Apple Shares Plunge After Earnings: Are You Panicking Yet?

Let's not beat around the bush. In several ways, Apple's (NASDAQ: AAPL  ) fiscal first quarter earnings release did leave a little to be desired in some key areas. iPhone units came in below estimates, particularly when considering the optimistic expectations suggested by Verizon's activation figures. Mac units legitimately plunged both sequentially and year over year. Gross margin contracted to the lowest point in two years.

In after-hours trading, shares reached as low as $457.30, shedding nearly $57, or 11%, from where they closed. That's $53 billion in market cap lost in about an hour.

Are you panicking yet?

On iPhones
The company sold 47.8 million iPhones in the December quarter, 29% higher than a year ago. That was shy of the roughly 50 million that most investors were expecting, and well below the 56 million figure suggested by Verizon's activations.

The iPhone 5 was constrained throughout most of the quarter, but sales climbed during the tail end as production ramped up. Tim Cook said that iPhone 4 supplies were constrained for the entire quarter. That coincides with the fact that only half of Verizon's iPhone activations were the newest model, indicating strong demand for older models.

On iPads
iPad units were solid at 22.9 million, driven in part by strong demand for the iPad Mini. That's a jump of 48% over last year. Cook said that the smaller tablet continued to be constrained during the quarter and that Apple expects to achieve demand balance this quarter as it ramps up.

Source: Earnings releases. Fiscal quarters shown.

Average selling prices expectedly dropped to $467 with the introduction of the iPad Mini, along with the continued presence of the iPad 2. That was a $101 drop in ASP from a year ago.

On Macs
The total Mac units of 4.06 million were undoubtedly light, dropping 22% year over year and significantly underperforming the broader PC market (negative 6%), breaking Apple's streak. Apple no longer reports the mix of desktops and laptops, but Cook attributed most of the shortfall to the "significant" iMac shortages that he warned about last quarter.

I underestimated how much iMac shortages would impact the quarter, since the relative importance of the desktop business has continued to decrease. Specifically, Cook said iMac units were down by 700,000 year over year due to the constraints, which alone represents a large chunk of the 1.1 million decrease. The 21.5-inch model shipped in November and the 27-inch model shipped in limited quantities in mid-December. After announcing them, the previous generation was no longer available, so Apple simply had no flagship desktop to sell during much of the quarter.

Desktop ASP last quarter was almost $1,300, so missing out on 700,000 units represents $910 million in lost revenue. The one saving grace is that Apple customers are a loyal bunch, so most of those sales are simply being pushed into the March quarter instead of being lost altogether.

Cook said laptop units were "in line" with IDC's estimates of of the broader market.

On reporting
Apple has reorganized how it reports its results in several ways. iTunes has been combined with software and services. Apple has replaced peripherals with accessories, and unbundled first-party iPhone and iPad accessories from iPhone results and moved those sales into this new accessories segment.

These accessories were previously reported in their related product segments, slightly increasing reported revenue and ASP figures. The move is intended to increase transparency and isolate actual device revenues, which are more relevant. Apple has restated its financials for the past two years.

Source: Apple Investor Relations. Fiscal quarters shown.

As the company's "Greater China" business has exploded, Apple has now broken out that segment from its broader Asia-Pacific segment. This is very helpful for investors, as previously this data was only given out on conference calls.

The figures in this new Greater China segment don't exactly line up with previously provided data, primarily because Apple still reports retail results separately, which include stores in numerous countries around the world. Total Greater China revenue including retail was $7.3 billion, up 62% from a year ago; compare that to the $6.8 billion revenue from Greater China excluding retail.

On order cut rumors
Cook went out of his way to address the recent rumors of component order cuts, an obvious reference to The Wall Street Journal's recent speculation:

I would suggest it's good to question the accuracy of any kind of rumor about build plans and also stress that even if a particular data point were factual it would be impossible to accurately interpret the data point as to what it meant for our overall business because the supply chain is very complex and we obviously have multiple sources for things, yields might vary, supply performance can vary. The beginning inventory positions can vary, I mean there is just a long list of things that would make any single data point not a great proxy for what's going on.

That echoes my own initial sentiments:

Apple's supply chain is a living, breathing entity with a lot of moving parts. I wouldn't purport to know more than Tim Cook about how all those pieces fit together, and neither should the WSJ, Nikkei, or investors.

I've said it before and I'll say it again: Investors need to trust Tim Cook more.

On guidance
Apple's historically been known for its lowball guidance, but it seems those days are at an end. CFO Peter Oppenheimer said guidance used to reflect a "conservative point estimate" of results that the company felt reasonably confident it could hit, but now it plans to provide a range of what it thinks it will achieve.

It seems like a semantic distinction, but analysts interpreted it as Apple moving away from its comically conservative guidance of the past and toward more pragmatic forecasts. This is a trend I've noted before.

Source: Earnings releases and conference calls. Fiscal quarters shown.

For the past three quarters, Apple's actual results have been relatively close to its guidance. Apple expects the current quarter to see sales of $41 billion to $43 billion, with gross margin of 37.5% to 38.5%.

On panicking
With an 11% plunge after earnings, some investors are obviously panicking. At that low, shares are just a 3% sell-off from tapping fresh 52-week lows. Moves of that magnitude are common nowadays with the negative sentiment surrounding Apple lately. As Apple flirts with new lows, investors are overlooking the fact that it just posted all-time records in three of its most important metrics: total revenue, iPhone units, and iPad units.

Meanwhile, its cash balance has swelled to an incredible $137.1 billion, representing 32% of its market cap. Its P/E now sits at 10.4, and backing out the $146 per share in cash brings that figure down to 7.

Yes, 7.

A pullback on these results could have been reasonable if shares were at all-time highs and Apple's P/E was in the "lofty" territory of 16.3 (gasp!) when it peaked in September. Some figures could have been better, but an 11% plunge amid low expectations to add on to the 27% already lost is nonsensical to say the least.

When the terror subsides, will you still be holding (or buying) shares? Let's hope so.

As myopic traders dump their Apple shares en masse, will you have the resolve to hold your ground -- or possibly buy more? Emotions aside, Apple's growth story is far from over and it still has massive opportunities ahead. We've outlined them right here in The Motley Fool's premium Apple research service, and it may give you the courage to be greedy when others are fearful. If you're looking for some guidance on Apple's prospects, get started by clicking here.


Read/Post Comments (66) | Recommend This Article (113)

Comments from our Foolish Readers

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  • Report this Comment On January 24, 2013, at 11:13 AM, JokerJoey wrote:

    Evan dd a good job here. I was prepared for the worst in this article but it turned out fair and balanced to use a Fox term.

    Anyway, the guidance given is a way to quell lofty expectations. I think that as things normalize both from a moderation in constraints and from evening out in supply chain anomalies, you will see a fine beat this current quarter.

    The next thing to watch for is what happen after the shareholders' meeting coming up, especially as relates to the cash hoard. My preference is that if there is no buyback announcement, then there should be a special dividend of between $20 and $25 to bring things back into line if you will, and at the same time still leave the company with more than enough to do all kinds of interesting things....which I am sure are already being planned if not executed and waiting for announcement.

    And yes, I am definitely a buyer.

  • Report this Comment On January 24, 2013, at 11:15 AM, mnyhus wrote:

    I remember telling my wife, let's buy some Apple stock, it will be fun -- I have been screaming all the way down like on a bad roller coaster ride. No one comes to panic parties here, I am in for the long haul. Too many good things happening with the technolgy and the company.

  • Report this Comment On January 24, 2013, at 11:21 AM, ayaghsizian wrote:

    I may be dumb but I'll admit I bought a boatload more at $459. I think that 7 PE ratio is too low bordering on ridiculous. This isn't Hewlett Packard.

  • Report this Comment On January 24, 2013, at 11:29 AM, ayaghsizian wrote:

    If Apple paid $5 a quarter in dividends, wouldn't they still have enough for operations, buybacks, supply issues, R&D, and anything else they wanted to do. And they would still be growing their cash hoard by over $5B per quarter. I believe I'm correct so the only reason I see for not giving more cash back is repatriation taxes, and if this is the case then Apple is being smart to wait.

  • Report this Comment On January 24, 2013, at 11:39 AM, IlluminatInvest wrote:

    Good article, but I think you need to change your title unless "plunge" means a half a percent decrease versus last year's longer quarter.

  • Report this Comment On January 24, 2013, at 11:49 AM, Scunnerous wrote:

    Just what "earnings plunge" is the headline referring to... which is not mentioned in the article? Sales were up year over year at 17.5% vs 18% projected by analysts, and net income was slightly up so I fail to see any plunge. What is this "$146 per share in cash" that you mention as "backing out"? Sorry but I'm not an expert and need a little help here.

    You say panicking but to me this whole thing stinks of market manipulation by the big boys.

  • Report this Comment On January 24, 2013, at 11:55 AM, PinkFloydRoadie wrote:

    Nice rehash of events up to this point, but you know that stock price indicates what people think will happen down the road, not what happened yesterday.

    Interesting how different people can come away with different opinions by hearing the same statement.

    "Cook went out of his way to address the recent rumors of component order cuts?."

    Actually, I think Cook went out of his way to AVOID answering the question by making that statement... which makes me believe the rumors were right, otherwise he would be quick to dispell them.

    Yet, I agree, not time to panic...... YET !

  • Report this Comment On January 24, 2013, at 11:55 AM, pwready wrote:

    I can't believe the reaction. The headline for this article states: "Apple Earnings Plunge: Are You Panicking Yet?" Earnings beat the hell out of the company's forcast, but they always do. Analyst estimated earnings at $13.47- 13.49. The actual was $13.81. Earnings were 29% higher than a year ago. Record sales of iphones and mini ipads where recorded. So, just where is the so called earnings plunge? Boy, this maket is a CRAP GAME WITH LOADED DICE and the fools are willing to support this kind of informatiobn with their headlines.

  • Report this Comment On January 24, 2013, at 11:56 AM, Fortunato11 wrote:

    It's titles on articles on this that discounts any usefulness of the article itself.

    Apple made much more than the corresponding quarter last year and missed analysts expectations by a percentage of 1 percent.

    Calling it a "plunge" is a shameless attempt to get hits and degrades the validity of a well written article.

    C'mon, do you want respectability or FUD?

  • Report this Comment On January 24, 2013, at 12:31 PM, KailuaSurfrider wrote:

    I agree with Fortunato11. Too many media outlets with questionable writers push bogus headlines for attention and web traffic. Please stop following the foolish standard traders and analysts who completely confuse investors with article titles. Too many web writers out there already who ignore and obfuscate the actual numbers within the articles and create confusion and irrationality among regular investors.

  • Report this Comment On January 24, 2013, at 12:46 PM, jdmeck wrote:

    Apple is not a broken stock. But the market is certainly broken.

  • Report this Comment On January 24, 2013, at 12:51 PM, vasco42 wrote:

    I think the wording in the headline of this article was just poorly constructed - I think the author meant "plunge in share price as a result of earnings", which most certainly did happen.

  • Report this Comment On January 24, 2013, at 1:15 PM, TMFNewCow wrote:

    The plunge refers to the stock's 11% drop.

    -- Evan

  • Report this Comment On January 24, 2013, at 1:22 PM, TMFeek wrote:

    Apologies for the confusion regarding the headline. It's been changed to better reflect the article.

    -- Erin, tech/telecom sector editor

  • Report this Comment On January 24, 2013, at 2:11 PM, memoandstitch wrote:

    Cramer said that people who suck at valuation need to be washed out of the market.

  • Report this Comment On January 24, 2013, at 2:15 PM, birjisarman wrote:

    The only place in the Mall thats alway busy and packed is the apple store. Still cutting edge, smart and unique. If I could afford it, I would buy more

  • Report this Comment On January 24, 2013, at 2:19 PM, roberrabbit wrote:

    to Scunnerous on the 137 billion or $146 per share "cash balance". I think the author was adding cash 16 billion + short term securities 23 billion + long term securities 47 billion to come up with that figure. Marketable securities both short and long term aren't as liquid as pure cash, so it is a bit misleading to say they have 137 billion in cash, but I agree with the author's point that there is a liquid asset cushion in the stock.

  • Report this Comment On January 24, 2013, at 2:36 PM, TMFNewCow wrote:

    Scunnerous & roberrabit,

    Apple's total cash includes short-term and long-term marketable securities. $16.1 B + $23.7 B + $97.3 B = ~$137.1 B total. Shares outstanding on balance sheet is 938.97 million. Dividing out = $146 in cash per share.

    -- Evan

  • Report this Comment On January 24, 2013, at 2:39 PM, daveandrae wrote:

    Blah, blah, blah.

    Nothing that has been said, or written, about this stock over the last 24 hours will stop its market price from trending DOWN.

    Sad and simple.

  • Report this Comment On January 24, 2013, at 2:41 PM, Mathman6577 wrote:

    Not sure that 50 million iPhones were "expected to be sold". Everything that I read in the weeks leading up to the earnings annoumcement stated that the number was in the range of 45 to 47.5 million. I think that this is a case of unrealistic unexpectations from investors and analysts who shoudn't be commenting at all.

  • Report this Comment On January 24, 2013, at 3:43 PM, NoFlash wrote:

    products are great, customers "love" them, repeat and multiple purchases expand continually, business grows including internationally, cash grows, revenue grows...new products clearly in pipeline.....do you have confidence in their capacity to introduce new products that knock us over and that we can't live without? ....I do!

    own a bunch of stock, holding for long term!!! made a bunch already, will make more in the future.

    latest experience was AppleTV...just bought, fantastic product, easy to set up and use....added Netflix account....makes me wonder why I still have cable, which neither of my kids in their 20s do...nor do many of their friends...now let's see if I drop cable, how much can i save to either invest in more Apple stock.

    What am i missing? Seems this stock's market is being manipulated by the market of speculators not investors.

  • Report this Comment On January 24, 2013, at 4:03 PM, daveandrae wrote:

    ^

    What people like NoFlash are "missing" is simple....investment experience. All you've ever experienced with this stock since you've been holding it is sunshine. Thus, you've never held onto to an individual stock through a severe correction before.....now you're about to.

    Again, this is NOT the end of the decline, it is the beginning of it. After fifteen long years of experience in this business, I know the difference.

    Good luck

  • Report this Comment On January 24, 2013, at 4:18 PM, Borbality wrote:

    Finally buying

  • Report this Comment On January 24, 2013, at 4:28 PM, Borbality wrote:

    It's kind of crazy how the biggest, most-watched stock in the U.S. can see such knee-jerk reactions, though. I am not an expert, either, so I'm buying a pretty small amount of shares. But, as others said, the p/e of about 7 after subtracting cash is insane for a company still growing at a good clip.

  • Report this Comment On January 24, 2013, at 4:46 PM, Rayinthesun wrote:

    There is so much good news to come from this company regarding future products and access to developing markets, including enormous potential sales in China (I hope there is good news on that soon). Reasonable minded investors who take a step back and review the figures and the bigger picture stand to make money by investing in the stock and not selling when it is in a temporary dip. People selling now will regret it sooner than later.

  • Report this Comment On January 24, 2013, at 6:07 PM, EquityBull wrote:

    I was a 5 year holder of apple. took my profits during the conference call. Not because of earnings or unit sales numbers. That was all fine. It was the silence to the shareholders.

    No buyback or dividend boosts. Apple will keep that 137 billion and never leak more than 10.60 per year to shareholders. someday they may be burning that hoard up leaving nothing for shareholders. The street is expecting this.

    Management and the board don't care about shareholders. This is why the comment on the call about no buyback move and no plans to change capital allocation had my finger selling 1000's of shares and closing out my options.

    Plenty of other shareholder friendly companies who understand how to allocate capital and not let it sit in the bank eroding 3% per year to inflation. 137B is absurd. Management just spit in shareholders faces. I vote with my feet. good luck longs. Your in Cook's hands now.

  • Report this Comment On January 24, 2013, at 6:23 PM, somacho wrote:

    Extaordinary drop in market cap in a solild company makes manmipuilation by short sellers or fancy speculators about an 80% probabililty. There is no basis for a 247 billion dollar drop. S till buying.

  • Report this Comment On January 24, 2013, at 6:29 PM, pgareis27 wrote:

    Thanks for this bit of sanity in a crazy world!

  • Report this Comment On January 24, 2013, at 6:32 PM, mclaugph wrote:

    <<Are you panicking yet?>>

    LOL

    no.

  • Report this Comment On January 24, 2013, at 7:40 PM, TheRealRacc wrote:

    Apple fans remind me a lot like Obama supporters. All love, no negative criticism.

    How ignorant can you all be?

  • Report this Comment On January 24, 2013, at 9:45 PM, HenriSuy wrote:

    What happened today is in my opinion a classic case of "dump quick and buy back tomorrow". At lease that is what I make of such a steep drop in a solid stock like Apple. Or is it also because of misinterpretation of facts? And let's not forget that the price was well below its present low, not that long ago, so one can expect investors cashing in.

  • Report this Comment On January 24, 2013, at 10:05 PM, mountain8 wrote:

    And to hades with you if you even mention I missed an '.

  • Report this Comment On January 25, 2013, at 12:37 AM, bunker262 wrote:

    equity bull. it's not about you. buy or sell, it's your choice, just stop whining. I prefer Jobs' no div and Google's no div approach. buy the stock if you want, sell if you want, your choice. we believe in our business model and you can invest if you like.

  • Report this Comment On January 25, 2013, at 12:57 AM, Morgana wrote:

    Jdmeck said it all. "Apple is not a broken stock. But the market is certainly broken."

    Unfortunately for us, we have to play in the broken market. I feel as if I am waiting out my boss (market & bimbo and bimba analysts) while he has his infantile temper tantrum. Then the adults can have a reality based conversation about aapl.

    (Aapl from 91)

  • Report this Comment On January 25, 2013, at 2:48 AM, jlclayton wrote:

    I started investing in the late 1990's and watched many tech companies go sky high and then take huge falls when the company went out of favor. I don't see that happening to Apple since it has true value built into it's share price. However, I'm seeing the same type of investor sentiment over this last year that I saw during the tech bubble.

    Apple has a huge cash moat, and it's products are good quality and popular, so it can weather a rough patch with no problem. But when I started hearing stories about people taking all of their life savings out or taking out home equity loans just to buy Apple stock because they were sure it it would keep skyrocketing, I could see a correction coming.

    Today's prices represent a good value based upon company guidance and reasonable projected sales. But the fact is that it could go to $1,000 a share from here or it could correct quite a bit further. Apple's cash hoard held overseas isn't helping those investors looking for the kind of dividend that a company like this could be giving them. Their share price is still volatile to concerns about supply chain constraints and competitors gaining market share. So if investor sentiment turns overly cautious, there's still a lot of room to fall even at the current valuation.

    I'd love to see it rise from these levels and am optimistic on the stock price from here, but I recognize that too many investors have fallen so in love with it that they won't look at the company objectively. The price got too lofty for me before I could take a position that I was comfortable with awhile back, but I respect the company and am seriously looking to start a position soon. Just have to be sure that I can handle a possible wild ride and stay objective.

  • Report this Comment On January 25, 2013, at 5:30 AM, mrshastri wrote:

    Apple days are over. All consumer electronics company die eventually. Look at Nokia and Sony.

  • Report this Comment On January 25, 2013, at 6:09 AM, fkim wrote:

    People who buys Apple stock and product is a group of dumbest bunches in America, right now. They believe the world is not turning. Samsung and Nokia have as good as or better R&D than Apple. Why Apple is not talking about OLED?

    Value investors like me is just laughing like crazy. There are so many better stocks than AAPL to be invested in and make money. Yes-Apple is not HP but, some investors point of views, Apple is like HP.

  • Report this Comment On January 25, 2013, at 8:32 AM, 8Lives wrote:

    Fkim- help me out here ...what is your #1 suggestion in instead of apple? --I love valid research

  • Report this Comment On January 25, 2013, at 10:04 AM, lowmaple wrote:

    Who should really care about the article's headline? When or if you read it you get the idea. Of course everyone's worried about apple turning into microsoft which will happen sometime. However valuations are so low the comparison is ridiculous. the microsoft scenario is probably years away and a bounce back in share price will occur sometime so no panicking neccesary.

  • Report this Comment On January 25, 2013, at 10:48 AM, RealMainah wrote:

    For each panicky seller, there seems to be an eager buyer.

  • Report this Comment On January 25, 2013, at 10:49 AM, italianceltic wrote:

    What is insane is the parabolic rise of this stock. Apple may not be HP, which by the way was a innovative company. So wasn't Polaroid and Kodak. Apple reminds me of the parabolic rise and subsequent fall of Qualcom. Apple never built a base and will fall just as fast. I expected a possible run up on earmings to $525 to $530 setting up the next leg down to $425. If it doesn't hold there look out below. The market will give you a chance to sell on a bounce if you are smart enough to heed the warning. If you get $515 to $528 you are fortunate.

  • Report this Comment On January 25, 2013, at 11:22 AM, Morgana wrote:
  • Report this Comment On January 25, 2013, at 11:31 AM, Mathman6577 wrote:

    As long as an individual investor doesn't have too much in Apple (or any stock fro that matter) this shouldn't affect them. One good investing rule is "don't put all your eggs in one basket". Another is to have more than one basket.

  • Report this Comment On January 25, 2013, at 11:34 AM, PinkFloydRoadie wrote:

    Regarding the comment "It's kind of crazy how the biggest, most-watched stock in the U.S. can see such knee-jerk reactions, though. I am not an expert, either, so I'm buying a pretty small amount of shares. But, as others said, the p/e of about 7 after subtracting cash is insane for a company still growing at a good clip." .....

    Whether it is knee-jerk or not (and I don't think it is), a lot of what happens in a downward movement is due to uncertainty (among other facors). Smart cautious investors don't like uncertainty in their investments, so they sell.

  • Report this Comment On January 25, 2013, at 11:50 AM, DLPDLP wrote:

    I'm buying Apple today. Been watching it, wasn't sure, knew report was coming, didn't expect it to hurt stock price so much but am buying now! I bought in this morning at $450.40. And if it drops further I may just buy more.

  • Report this Comment On January 25, 2013, at 12:07 PM, whyaduck1128 wrote:

    Mathman is right. Diversify. While the highs won't be as high, the lows won't be as low, and It's easier on the soul.

    I'm long AAPL (about 6% of my overall portfolio, excluding holdings within mutual funds) and neither buying nor selling right now. I may consider buying more if it goes under $425, maybe $400. I'm not happy with the recent plunge, but I'm not panicking.

  • Report this Comment On January 25, 2013, at 12:47 PM, Wooker1 wrote:

    Watching the Fast Money Half Time report at 12:44 on 25 January and Apple is now at 438!!!!!

    Now I know EXACTLY how my grandfather feel in 1933!

    Thankfully I only have one floor in my house!!

  • Report this Comment On January 25, 2013, at 1:15 PM, Getnrichr wrote:

    The headline doesn't state that earnings plunged, it states that shares plunged. An accurate statement of fact and asks a legitimate question: are you panicking yet?. (which, by the way got us all here) I am not. I couldn't resist adding to my admittedly overweight position at $460 yesterday after the sell off. I'm no pro but I've been watching this process long enough to know that the market is wrought with overreactions. (read: oportunities).

    I am , however, thankful for the netflix position which surged on the same day!

  • Report this Comment On January 25, 2013, at 1:17 PM, markhealth wrote:

    Loved the article and agree. Holding on.

    But I hate the links you have on our emails to

    get us to subscribe. Hey! We are subscribers,

    that's how we got this email. Stop it. They are

    long, this one was 28 minutes and you never

    give the name of the company you are talking about. You want us to subscribe, again?????? I now vow to never listen to another of your videos.

  • Report this Comment On January 25, 2013, at 2:19 PM, eldetorre wrote:

    apple "Still cutting edge, smart and unique."

    Sorry no. Apple only has the appearance of all the above. Don't let the overly generous stupid patent awards fool you. Apple was all of those things, but is abandoning the pro market sector where they had their only legitimate claim to innovation. The consumer space is notoriously fickle. The only significant thing that makes Apple attractive is it's financial cushion.

  • Report this Comment On January 25, 2013, at 2:30 PM, SkepikI wrote:

    OK, if the headline wasn't enough, the irrational commentary was enough to convince me it was time to invest, at least in the short. (you fool, its a Jeddi mind trick...ha)

    I ought to be selling equities, I am not an apple fan, and I generally dont invest in this sector. BUT the psychology of the moment is just so compelling, I need to test my thesis with real money. In at $437/sh for a pinch.

  • Report this Comment On January 25, 2013, at 3:42 PM, JCCFinance wrote:

    This is just dumb. Does the Apple board not know how the stock market works? This drop is from stock manipulation from traders, hedge funds, dark pools, etc. Tim Cook should kick them in their stupid teeth. Just by doing 2 simple things you can crush those idiots. 1. Announce a 10 for 1 stock split. That will immediately stop the stock from declining any further. Also, it will increase demand for the stock as more people will be able to afford it. 2. Announce a $50 billion stock buyback (remember, just because you announce a buyback doesn't mean you actually have to spend the money). That would immediately get the stock back up to 52 week highs.

    See, simple. Problem solved.

  • Report this Comment On January 25, 2013, at 5:25 PM, msgt99 wrote:

    Panic - no.

    Hold - definitely.

    Buy more - probably not yet.

    Currently own a couple hundred shares at an average cost of about $12/share. Employee stock purchase plan from 1994 (19 yrs) - yes I do believe in buy and hold.

    Dividend yield on cost is pretty nice right now.

  • Report this Comment On January 25, 2013, at 11:17 PM, PRHSydney wrote:

    No, I'm not panicked.

    The 22% drop in iMac sales YOY is due to many Mac laptop users believing they can get way with an iPad hence buying or upgrading their iPads rather than their Macbooks. This explains part of the reason for the 48% increase in iPads. Much of the remaining shortfall in Macs sales is due to upgraders waiting for the new iMac, which wasn't available for much of the qtr. and then was supply constrained. Another factor is the failure of Apple to provide upgrades of the Mac Pro desktop in 2012. There are many heavy duty users like myself who will return to buying Mac Pro when a new compelling upgrade is released (there is no substitute for expandability, comprehensive I/O in the fields of engineering, design, science, pro audio and video, medical etc.) Those that say desktop PC's are finished, don't have a clue - they're only looking at the trivial social media / fluff end of the spectrum. How do they think the heavy duty content they are consuming actually comes from? Certainly not off a tablet!

    Also it's ironic that those that buy iPads immediately find they need to encase it in protective cases/ sleeves etc because it doesn't have a lid like the laptop. Many then buy external keyboards etc. - and end up with something as bulky as a Macbook Air, but without the input/output options of a laptop. Many will eventually realize they still need a laptop or desktop and they will upgrade - hence Mac sales will level off or even rebound.

    Taking into account 13 weeks in the qtr rather than 14 last year, leads to this last quarters results being underestimated by 7.7%!

    Also 61% of sales are outside US, with China hardly penetrated yet. I have experience with China and I am sure China will buy many millions of iPhones and iPads, because they purchase mainly on perceived status symbol value. I have seen Chinese ethnic tribesman carting a CRT TV around on their camel from camp to camp, with a niche carved out for it in the wall of their underground rock cut homes - without it ever being plugged in to electricity (there is none) - all done as a show of status. They will pay a premium for Apple products so long as they are perceived as the highest status brand!

    Looking at the media comment and ANALyst's wild imaginings since late 1012 it is clear there is too much focus on these people's "expectations" of sales / revenue / earnings rather than the actual figures presented by Apple. Only Apple has the facts and data to make realistic forward estimates, everyone else is making unsubstantiated guesses based on incomplete information. They then get so upset and indignant when their guesses prove wrong and they attack Apple, frighten investors and precipitate a drop in AAPL share price.

    I have seen a concerted effort by many to try to drive down AAPL share price - I presume so they can then buy in at artificially low prices. I have been watching APPL since the early 1980's and if you factor in the 2 for 1 shares splits in 1987, 2000 and 2005, the shares have increased in value by a massive 2,500 X ie. 250,000%. I have heard innumerable times over the last 30 years the media referring to "beleaguered Apple", "Rotten to the Core" "Take a bite out of Apple" - so cliched, unfunny and so wrong. They have been predicting the demise of Apple since 1984. So none of this current nonsense that the "sky is falling" is new to me. Since 1984 I have been warning - "DON'T BET AGAINST APPLE".

  • Report this Comment On January 26, 2013, at 1:04 PM, 48ozhalfgallons wrote:

    Those who sold APPL last March, bought DDD and of all things, NFLX then, and are selling those now are the crowd I want to hang with.

    There must have been a boat load of APPL buyers @ $700 when the hype was at its maximum. A herd waiting..... waiting..... waiting whilst the action keeps moving on. Folks, this is no longer a buy and hold world. The market is for athletes.

  • Report this Comment On January 26, 2013, at 2:53 PM, 1spring wrote:

    I sold at 695 (brag) and have been feeling that every penny in drop is a penny i earned. i will wait for the stock to settle or climb a bit before jumping back in. Unfoolish, but the signs were there. There is something to taking earnings when things give clues. sometimes beeing foolish becomes foolish.

  • Report this Comment On January 26, 2013, at 2:57 PM, 1spring wrote:

    ps. the hoard of cash is probably just the organic growth of the system for its own sake, not focused on the benefit of shareholders at all. the announced 20 cents was insulting.

    as for its unwillingness to pay a paltry 35 percent taxes, shame on apple. it has the money to act like a responsible citizen.

  • Report this Comment On January 26, 2013, at 3:07 PM, hembreeder wrote:

    I am picky and hard to please about almost everything. But I absolutely adore my iPad, Macbook Air, iPhone and 27" iMac. I've had several iPhones Every one worked perfectly. Never a problem, since iPhone 1, the first one. No crashes, no bugs, not even any screwy apps. All of it just works.

  • Report this Comment On January 26, 2013, at 5:42 PM, dwatson102 wrote:

    Latest smartphone purchase data shows in the 4th quarter iPhones purchases came from about a third former iPhone owners, a third from people new to smart phones and a third from Android users crossing over. I wonder how many iPhone users crossed over to Android. Anybody have those numbers?

  • Report this Comment On January 27, 2013, at 3:06 AM, uclagsm wrote:

    The problem with Apple is shared by many tech companies. Most of their products are entering the "Commodity" Phase. Smart phones with ease of use are becoming commodities with low margins.

    Why pay $500 for a tablet when tablets under $100 exist.

    WiFi hotspots are growing and thus the need for a carrier connected smart phone or tablet is declining.

    As for PCs, Crome based are $199, Windows based are $399 to $699. Macs and Macbooks cannot compete at those price points.

    It is so simple, all tech hardware companies face this eventually.

    Apple has yet another shoot with TV, but then how long will that last and what is next?

    The Cloud is the new thing but Google and Amazon dominate that.

    Apple needs to create an IP data only wireless network. They have the cash but would then compete with those who subsidize iPhone sales. This would cause a short term drop in their share price. Are they willing to take a big hit for a large long term reward?

    That is the question.

  • Report this Comment On January 27, 2013, at 3:36 AM, sirhc1978 wrote:

    Where is Apple's innovation gone since the passing of Jobs?

    When Jobs was at the helm they produced -Imac,Ipod,Iphone,Itunes and the Ipad. All were new products to the market that no other company held a candle too.

    Since Cook's take over what has Apple done? Making the same products but diffrent models.

    Ill be a buyer when Apple can show me something that no one else has. .(Besides a hoad of cash that is) Which wil be the I TV, but Intel and Samsung are already producing them..

  • Report this Comment On January 27, 2013, at 9:19 AM, verable wrote:

    I have the solution . . . crucify the sellers.

  • Report this Comment On January 27, 2013, at 10:56 AM, andyo5 wrote:

    I think that some folks should read the title of the article again. It said that shares plunged. It did not say that earnings plunged. There is a big difference!

  • Report this Comment On January 27, 2013, at 9:16 PM, kukama wrote:

    I trusted my instincts....I never bought into the "buy APPL now" gold rush....I'll probably buy an I-5 later this year, but will stay away from the stock, although buy low, sell high is certainly in order right now.

  • Report this Comment On January 29, 2013, at 9:57 AM, TheKing887 wrote:

    Observation 1: Foolish principle: Reward companies who reward the stockholders. Does Cook have a tin ear to the sound of the herd headed for the door?

    Diagnosis: Way too much "social network" chatter that has freaked the un-foolish. Prime example of how propaganda is spread through the market in our days. I imagine about 50 or so years ago rumors from the mens room on the exchange had the same effect. Hedge funds might be trying to manipulate the stock to create their own landing zone to launch a new offensive.

    Earnings did not plunge but stock prices did.

    That is cause and effect of new normal in information age.

    Prognosis: APPL continues to dominate the market based a couple of things like customer loyalty and it's access to greater China and it's appetite for APPL products. BULLISH on APPL.

    Signed not an APPL fan just looking at everything objectively.

  • Report this Comment On February 01, 2013, at 1:11 PM, ruastar2b wrote:

    Isn't it interesting that when analysts predict Apple's Earnings and they are wrong, they say that Apple "missed" the target. Apple didn't miss - the analysts missed! These so-called experts arrogantly make predictions and then they blame Apple rather than themselves for the "miss." Why anyone listens to these guys is beyond me.

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