Apple Inc. (AAPL) Taps a Fresh Low. How Bad Could It Be?

Page 1 of 2

If Apple Inc. (NASDAQ:AAPL) investors thought they had already seen shares hit rock bottom at $435 shortly after last quarter’s earnings release, they were wrong. As the sequester technically begins today and the market opened lower, Apple Inc. (NASDAQ:AAPL) gapped down and was significantly lagging the market with losses of 2%, tapping a fresh 52-week low below $432 first thing in the morning.

Apple Inc. (NASDAQ:AAPL)What was rattling shareholders?

It’s over

The only notable commentary out before the close was a research note from BMO Capital. The Mobile World Congress, a conference where gadget makers like to show off their newest mobile devices, wrapped up last night in Barcelona. Of course, Apple Inc. (NASDAQ:AAPL) never attends MWC since it likes to unveil its products on its own terms, and the Mac maker pulled out of all third-party trade shows years ago (even Macworld) as it was looking to take further control over its press events.

MWC still has important implications for Apple Inc. (NASDAQ:AAPL), though, since many of its competitors attend, providing a useful preview of what rivals have up their sleeves. It’s for this reason that analyst Keith Bachman had some negative things to say about Apple’s prospects.

After conversations with wireless carriers and distributors that operate in Europe, Latin America, and the Middle East, the general consensus is that while the iPhone 5 is a solid device, it’s simply not “materially different” from the previous generation iPhone 4S, while competing flagship devices like Samsung’s Galaxy S III are grabbing more attention. These mobile entities believe that the iPhone needs a larger display in order to effectively compete.

Bachman is modeling for 37.8 million iPhone units sold in the current quarter, which should decline sequentially to 34.5 million units in the June quarter. iPad units are estimated at 18 million and 19 million over the next two quarters, respectively. The analyst thinks these estimates are still “reasonable” but acknowledges that there’s more downside possibility than upside given the competitive landscape.

Timing is everything
While Tim Cook gave no solid clues at the annual meeting on when Apple will increase its dividend payout, Bachman thinks this announcement will come before the next earnings release. It’s widely considered the next big catalyst for the stock (assuming the iPad product cycle has indeed been pushed out to later this year).

Apple’s fiscal second quarter report takes place at the end of April, and last year Apple announced its dividend reinitiation in March, so this timing would make perfect sense since companies typically change dividend payouts on an annual basis.

Page 1 of 2
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!