Apple Inc. (AAPL), Cirrus Logic, Inc. (CRUS): Why Did My Stock Just Die?

Here we go again, experiencing dramatic swings in the Dow Jones Industrial Average, which closed down 138 points yesterday nearly wiping out the recovery it had made the day before. The index was shot down largely by Bank of America Corp (NYSE:BAC) missing its earnings estimates, even though it witnessed a 57% surge in deposits from the year-ago period and profits roared ahead to $0.20 a share from $0.03 a share.

While mortgage banking income was down year over year, the greater sin committed was missing analyst profit expectations of $0.22 per share. An argument could be made that perhaps Wall Street was a bit too exuberant in its outlook for the No. 2 banking giant, but it could also be excused for being so, since financials have been the shining star of the markets, with B of A, JPMorgan Chase & Co. (NYSE:JPM), and Goldman Sachs Group, Inc. (NYSE:GS), all benefiting from the Fed’s pumping $80 billion or so a month into the economy.

Looking at their stocks’ performance over the past year, we can see that analysts might have expected Bank of America Corp (NYSE:BAC) to continue its meteoric run.

BAC Chart

BAC data by YCharts.

With B of A faltering, Morgan also dropped 3.5%, and Goldman and Citigroup Inc. (NYSE:C) were down 2% or more. Considering the fractured future of the eurozone and the baseless gains made here at home, it may be we’re seeing the peak of the financial markets.

A chip so big it’s a gouge
Yet even beyond financials, the markets were weak yesterday with more than three-quarters of all stocks listed on major U.S. exchanges declining, in large part on the tremors Apple Inc. (NASDAQ:AAPL) caused. After audio-chip supplier Cirrus Logic, Inc. (NASDAQ:CRUS) rocked the i-sphere with news of a glut of chips at the slowdown of an unnamed customer (that everyone knows is Apple Inc. (NASDAQ:AAPL), since it accounts for 90% or so of its revenues), analysts immediately speculated that that meant there were likely going to be delays in launching new versions of the iPad and iPad Mini. The speculation sent Apple Inc. (NASDAQ:AAPL)’s stock careening 5.5% lower and Cirrus Logic, Inc. (NASDAQ:CRUS) plunging 15%. Other Apple Inc. (NASDAQ:AAPL) suppliers were also generally knocked down, with TriQuint Semiconductor (NASDAQ:TQNT) and Skyworks Solutions Inc (NASDAQ:SWKS) falling 3% and 4%, respectively.

Yet it raises the larger concern that Apple Inc. (NASDAQ:AAPL) is generally losing its hold on the public’s imagination, and perhaps the iPhone specifically may be endangered by the rise of Samsung’s Galaxy and other Android smartphones. With Apple’s earnings due out next week, investors worry there may be some significant gaps that show up, and they’ve dropped its stock below $400 a share, the lowest level it’s been at since late 2011. That might make its stock absurdly cheap — along with Cirrus Logic, Inc. (NASDAQ:CRUS)’s — but there’s the distinct possibility we’ll see them both test newer lows yet.

Thanks, now get out!
Dismissing your auditor for questions it raises about the value of your properties and your reserves doesn’t exactly instill confidence among investors. Magnum Hunter Resources Corp (NYSE:MHR) reported it fired PriceWaterhouseCoopers because it started questioning items in its financial statements that could have a material impact on whether investors could trust what the company’s reporting.

Management essentially said, “Trust us, we already know about that stuff and are working on it. You don’t need more information to review it.” They also said they have plenty of money to meet its debt covenant, and its reserves, and its other estimates are accurate, too.

Oh, OK. Investors are supposed to take management’s word for it when their auditor raises potential yellow flags and then gets fired for doing so? Maybe there’s nothing wrong with Magnum’s numbers, but why wouldn’t you work amicably with your auditor instead of giving them the boot? The stock might have fallen 15% yesterday, actually having recovered from the worst of the news when it lost nearly 30% of its value, but I have to question why investors would hang around anyway, and I expect we’ll see it drop further.

The article Why Did My Stock Just Die? originally appeared on Fool.com and is written by Rich Duprey.

Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Apple and Goldman Sachs. The Motley Fool owns shares of Apple, Bank of America, Cirrus Logic, Citigroup, JPMorgan Chase, and TriQuint Semiconductor.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!