Archive for the 'Apple' Category
Unlike 2007, 2008 is looking to be a bad year for the Apple (AAPL). After breaking the $200 mark last year Apple has been in nothing short of a tailspin, losing over 15% of it’s high value mark in the first two weeks of 2008.
Even Macworld appears to be unable to help this struggling stock. Could the iPhone have been the “one hit wonder” that brought Apple into the limelight only to see it fall as Steve Jobs parades a list of so-so electronic gadgets before the eyes of the press?
What’s new at Apple
- Apple TV 2.0 - Because no one wanted to buy the first model.
- Movie rentals via iTunes - $3.99 is not a bad price for a DVD-quality movie rental but will they be that good? Netflix (NFLX) announced that they were changing their download service to unlimited prior to Macworld.
- iPhone firmware update - Not exactly unexpected news here. What was expected was the SDK for the iPhone.
- Time Capsule - Anybody want an external storage device that does not do even half of the things a NAS setup does?
- iPod touch gets more apps - I honestly did not know that these four apps (mail, maps, weather, stocks) were not already included. If you already have an iPod Touch you have to shell out $20 to upgrade.
- MacBook Air - Super slim and super fragile looking. Expensive price tag to match.
So, what has Macworld done for Apple stock? Would you believe brought it down? not only has it brought Apple stock down but so have NetFlix, Blockbuster and Amazon seen their value decline on the news of renting movies via iTunes.
I see this as a bit of a disconnnect because as these movie rental stocks fall Apple falls right along with them! If this service were truly a threat to them wouldn’t Apple stock be rising as these ones fall?
Sorry Steve, you are last years news now. I hope most of you sold your apple stock at $200 because it’s not going there again for quite some time!
2007 Was a very good year for both Apple (AAPL) and Google (GOOG). Well, the first 11 months were good but something happened in the last month that hurt both of these stocks.
Apple Inc began the year with a stock price of $83.80 and hit a high of $202.96 on Dec 27, 2007. The stock has since fallen off from that high closing at $171.25 on January 8, 2008. Still, Apple stock has grown by leaps and bounds over the course of the last 12 months but the question remains, can it continue to grow or has the market corrected itself and set Apple on a downward path until it reaches a natural price?
Watching Apple decline these last few days has made me think back to when their stock dropped $7 a share based on news posted on the tech blog enGadget. The Internet was up in arms over that one but Apple quickly recovered. This time there is no Internet blog posting insider information causing this drop.
What about Google? They opened the year with a price of $467.59 per share, reaching a high of $747.24 on November 7, 2007. since that high they have been bouncing up and down around the $700 mark. They are currently trading down in the $630 range.
Google’s bread and butter is online advertising, it seems strange that the high advertising time of the year (December) would see this Internet juggernaut falter. Unless, as in apple’s case, the market is simply adjusting its eyes in respect to the company.
Let’s take a moment and look at the three month chart for these two stocks:
Google vs. Apple Inc, past three months
These two stocks are practically twins! There charts do no exactly overlap but it is close enough.
So, what do these two companies have in common? For one thing they are both media darlings. Not just that but both are often seen as “do no evil” companies, whether they deserve the title or not. Google is seen as the “good” search company while Yahoo is seen as the “evil” one. Apple is seen as the “good” consumer electronic/computer company while Microsoft is the “evil” one. (Microsoft is having a good year, more because of their Xbox360 than their other ventures.)
Because there is so much consumer goodwill towards these companies investors find themselves looking upon these two companies as being worth a long haul investment. So, what could have happened in the last few months to change the consumer’s impression of these two?
Apple shows its evil side
Apple has a love-hate relationship with its fans. The fans love Apple and Apple returns that love with hate. Just look at the fate of Think Secret. Apple sent their lawyers after them and ended up shutting them down. Why did they do this? Because Think Secret was posting information that Apple considered to be a trade secret that was nothing more than inside information on upcoming Apple products.
So, in essence these fan sites are just trying to promote new Apple products and Apple will have none of it. If apple had a company logo it would be, “Look at me, I’m different, just like all those other people dressed just like me.”
Android crushes Google
It was secrecy that also did in Google. Not the same type as Apple but secrecy none the less.
Earlier in the year rumors of the G-Phone began to circulate and Google said nothing. (Apple had the same policy about the iPhone but some real information was leaked.) Many people thought that it was legit and Google would soon be competing with Apple in the cell phone marketplace. Yeah, about that G-Phone…
The G-Phone (or Android) turned out to be a let down. It was not a phone at all, just a clever phone operating system designed to get Google applications onto cell phones. Yes, everyone was underwhelmed.
This was soon followed buy Facebook’s disastrous entry into online snooping advertising with a system designed to sell things to your friends based on what you did. This was seen as a threat early on but was quickly killed after a user revolt. Even with its demise the fact that it existed (without Google) was enough to remind people that Google is not the only advertiser on the Internet and that sites can make money without them.
Closing
What will the future hold for these two companies? I don’t know. I think 2007 was a banner year for these two but I do not see it continuing into 2008. My money is on Sony (SNE) with its PS3 and Blu-ray technologies. With HD-DVD just about dead I think the future lies with Sony.
I’m not saying that Google and Apple will be stagnant, I’m simply pointing out that 2007 will not be repeated in 2008 and you can make a better investment putting your money somewhere else.
On Wednesday September 5, 2007 Steve Jobs announced a $200 price drop on the iPhone. This is unheard of in the tech industry!
With no new version on the horizon why would Apple drop the price of its “hot” new piece of technology only two months after it was released? Why did Steve Jobs release a press release after the fact offering a $100 store credit to customers who purchased the device at full price? I have a few ideas of mine own on this but first let me show you the stock chart for the last 5 days.
Apple 5 day chart from Yahoo Finance
Investors were very happy leading up to the Apple announcements last week. News of the “fat” Nano had leaked and there were rumours about a “touch” iPod on the horizon. Everything was looking great until the price cut was announced. Once that news hit the stock began to take a serious nose dive. Trading was way up and the stock ended the day almost ten points lower than the daily high. (Daily High: 145.84, Closing Price: 136.76)
Over the course of the next few days The market reacted somewhat positively towards the rebate offer and the new products being released. Friday was the worst day so far with the stock ending the day at $131.77 per share, $14 off the high from Wednesday.
Why Steve, why?
According to a news release posted on gizmodo Apple just reached the million iPhones sold mark. Sadly, this news was released after the price drop. So, if the iPhone is selling so well (it took almost two years to sell 2 million iPods) why are they dropping the price?
It could be because of the problems:
- Buying an iPhone requires changing carriers to at&t if you are not already with them.
- For $600 you can buy a much bigger iPod (capacity) and a damn fine cell phone.
- Changing cell carriers involves an early termination fee.
- Did I mention at&t already?
You might have also seen the recent news about the iPod “Touch” that was just announced. It is an iPhone without the phone but it has wi-fi. It will only be a matter of time before someone figures out how to hack that device to use it with a bluetooth headset. You know what that means? It means you will have an “iPhone” that works with Skype! Now that will sell some hardware!
Gizmodo also touches on Apple possibly entering the wireless market in the upcoming spectrum auction. Is Apple thinking of going it alone or just using this to help push iTunes and iPod sales?
So, knowing all of this why has Apple cut the price on the iPhone when there is no second generation iPhone replacing it? How will a price drop affect future Apple products?
First off most people believe that the spike in Apple sales upon release of a new product is due to the Apple “fanboys” who buy everything the company makes. These people would pay double for “iToilet Paper” if it had an Apple logo on it. It is quite possible that all of the fanboys have purchased their iPhones and Apple saw sales declining. Knocking the price down to $400 does make sense in that now the rest of the market may give the iPhone a second look. After all it is no big secret how much the iPhone costs to produce.
What about the secondary effect of a price drop? If Apple is willing to knock a third of the price off of their device after the fanboys buy it what is to stop the fanboys from taking a “wait and see” approach to the next Apple device? If a two-month wait gets you a 33% price drop why buy anything when it comes out?
I still think the iPhone was over-hyped and that Steve Jobs is right in saying that the device was priced to high. I just think they should have came out with the lower price from the start. Dropping the price this soon after release can only be bad news for Apple. No one ever drops the price on a device because it is selling “too well”.
That must be what the executives over at at&t are saying. I mean, they had a deal with Apple to make the iPhone exclusive to the at&t cell phone network and now hackers all over the world are unlocking the iPhone!
The law is not exactly on at&t’s side either. Some exceptions were made to the DMCA last year specifically to allow owners of cell phones to unlock the device. Hacking a phone to illegally use a carrier’s network is still illegal but that was never the goal of iPhone hackers. iPhone hackers have only one goal in mind, to free the iPhone from the lock that at&t and Apple added to the device to secure an exclusive two year contract between the two parties.
Already we have news of a kid, who unlocked an iPhone, trading the iPhone (and his skills) for a new car and a job.
Right now the focus is on getting the iPhone to work with T-Mobile, who uses the same network system as at&t. Several groups have already done this and provided photographical evidence to many in the media.
So, how have the stocks of at&t and Apple fared with this recent news?
at&t 5 day
Apple 5 day
Looking at these two charts we can see that when the big news hit on Friday about the unlocked iPhones both stocks began to slide. Do you know why that is? It is because not only did Apple get a big chunk of change up front from at&t but they also stand to gain via a revenue share agreement! If the iPhone gets unlocked how can they collect? Even worse is the thought that foreign cell phone companies may bail on signing such agreements once they see how easy it is to hack the iPhone and put any old SIM card in that the consumer wants!
Some legal experts think that Apple and at&t will use the DMCA to put these hackers in their place but, like I said earlier, a change was made last year to allow consumers the right to unlock their phones as long as they are not doing so to get free service.
At this stage of the game Apple stands to lose a lot more stock value than at&t does. If this happened after all of the foreign markets were tied down via contracts it would not be as bad for Apple. Coming now it is real bad. I expect Apple stock to continue to decline. If they call out the lawyers rather than figure out a software fix it will get even worse for them.
Why is that? Because a software fix says Apple is in charge while a court battle says that they have already lost. Apple hit $148 back in July 2007 and they have been falling ever since. I had planned to get out at $140 but I rode it up to $145 and started kicking myself. Now that I’m out I can honestly say that I made my money and I’m happy.
Why am I suddenly reminded of the old Jerry Reed song She Got The Goldmine (I Got The Shaft) when looking at the recent stock prices for at&t and Apple Inc?
At close of business Monday July 2, 2007 (the first full trading day after the iPhone release) Apple stock closed at $121.26 and at&t stock closed at $41.49. That was as low as Apple was going to go and as high as at&t has made it.
Disclaimer: at&t did declare a dividend of $0.355 per share on July 6, 2007 and stocks are known to drop after a dividend is declared.
Stock Prices at Close post-iPhone
| Date |
Apple stock |
at&t stock |
| 29-Jun-07 |
$122.04 |
$41.14 |
| 2-Jul-07 |
$121.26 |
$41.49 |
| 3-Jul-07 |
$127.17 |
$41.14 |
| 4-Jul-07 |
no data |
$40.60 |
| 5-Jul-07 |
$132.75 |
$40.66 |
| 6-Jul-07 |
$132.30 |
$40.66 |
| 9-Jul-07 |
$130.33 |
$40.49 |
| 10-Jul-07 |
$132.35 |
$39.50 |
* prices are for adjusted close at end of day. The price may have been higher or lower during daily trading.
As we learned in the past when Engadget posted (false) negative news about Apple and the iPhone a news story can have a short term impact on the stock price. We saw this play out again on Tuesday July 10, 2007 when rumors of an iPhone Nano surfaced. Apple stock flew up to a high of $134.50 on that news and did not fall back for about two hours!
Stock Tip
With at&t gaining no real market benefit from the iPhone I’m going to go out on a limb and suggest that the stock may have hit its year end target early. I sold a good amount of at&t stock when it hit $36 because I thought it would not hit $40 until the end of the year and I wanted to move my money into a stock with better bang for my buck. When I sold those stocks Apple was just shy of $90 per share. Every two and one-half shares of at&t stock I sold I converted into one share of Apple stock. With Apple gaining about $45 per share since then I have made out like a bandit!
It’s not too late for you. There is still some money to be made from Apple stock but you will likely not see the record gains of the past six months repeated in the near future. It might get as high as $150 per share by year end but I’ll probably sell it if it hits $140 and begins to flatline there.
As for at&t stock? I’m setting a year end target of $44 for that one. Yes, I’m sticking with the Apple stock.
With recent reports of hackers crawling through the innards of the iPhone markets are aghast at the prospect of what this means. So, what does it mean?
It means that Apple wins and at&t loses.
at&t missed out on one very important thing when they plunked those millions of dollars down to gain exclusivity on the iPhone. They missed out on the hacker aspect.
Hackers
The hacker aspect is very simple. In this new world of technology that we live in consumers do not like it when they buy a device and find it locked. It does not matter if it is a DVD player with its region encoding or a cell phone with a carrier lock. Consumers feel, and rightly so, that if they pay the money they own the product.
If a device uses mp3 files for ringtones why must the consumer pay $0.99 to put that sound on their phone? If the phone is just a small computer why can they not record their own ringtone and add it to their phone for free?
Think of your computer. Say you purchase a PC from Dell and it comes with Windows Vista pre-installed. You have paid for the computer and the software, if you now choose to remove Windows Vista and put Linux on there neither Dell nor Microsoft can stop you.
When you buy that PC Dell can not force you into only using at&t as your broadband provider so why can Apple force you into using at&t as your wireless carrier? You already paid full price for the iPhone (and then some) so why the lockdown?
There is no technological reason for the lockdown so it must just be a software “feature” that you are paying for. In this day and age the consumer who wants an iPhone may not want to switch carriers. Not all consumers are tech savvy enough to hack their iPhone but those who are (or know someone who is) will likely go this route.
Understand this; the hackers who are hacking the iPhone are not doing this to steal service, no, that is not their goal. Their goal is to unlock the device so that it works the way they want it to and so that they can take a SIM card from their phone and put it in the iPhone.
Apple can put out patches and the like but even those things can be worked around. Besides, every Apple iPhone sold is money in Apples stock price; do they really care if you use the iPhone with at&t? I don’t think they care privately though they may care publicly (at least until the European release contracts are signed).
Conclusion
In the end the iPhone is going to be a big boon for Apple and only for Apple. Apple stores have been selling far more iPhones than at&t stores. That alone tells me that Apple has been making far more money than at&t right off the bat. As someone who knows a thing or two about how the wholesale system works an iPhone sold at the Apple store means Apple gets all the money while an iPhone purchased at an at&t store means Apple only gets the wholesale price, which may be in the 50% of retail range. (iPhone parts are near 50% of the cost of the unit.)
Stock Tip
If you are watching the two stocks involved here I suggest you go for the Apple stock. Even though it costs over three times what at&t stock costs at&t stands to gain nothing when the European contracts are signed later this year. Apple stands to gain a bundle!
A few weeks ago I asked the question, “Apple vs. AT&T: who wins the stock battle?” Early information points in an unexpected direction.
On close of business Friday June 29, 2007 Apple closed at $122.04 and at&t closed at $41.50. The iPhone launch had been set for after the markets closed on Friday. Could this have been designed to give both companies two days to fix problems? Apple products are known for one thing aside from being sexy:
Either it just works or it doesn’t
The core beauty of Apple products is not the outward sexiness and marketing spin. It is the way they just work. This often bites people in the back side because when an Apple product fails to work the problem often lies beyond the power of the consumer to fix.
Over the weekend there were numerous reports about the iPhone. Some people loved it others thought it was over-hyped. What you probably want to know most is what the market thought of the iPhone.
At close of business Monday evening Apple stock closed at $121.26 and at&t stock closed at $41.85. What’s that you say? the launch of the iPhone made Apple stock go down?
Apple lost $0.78 per share over the iPhone launch weekend while at&t stock gained $0.35 per share
How can this be? Everything Apple puts on the market is golden! Sort of, just like the Sony PS3 some products are released before their time is right. The iPhone may just be one of those products. As sleek and sexy as this device is it has problems and the same functionality can be had elsewhere for less money. Couple this with the fact that the iPhone HAS to sync to a computer running iTunes to work makes it even worse. Why can it not run iTunes on itself and use the Edge network or Wi-Fi?
Engadget has an excellent in-depth review of the iPhone and I suggest you read it. There is also an interesting forum post on some lackluster first impressions of the iPhone.
I also noticed that the Apple fanboys were quick to blame at&t for all of the problems with getting the iPhone up and running. Some of these problems may be due to the large number of people purchasing iPhones but, a lot of buyers were trying to scam by buying iPhones for eBay resales… An idea that failed due to Apple’s large manufacturing run!
Most of the problems involved people moving from one carrier to another and taking their number with them. That means the problem could be at&t’s or it could be caused by the old carrier dragging their feet.
Should you buy an iPhone? I would say NO. Even if you do want one I highly suggest you wait until the bugs are fixed in the current batch before buying one.
Back on January 9, 2007 the iPhone was announced. At that time the AT&T stock closed the day at $33.85 per share and Apple closed at $86.45 per share. By January 16, 2007 Apple stock had quickly spiked to $97.10 per share while AT&T only hit $34.32 on that same day. Apple shares then dropped to their pre-iPhone levels until mid February when they began to rise once more.
If you had purchased your Apple stock on January 9 and sold it on January 16 you could have made a quick $10.65 per share or about a 12% profit on your Apple investment. AT&T stock had only gained $0.47 per share during that same time span for a far poorer 1.3% profit.
Not counting the quick gains made within the first week of the iPhone announcement we see that AT&T stock was the better pick. It was not until early May when Apple stock began to hit its major stride and beat the performance of AT&T stock. Though we do remember the Engadget flap in regards to Apple stock the surge began before that. There was the iTunes DRM story that hit early in May, could that have been what set things off?
If we look at May 4, 2007 (the last stock trading day before the DRM news) we see that Apple was at $100.81 per share and AT&T was at $39.48 per share. AT&T had also declared a dividend early on that was paid out at $0.355 per share on April 5, 2007. This means Apple stock gained $14.36 per share while AT&T had gained $5.985 per share. Even though the AT&T gains were only 40% of what Apple gained AT&T shares started out at about 40% of the price of Apple shares.
From here forward Apple shares began a rocket climb, ending at $121.33 on June 4, 2007. AT&T closed at $40.90 on that same day.
All is not just about the iPhone though. AT&T recently changed CEOs and they do more than just sell cell phones! Apples big focus right now is on the iPhone. They should see a stock jump tied to their newest product.
If you look back at these two companies on a five year graph it is very clear that Apple stock has been on a wild ride of great profit. Apple has gained almost 750% in the last five years while AT&T has remained a “steady” stock. If you go back further you will be reminded that AT&T’s graph looks like a nice steady line without a lot of dips while Apple’s stock price looks like a wild roller coaster ride.
Who will out in the long run? I guess that depends on your investment strategy. I had thought (back in January) that AT&T would hit $40 per share by years end, I was pleasantly surprised to see it hit $40 within 6 months. Apple shares? Who can tell. I think it all depends on the iPhone. If the iPhones does well than Apple will do well. If it flops than Apple will be in trouble.
How will an iPhone flop affect AT&T stock? Probably not that much. It may lose a few points but cell phones (or one particular cell phone) is not what AT&T is all about. The same can’t be said for Apple these days. After releasing that flop of a product called the AppleTV and the problems getting Leopard out the door Apple is betting a lot on the iPhone. A phone that is of no interest to business customers and has its greatest appeal to those who can not even afford it is a big thing to gamble on. We’ll just have to wait until the end of June to find out.
Recently, enGadget published an email that was sent to them from an Apple employee. This email had originated somewhere on the Apple email server and enGadget decided to run with it. Within minutes of publishing the news of a suspected iPhone delay the Apple stock dropped, knocking four billion dollars in market cap off of Apple stock. The stock did rebound over the course of the afternoon. With the FCC news of the iPhone’s approval it climbed even higher.
This leads me to wonder if enGadget was being used as an unwitting accomplice in an Internet stock pump-and-dump scheme. Or would this be a dump-and-pump scheme?
Think about this for a minute. You have inside information about Apple and know that the FCC is about to announce approval for the iPhone but, the stock is too high for you to properly profit off of it. Why not send out an email telling everyone that the iPhone is going to be delayed? Then, after the stock drops, you buy up a whole bunch! Any delay news would likely be refuted by Apple before the day ends, at which point the stock will rise again. Couple that with the expected approval nod from the FCC and you have a suspicious looking example of a stock fraud.
Now, I’m not saying Apple is behind this as it could have been done by someone who hacked into Apple’s mail server.
Between 12:00 PM and 12:05 PM on May 16, 2007 Apple stock went from 107.79 to 103.42 with a volume well over three million shares! By Friday evening the stock had climbed to 110 on the good news from the FCC. With the right timing someone could have just made themselves almost $7 per share in profit.
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