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Apple falls from the tree

posted 10 Nov 2012, 07:47 by Mpelembe   [ updated 10 Nov 2012, 07:47 ]

Behind all of the hype around the barrage of new products including the new iPad mini....Apple has lost some of its luster on Wall Street.

Reuters Business Report - The world's most valuable technology company entered bear market territory, as its shares lost 20 percent - $130 billion in market value - since hitting a record high in September.

Brian Colello, Senior Equity Analyst, Morningstar:


"There has been some concern about whether Tim Cook and the management team can live up to Steve Jobs' reputation, there was a bit of a management shakeup recently, there's concern about Applemaps and so sometimes we hear fear over whether Apple has lost its touch, we disagree with that but we can at least recognize that some investors may feel that way."

Add to that, worries over supply chain snarls prompted concerns it wouldn't be able to meet demand for its hot iPhone 5, which accounts for about half of its revenue.

The reaction on the trading floor has been quick.

Apple, long a mainstay in many fund portfolios, lost one of its biggest fans.

The American Funds Growth Fund of America, dumped 2.74 million Apple shares last quarter, 35 percent of its holdings.

But most analysts are holding fast to their buy recommendations - with a mean 12-month price target of $767.40, which would be a gain of 40 percent.

On that note: ING's Large Cap Growth Portfolio and the Columbia Value and Restructuring Funddoubled their holdings.


"The biggest strength of Apple is its ability to seamlessly integrate the hardware, software and services. If you look at a company like Samsung that does very well with hardware but they don't own the software. Google and Microsoft in particular is on the other side, they own the software but have never owned the hardware, they are making moves to get in to hardware but that integration, they are years behind what Apple is doing."

Apple's latest parade of gotta-have-it gadgets is expected to account for 80 percent of sales for the December quarter - though the pressure to innovate won't disappear as Wall Street looks around the corner to 2013 for the next rollout from Apple.