Bad Earnings and Apple Rumors Send Stocks Reeling

Stocks are down sharply today thanks to worse-than-expected earnings from Bank of America (NYSE: BAC  ) and fears that Apple's (NASDAQ: AAPL  ) report may similarly disappoint. With roughly an hour left in the trading session, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is lower by 167 points, or 1.13%.

Given the absence of economic data, it's safe to conclude that today's decline is attributable to one thing: earnings. After yesterday's closing bell, Intel (NASDAQ: INTC  ) reported that its quarterly earnings plunged by 25% from the same time period last year and that its revenue contracted by 2.5%.

And yet shares in the chip maker are nevertheless moderately higher in afternoon trading. What gives?

The answer is that Intel's results were roughly in line with analysts' estimates. In addition, despite the fact that personal-computer sales purportedly fell 14% over the quarter, Intel's PC processor division only saw its top-line erode by 6%. As my colleague Anders Bylund noted, this wasn't wholly unexpected, given that the company never warned investors of an impending meltdown.

Unfortunately, Bank of America is having the exact opposite experience today. Namely, despite the fact that its net income improved by a factor of four over the first three months of the year, its shares are tanking, down 5.3% at the time of writing.

The reason is that, unlike Intel's, Bank of America's results came in below the consensus forecast. While analysts had estimated that the bank would earn $0.22 per share, its actual earnings came in at $0.20 per share. Suffice it to say, the market's not pleased.

And speaking of being displeased, shares of Apple fell below the $400 threshold for the first time since 2011, erasing nearly a year and a half's worth of gains. The catalyst was an announcement from Cirrus Logic (NASDAQ: CRUS  ) , a supplier of audio chips for the iPhone and iPad. According to the Associated Press, Cirrus said that "sales of a particular chip are slowing down as an unnamed customer [presumed to be Apple] moves to a newer component."

The implication, according to an analyst cited by the AP, is that Apple is unlikely to launch a new iPad Mini in the April-to-June period. For investors, it's important to keep in mind that this is purely speculation and rumor. We should get a better feel for things on Tuesday when the tech giant itself reports earnings.

There's no doubt that Apple is at the center of technology's largest revolution ever and that longtime shareholders have been handsomely rewarded. 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 reasons both to buy and to sell Apple, as well as what opportunities remain for the company (and your portfolio) going forward. To get instant access to his latest thoughts on Apple, simply click here now.


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  • Report this Comment On April 17, 2013, at 3:38 PM, techy46 wrote:

    Oh, oh we're ending the Windows 7 refresh cycle and Windows 8 is waiting in Intel's Atom Haswell chips before smart PC shoppers versus ignorant Apple shopper's start buying Windows 8 Ultrabooks when they hit the $499-699 price range if Windows 7 devices. Oh, Intel says 7" W8 devices could be selling for $199 to $299 in a year. Hum, maybe that's why Intel's going up.

  • Report this Comment On April 17, 2013, at 9:38 PM, Rockthebest wrote:

    It don't matter no more. Windows 8 did not catch the consumers interests as they hoped. Even at lower prices most corporates are sticking to XP and win 7.

    Apple too seen drop in Mac sales. They are simply too expensive. Almost 1 Mac book = price for two advanced pcs.

    Apple did not hit bottom yet. I can see the shorts are ganging up on Apple too. Maybe apple will see stock ground around the $230 range. It's tough call tho.

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