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.

blog comments powered by Disqus
Insider Monkey Headlines
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 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

The 10 Biggest Tax Havens in the World to Stash Your Money

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!