Calling Bottom on Apple Is a Dangerous Sport

Apple (NASDAQ: AAPL  ) broke below $419 within seconds of trading on Wednesday. A few minutes later it was trading well below that.

I was an idiot for arguing that $419 would be the stock's low last month. I was on CNBC just minutes after Apple hit what then was its 52-week low, suggesting that Apple would hit $1,000 before the higher-priced Google. Later that day I would go on to write about the five reasons why Apple stock had indeed bottomed out.

I was wrong, of course.

That March 4 low held until today, and a few factors are weighing on the hit.

  • DIGITIMES¬†-- the Asian tech publication that's well connected to Apple's suppliers -- is reporting that iPad shipments may dip by as much as 30% sequentially. Upstream sources are telling DIGITIMES that demand has been softening for the smaller tablet that was an initial hit during the holiday season.
  • Cirrus Logic (NASDAQ: CRUS  ) warned of a big inventory charge in the quarter. As the company that provides audio chips in Apple's iPhone, the news is being interpreted as soft demand for Apple's iconic smartphone.
  • Samsung -- the biggest thorn in Apple's side when it comes to smartphones -- announced this morning that its Galaxy S4 will be available through seven stateside wireless carriers later this month. The bar-raising smartphone is powered by Google's Android. Many of the leading carriers were already starting to take pre-orders for the device, but it wasn't clear if it would hit the market this month or potentially early next month.
  • Analysts at Bernstein Research and Goldman Sachs offered up earnings preview notes ahead of next week's quarterly report. As one might imagine, the tone is cautious.

Expect the volatility to continue until Apple actually does report on Tuesday, and then, naturally the shares will move higher or lower based on the report and the tech bellwether's assessment of what its near-term future looks like.

Is today's low the final bottom? Apple shares are definitely cheap, but after being burned by last month's call, it may be best to wait this out until we see how the fallen consumer tech darling is actually doing.

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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 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.

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Comments from our Foolish Readers

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  • Report this Comment On April 17, 2013, at 8:33 PM, DanManners wrote:

    You gave it your best shot. No one seems to be right with Apple.

    Apple is going lower. The trend is your friend. Until Tim Cook leaves the company, the stock will tank. After maps fiasco, all should have realized this. Cook is a disaster and everyone on Stocktwits is calling for his removal. Not that is the place to get good advice. But it does show sentiment.

    Apple will continually drop and will never be a buy again because as good as it seems its earnings margins and all are going to just keep getting worse.

    Maybe when the stock is below 200 you might say they have hit bottom. It will go there. It is going to be 360 or less after Junes earnings. And with no real new products but mild upgrades of iphone and ipad, Apple will get destroyed by Samsung and others.

    No Big phone anytime soon. And China is fighting back at Apple to hurt it so its home grown brands can win. Apple is going to really underperform in China. Just like Google. The Chinese play for keeps. there will never be a China Mobile deal. They won't settle.

    Apple is over. Like many other tech companies. They will languish for a few years and then just be a smaller version of its old self. They won't go away and they have too much cash to go under. They were smart to keep the cash as they will need it to survive.

    Tim Cook is a disaster just like Rocco Pendola always says. he wants Cook out. Cook has done alot of bad things so far and Jobs must be spinning in his grave. From Ron Johnson, Scott Forstall and Cook, we see they were nothing without Jobs. Mere pawns. They cannot even come close to running this company without him. Jobs would have been doing so much more to protect his company. Cook just fiddles while Rome burns.

    Apple will break 400 for good next week and we may never see this height again. But as much money as investors lose, they can take solace in that Cook feels your pain.

  • Report this Comment On April 17, 2013, at 9:42 PM, daveandrae wrote:

    Let this be a lesson learned.

    In the future, don't buy the "stock", buy the business.

    Meaning, if you had 373 billion dollars in cash, and there was no such such thing as the "stock market," would you really buy, not some, but ALL of the Apple computer company?

    If that answer is hell no ( as it should be) then why would you purchase even one share of the company's stock?

    This simple philosophy has saved me untold amounts of money. For the people that are suffering the most dreadful losses in this stock are the same ones that forgot to ask the most basic question; Which is "how much?"

    Good Day

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