for at least year prior to his death - Cook has been at the tactical helm now for well over two years and ain't making it happen.

OK so then the things that came out during this period can't be attributed to Jobs because he was critically ill, right? And Cook should get the credit since he was the one really running the show? It seems some want to have it both ways - good stuff Steve gets the credit, bad stuff Cook gets the blame. Which I think is incredibly unfair to Cook.

 

[Apple Corps]

It is quite simple to understand. Steve's genius was envisioning "magical" products at the intersection of liberal arts and tech - almost universally accepted for that - and that was the critical "secret sauce" of Apple - very, very few people can do that. He also had a penchant for details and aesthetics and made things happen. Jobs and Ives are one of those 1 + 1 = 3 deals.

The more tactical aspects of engineering and supply chain were things that many executives could do. Ron Johnson was a genius at retail - or was he? IMO, much of Johnson's success was Steve's vision about clean lines and open, natural environment / sales processes PLUS the hot products Apple had to sell.

Now this is the important part - Cook's CEO performance early on is highly attributable to Steve and the plans and influence he had architected. As time goes on we are seeing more of what Tim Cook brings to running Apple sans Steve Jobs presence.

It is not about having it both ways, it is real world experience and a highly accepted reality of CEO transitions.

----------

Why hasn't Cook been successful in signing up TV networks and studios on a subscription model for iTV? That's the model that made the iPod successful. It would make the iTV a success, too.

Jobs would have muscled through it like he did with the music studios. You know at least Disney would have been on board as the largest shareholder. He might have just bought Disney to kickstart the model and force the others to play.

I don't see Cook playing this game.

I agree fully - he does not appear to have the skill / stones to pull things off.

 

[Random 995K]

Just making sure I got this right...

The holiday qtr where they sold the most iPhones in their history was a fail because they failed to beat wall street estimates

This past qtr where wall street estimated 3.5M iPhones at Verizon, they sell 4M but that doesn't matter now because growth "has slowed"

If they don't meet the overall wall street consensus on April 23rd, the wall street estimate WILL matter again.

So...

Do street estimates matter or not? Or are you just preaching gloom and doom no matter what?

Don't bother with him, judging by his posts he can't grasp the concept of growth. I also don't think he can get his head around that a launch quarter combined with Christmas should result in more sales than a quarter with no new iPhone and no Christmas.

 

[SemperMac]

Reed Paul Jobs !?

Could Reed Paul Jobs (born 1991) take over (in a couple of years) from where his father was forced to stop ... does he have what it takes?!?

 

[Rogifan]

It is quite simple to understand. Steve's genius was envisioning "magical" products at the intersection of liberal arts and tech - almost universally accepted for that - and that was the critical "secret sauce" of Apple - very, very few people can do that. He also had a penchant for details and aesthetics and made things happen. Jobs and Ives are one of those 1 + 1 = 3 deals.

The more tactical aspects of engineering and supply chain were things that many executives could do. Ron Johnson was a genius at retail - or was he? IMO, much of Johnson's success was Steve's vision about clean lines and open, natural environment / sales processes PLUS the hot products Apple had to sell.

Now this is the important part - Cook's CEO performance early on is highly attributable to Steve and the plans and influence he had architected. As time goes on we are seeing more of what Tim Cook brings to running Apple sans Steve Jobs presence.

It is not about having it both ways, it is real world experience and a highly accepted reality of CEO transitions.

----------




I agree fully - he does not appear to have the skill / stones to pull things off.

According to you everything good that happened at Apple was because of one person - Steve Jobs. Since we can't bring Steve back from the dead what do you suggest Apple do? Do you have someone in mind that you think is the best approximation of Steve that Apple should hire to turn around the sinking ship? Obviously you don't think Tim Cook has what it takes. Who do you think does? And do you think whoever this person is should come in recommend the board be replaced since they supported Cook becoming CEO and Apple's share price decline happened on their watch?

 

[slughead]

You haven't lost anything until the moment you sell.

So, don't sell.

It's that easy.

Tell that to people who held Zimbabwean dollars, or any other asset that loses value. They didn't lose anything, they had 1 billion dollars 1 year, 1 billion the next. Ignore the fact that the value was basically eliminated, you don't lose anything until you sell! In fact, keep buying!

Silly way to look at it. Value is value. I'm not saying Apple wont go back up eventually, but it could still be overvalued at the moment / will take a long time. Also, anyone who bought at $600 did, in fact, lose a crap-ton.

You also have to factor in opportunity cost. It may take 5-7 years for Apple to get back to $600. Meanwhile Gold / Exxon stock / whatever could have doubled. You might be better off cutting your losses now and buying something else.

 

[flux73]

Tell that to people who held Zimbabwean dollars, or any other asset that loses value. They didn't lose anything, they had 1 billion dollars 1 year, 1 billion the next. Ignore the fact that the value was basically eliminated, you don't lose anything until you sell! In fact, keep buying!

Silly way to look at it. Value is value. I'm not saying Apple wont go back up eventually, but it could still be overvalued at the moment / will take a long time. Also, anyone who bought at $600 did, in fact, lose a crap-ton.

You also have to factor in opportunity cost. It may take 5-7 years for Apple to get back to $600. Meanwhile Gold / Exxon stock / whatever could have doubled. You might be better off cutting your losses now and buying something else.

Well obviously. But it's not that easy is it? You know that gold and Exxon will be a better return on your investment than Apple? Even you said it "might be better". Which also means it might NOT be.

Comparing Apple stock to Zimbabwean currency is just ridiculous.

Note how most people said that Apple was a buy at $700. Now note how most people are saying it's a sell at $400. Nothing has changed all that drastically about Apple's business from 7 months ago. Certainly nothing to warrant 40% drop. The drop itself is what got people to say it's a sell now. This is like making a weather prediction for tomorrow based on today's weather.

 

[macalec]

I Just sold my stock for $400. I did very well. However I am planning to buy it back. I have a feeling that they did not have good earnings and thus the stock will go down even more.

 

[Apple Corps]

According to you everything good that happened at Apple was because of one person - Steve Jobs. Since we can't bring Steve back from the dead what do you suggest Apple do? Do you have someone in mind that you think is the best approximation of Steve that Apple should hire to turn around the sinking ship? Obviously you don't think Tim Cook has what it takes. Who do you think does? And do you think whoever this person is should come in recommend the board be replaced since they supported Cook becoming CEO and Apple's share price decline happened on their watch?

I already posted a link to a list of potential replacements - have you even read it?

Steve pushed Cook - the Board approved. Both Steve and the Board blundered. The Board needs to act. If they can salvage Cook all the better - I just don't think he has what it takes.

The only reason I could see for replacing The Chair is if he continues with Cook as CEO and little change in performance.

----------

I Just sold my stock for $400. I did very well. However I am planning to buy it back. I have a feeling that they did not have good earnings and thus the stock will go down even more.

We will know on Tuesday - I suspect a marginal performance with some goods and bads.

Increasingly, this WWDC will be the "canary in the mine" for Apple.

----------

Well obviously. But it's not that easy is it? You know that gold and Exxon will be a better return on your investment than Apple? Even you said it "might be better". Which also means it might NOT be.

Comparing Apple stock to Zimbabwean currency is just ridiculous.

Note how most people said that Apple was a buy at $700. Now note how most people are saying it's a sell at $400. Nothing has changed all that drastically about Apple's business from 7 months ago. Certainly nothing to warrant 40% drop. The drop itself is what got people to say it's a sell now. This is like making a weather prediction for tomorrow based on today's weather.

Those are good points. In spite of my assessment of Tim Cook as CEO, I believe Apple to be a strong company and generally agree with your comments. Do keep in mind that the stock price is about future earnings an that is where the market and a number of us are concerned. We know what Steve accomplished - we fear that...

 

[Rogifan]

I already posted a link to a list of potential replacements - have you even read it?

Steve pushed Cook - the Board approved. Both Steve and the Board blundered. The Board needs to act. If they can salvage Cook all the better - I just don't think he has what it takes.

The only reason I could see for replacing The Chair is if he continues with Cook as CEO and little change in performance.

I'm sorry I guess I missed your list of replacements. Perhaps you could point me to the post in this thread where you posted that link.

Obviously the board knows more than we do and if Cook is as bad as you claim they would have replaced him already. Or the board is no better and the chairman needs to go. Or Cook is doing just fine and Apple will wow us this summer/fall. Lets not forget, as others have pointed out, when the stock was going up, up and up Wall Street was buy, buy, buy. Now that they've decided Apple is no longer the cool kid and the stock is dropping the herd is saying sell, sell, sell. Yet there isn't anything fundamentally different about the company now than when it was $700 a share. The only thing that's different is the perception of the company. A perception that I think Cook and Schiller need to do a lot more to turn around.

Last year Don Norman called Cook, Ive and Schiller the most important execs at Apple and referred to them as the head, heart and voice. Perhaps we need to hear less from the head and more from the heart and voice. I've defended Cook in this thread and I do think he often gets treated unfairly compared to Steve, but I don't think he's Apple's best spokesperson so pushing him to be front and center isn't the greatest idea, in my opinion. He can operationally run the company and have the final say but let others be the face. I mean it is telling when Time magazine puts out its annual list of the 100 most influential people in the world and Cook doesn't make the list but one of his SVP's does.

 

[UBS28]

What goes up must come down.

 

[Apple Corps]

Rogifan - I can't find my own posted link

However - here is the link: http://247wallst.com/2013/03/05/who-will-replace-tim-cook-as-apple-ceo/

----------

What goes up must come down.

Not really - The Voyager spacecrafts will never come back down - Think Different

 

[thekev]

Not going to get hung up in the definition of innovative - but I think Steve would have rolled out some or most of these:

iTV
MacPro
iWork
iLife
CHINA MOBILE CONTRACT
iPad Mini retina
Streaming Radio
Aperture
Reliable Maps

Isn't your list somewhat nitpicky? Many of these things could have included some influence from either side. The mac pro didn't slip on its own. Someone had to dissolve whatever resources were assigned to it or they would have had something slated for at least late last year, even with a very small team. Software is the same thing. Even with minimal resources, these things have gone a very long time without updates. A smaller team that started work two or more years ago would have something out by now. Keep in mind iTV is still an owned trademark.

Give it a break Rogifan - Steve was critically ill for at least year prior to his death - Cook has been at the tactical helm now for well over two years and ain't making it happen.

Anything good gets attributed to the prior CEO. Negative things are attributed to the current one. When I look at the points you listed, many of them might not really change due to a change in leadership. I'm surprised they didn't replace their SVP of retail internally.

 

[Apple Corps]

No, I would not consider iTV (trademark is irrelevant issue) or whatever it can be called, the professional market hardware / software, or the huge potential of a China Mobile contract as nitpicky.

Some of the other items are clearly of less impact - but indicative of some type of change in not getting things out.

CEO performance attributions during transitions are not, IMO, as simplistic as you have outlined. And lets be real - we are past any transition period now. Cook's tenure as CEO/COO/ interim role is now approaching 2.5 years or so?

 

[Dmunjal]

What happened to Steve's iTV (let's call it iPanel or iScreen) and his aha moment from the book? Apple is greatest when reinventing industries. They did it for music, phones, PCs, and more. Time for TV to be revolutionized. The fact that people even compare Roku to Apple TV means they are not being revolutionary in their approach. It's been over two years since that moment.

 

[khiaao]

Bought one hundred shares when it was at 450.00, i wished i wait now to catch this low end but this is a long term buy for me so as long as the dividend doesn't stop or get lowered i'm good.

 

[Rogifan]

Rogifan - I can't find my own posted link

However - here is the link: http://247wallst.com/2013/03/05/who-will-replace-tim-cook-as-apple-ceo/

I stopped reading after I saw the name Eric Schmidt. Really?

 

[Apple Corps]

You can't get the whole story that way.

Lots of names can be floated but it is a moot point until . unless Apple's BoD decide to oust Cook or he resigns.

Anyway, we will have another data set on Tuesday.

 

[flux73]

I don't see any product being off track right now. Have we missed something that was *supposed* to come out in the last couple of months?

- iOS7 is on track to be coming out in less than year since iOS6. Same with iPhone 5S. I expect iOS7 to be functionally and visually improved.
- iPad March release missed, but since there was an updated iPad 4 in Sept, a summer release (June?) for iPad 5 works.
- iPad mini Retina release, this summer?
- Mac Pro release soon? Okay, this has been a long time coming, but it IS significant if for no other reason than to let professionals know they haven't been abandoned.
- OS X 10.9 coming out this summer, as scheduled. I expect a new desktop version of Siri that will be able to launch apps, which I think could be a much bigger deal than it sounds. Plus, a revamped look from Jony?
- new products: iWatch?, iTV?; release date=???
- iRadio?
- updated Passbook - iWallet?

Everyone in the media and online seem to be so focused on the hardware, but as I've speculated before, I think the big innovations will show up in software - specifically iOS 7 and OS X. I think we will start to see a lot more complementary and consistent functionality (as well as appearance) between the two OS's. This is where Jony Ive will (hopefully) show that he's moving towards a grand unification vision across different Apple devices. This is also an area where Samsung is completely powerless.