It was generally a great quarter for U.S. indexes all the way around, with the Dow Jones Industrial Average and S&P 500 all rising to the occasion and eclipsing their all-time highs. The same can't quite be said for the tech-heavy Nasdaq-100, which rose just 5.9% during the quarter. Don't get me wrong; this is still an impressive gain. However, the continued commoditization of technology products dragged down results for numerous technology bellwethers.
In spite of the almost euphoric gains to be had this quarter by investors, three Nasdaq-100 companies bucked the trend and finished decisively lower.
Garmin (NASDAQ: GRMN ) , down 17.9%
Bringing up the caboose was GPS and navigation products producer Garmin which dipped 18% for the quarter. Garmin was also part of the S&P 500's worst performers, logging the fifth-worst quarterly performance. Garmin shareholders can blame a dismal full-year forecast -- which called for a profit of $2.30-$2.40 per share and revenue of $2.5 billion to $2.6 billion when analysts had been expecting EPS of $2.89 and revenue of $2.77 billion -- for the majority of the damage.
Apple (NASDAQ: AAPL ) , down 16.3%
Not even the tech kingpin and former largest company in the world could escape the wrath of investors this quarter; they continue to expect the impossible from Apple. Apple's first-quarter results, released in January, were easily a record with 47.8 million iPhones and 22.9 million iPads sold. However, a slowing trajectory in smartphone sales necessitated the company to cut its iPhone supply orders which caused a negative ripple effect throughout much of the tech sector.
Akamai Technologies (NASDAQ: AKAM ) , down 13.7%
Akamai, which provides software solutions that enable service providers and websites to speed up their content routing ability, was actually having a decent quarter until it reported its fourth-quarter results in February. Akamai's total revenue missed the Street's estimates by only $3 million, but its first-quarter forecast that called for $352 million to $362 million in revenue fell well short of the $369.8 million the Street had been projecting. Akamai shares have yet to really recover since that one-day tumble.
Which company has the best shot at rebounding in the second quarter?
I can say with some personal confidence that I highly doubt Garmin shareholders are in for any relief. The company's losing sales left and right to smartphones and tablets which have downloadable apps that can handle the same functions Garmin currently advertises with its GPS and navigation products. There's still going to be some residual value in ocean navigation devices where current smartphone and tablet technology is extremely limited, but Garmin remains a stock to avoid.
Akamai definitely has a decent shot at rebounding over the long run, but I'm not convinced that its recent quarterly miss was a one-time event. Akamai ushered in a new CEO on Jan. 1, and is dealing with enterprise customers who are remaining very cautious about their spending habits between the health-care reforms set to be enacted in 2014 known as Obamacare, and the introduction of higher payroll tax rates for taxpayers.
You've probably heard this one a few times before, but Apple looks like the company with the greatest chance at reversing its fortunes in the second quarter. I made my case in late January why Apple shares were down in the dumps, highlighting supply-chain concerns, competitor emulation, and emotional investing as the biggest detriments to its share price.
I feel many of these factors are easily correctable, assuming investors are willing to keep their expectations in check.
Apple is fighting a constant battle against cannibalizing its own production line by offering to take more fabless production capacity from Taiwan Semicondcutor (NYSE: TSM ) . Taiwan Semi's two main customers are Apple and Qualcomm (NASDAQ: QCOM ) , which wowed Wall Street in February with the introduction of its RF360 chip capable of dealing with band-fragmentation on the front-end. Qualcomm is the sole supplier of Apple's baseband processors, and is the only truly vertically integrated mobile device components supplier at the moment. Apple would love to garner more of Taiwan Semi's capacity, but the catch-22 is that Qualcomm needs that space as well.
With the very real prospect that Apple may increase its dividend by a considerable amount, piled on top of its $137 billion in cash and forward P/E of just 9, I feel Apple represents the value stock that investors will be looking for if the market begins to show signs of losing steam.
Will Apple find its footing in the second quarter?
There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.