Why These Dow Losers Fell

Today, the Dow (INDEX: ^DJI  ) was down 22 points (or 0.18%) to 12,734.63. The popular ETF that tracks the Dow, the SPDR Dow Jones Industrial Average (NYSE: DIA  ) , was down 0.15% to 127.06.

Of the 30 Dow components, 23 were down today. Four of them were down more than 1%.

Company

Stock Price (Daily Price Change)

AT&T (NYSE: T  ) $29.45 (-2.5%)
Hewlett-Packard (NYSE: HPQ  ) $27.99 (-1.2%)
Alcoa (NYSE: AA  ) $10.36 (-1.1%)
Chevron $106.59 (-1.1%)

The market as a whole reacted negatively to an unexpected new-home-sales decline for December. New-home sales fell 2.2% to a seasonally adjusted annual rate of 307,000. For 2011 as a whole, sales fell 302,000 -- a 6.2% drop and the worst annual sales total on record.

Of course, if you're looking for a housing bottom, this could be good news, as my fellow Fool Morgan Housel explains.

But the biggest daily loser, AT&T, had the most identifiable reason for being down. Its earnings report today disappointed folks just as Verizon's did two days ago. Excluding charges, it reported earnings per share of $0.42, a penny off from analyst estimates. But including all one-time charges, it reported a loss of $6.68 billion, or $1.12 per share.

AT&T took a $4.2 billion charge from its failed bid for T-Mobile USA, but like Verizon, the longer-term problem for AT&T is its dependence on Apple. Even with efforts to diversify, some 80% of its smartphone sales were iPhones. Remember that these are extremely subsidized by the carriers to lock in customer contracts. And now that the iPhone isn't exclusive to AT&T, the subsidies go from differentiator to table stakes.

There you have it -- a bad day for AT&T and, more importantly, a sign of potential long-term trouble ahead if it can't solve the margin sucking sound coming from Apple. If you want to read more about Apple and the companies that are capitalizing on the mobile boom, read our brand new free report: "The Next Trillion Dollar Revolution."

Anand Chokkavelu and The Motley Fool own shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple and Chevron and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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