The world’s biggest company by value suffered its worst share value decline in four years on Wednesday. Apple stocks fell 6.43 per cent to close at $538.79; this is a considerable 23 per cent down from its record high valuation of $700 per share, earlier in 2012.
What’s the problem?
Reuters summarises that the major wobble is because investors in Apple are growing fearful of the “intensifying competition in the mobile device market.”Japan Today attributes a mixture of more intense competition, a lack of innovation and disappointing earnings reports from October. However Apple’s share value trend turned negative a little earlier, in September.
Brian Battle, analyst at Performance Trust Capital Partners in Chicago spoke to Reuters and said “This is not going to be a short-term trend. This is a management test, of how well they can perform without Steve Jobs”. He went on to stress how important a new innovative product success is, using baseball terminology; “They need another new product that hits it out of the park. Without that, they could get a gradual grind-down in confidence.” Battle surmised Apple needs “another home run”.
Michael James, an analyst at Wedbush Securities told Japan Today that “There are plenty of reasons to say the stock is done”. He warned that “they’re going to have to meaningfully beat estimates on the next report”. Also the secretive nature of Apple makes the stock market jumpy and therefore “Chatter, rumours and traders sentiment are all going to move the stock meaningfully without any comments from Apple”. Share values rest a lot upon expectations.
New smartphone stats just in from IDC
New stats from research firm IDC say that Google’s Android will power more than two-thirds of smartphones sold in 2012. IDC’s most recent projections for 2012, which came out yesterday, say that Android will have 68.3 per cent of the market, a long way ahead of Apple’s iOS, expected to be 18.8 per cent of smartphones sold in 2012. The reason seems to be the broad selection, and I think the important thing here is that broad includes cheap-and-cheerful, affordable devices. “IDC forecasts Android to be the clear leader in the smartphone mobile operating system race, thanks in large part to a broad selection of devices from a wide range of partners,” read the IDC statement.
Chinese launch of iPhone 5 and iPad mini
The iPhone 5 and iPad mini are soon to be released in China. The country has such a huge population that, if Apple can make a dent in the market there with these two new devices, perhaps innovation doesn’t have to play such a big part in getting the share price back up around $700. An analyst quoted on Computerworld said he expected the more accessibly-priced iPad mini to sell “like wildfire” in China.
