Today: Apple's (AAPL) market capitalization falls lower than $400 billion, costing the company its title as most valuable U.S. company even as iWatch buzz grows. Also: Google (GOOG), LinkedIn and Yahoo (YHOO) continue to soar higher as Wall Street gains despite issues on Capitol Hill.
Apple cedes crown to Exxon as stock price continues to plunge despite iWatch talk
Apple's decline on Wall Street reached new depths Monday, as the Cupertino tech giant again lost its title as most valuable company in the United States with yet another decline to a 52-week low.
Apple dropped 2.5 percent Monday to close at $419.57, taking its market capitalization lower than $400 billion and its individual share price lower than $420 for the first time since January 2012. Despite falling 0.5 percent on its own, Exxon Mobil kept its market cap -- the total worth of all shares in a company -- higher than $400 billion at $400.5 billion, allowing it to take the crown from Apple for the second time this year.
Exxon previously overtook Apple in the immediate wake of the tech giant's earnings report for the holiday quarter, which established new records for revenues and profits but showed a slowing growth rate that concerned investors. Apple ripped the title back the very next day, but has been unable to find gains or even a consistent stock price: Shares have declined 21.2 percent in 2013, and 6.9 percent in the past six sessions combined.
The most recent slide arrived as high-profile Apple investor David Einhorn, whose Greenlight Capital hedge fund hold about 1.3 million shares in the company, campaigned for the company to push some of its billions in cash back out to investors, a lawsuit that ended up changing the focus of Apple's annual shareholders meeting last week. While CEO Tim Cook says the company is pondering ways to reward investors with some of its cash hoard, it has made no moves to do so yet. The talk has become so rampant that even famed investor Warren Buffett chimed in with an opinion Monday morning, telling CNBC that he would suggest Apple use its cash to buy back shares.
The company took another hit Friday, when Judge Lucy Koh stripped $450 million from the $1 billion judgment Apple won from Samsung in a landmark patent battle. While Apple can fight a new trial to get some or all of that total back, Samsung has said it will also appeal the rest of the judgment, pushing that windfall farther into the future.
Still, Apple is likely one new gadget away from seeing its stock price turn around and possibly skyrocket back to the levels it reached in 2012, when it set a record for highest U.S. market cap in history, without adjusting for inflation. According to reports Monday, the Cupertino company will introduce its latest innovation before the end of 2013 in the iWatch, a wearable device that will communicate with other Apple mobile devices to present information in an easy manner.
Bloomberg News and technology blog The Verge reported Monday morning that Apple has a team of about 100 engineers working with design guru Jony Ive, and hopes to bring the device to the public as early as this year, with both reports attributing the information to anonymous sources. Bloomberg noted that such a device would likely have about twice the profit margin than the other rumored Apple device, a smart television set.
"This can be a $6 billion opportunity for Apple, with plenty of opportunity for upside if they create something totally new like they did with the iPod -- something consumers didn't even know they needed," Citigroup analyst Oliver Chen told Bloomberg.
Investors who have hung in with their Apple stake hope the reports turn out to be true, as it could spur the stock price higher. Analysts still believe such a resurgence is likely, with 53 of the 54 Apple analysts tracked by MarketWatch labeling the stock as a "Hold" or "Buy," with an average price target of $619.14, nearly $200 more than Friday's closing price.
Google and LinkedIn hit all-time highs as tech money flows out of Apple
While one of the most successful stocks of 2012 continued to struggle in 2013, three well-known Silicon Valley companies continued to vie for the 2013 title, as Google and LinkedIn continued to hit records and Yahoo again reached a 52-week high.
Google continued to break records two weeks after cracking the $800 level for the first time, rising as high as $822.24 Monday before closing at $821.50, with both prices reflecting new records. As The Wall Street Journal pointed out, it is the 18th session of 2013 in which Google has hit a new intraday high, with at least two analysts expecting shares to eventually reach $1,000.
Eric Kuby, chief investment officer at North Star Investment Management, said Google "seems to be the big momentum stock right now," taking over from Apple. "There's a lot of money that likes the tech sector and I think Google has kind of taken over from Apple," Kuby told Reuters.
LinkedIn also continued to hit new highs, after its earnings report last month sent it to a record level and positive analyst reports and general optimism on the company helped spur it to new heights last week. The Mountain View professional-networking company rose as high as $178.23 before closing at $177.90, a daily gain of 4.4 percent.
Yahoo has not had the benefit of rosy headlines lately, as CEO Marissa Mayer faced a backlash for her decree that employees of the Sunnyvale company must come to the office instead of working at home, and the company announced the death of a series of offerings Friday. Still, Yahoo continues to reach share prices not seen since 2008, with price hitting a high of $22.74 Monday before closing at $22.70, representing a 3.5 percent gain.
Other Silicon Valley stocks found strong gains as well Monday, helping offset Apple's drop for a flat trading day in the SV150 index of the area's largest tech companies. Zynga rose 6.1 percent as recent buzz around legalized online gambling and the San Francisco company's cost-cutting efforts have helped the company's beleaguered stock, and Workday increased 7.1 percent after Pacific Crest analyst Brendan Barnicle could be worth about 60 percent more than the market cap it closed with last week.
On the negative side, Yelp slumped in after-hours trading following an earnings report that showed the San Francisco consumer-reviews site is continuing to lose money while piling cash into sales and marketing. Hewlett-Packard (HPQ) declined 0.9 percent after IDC reported that personal computer sales are likely to decline yet again in 2013.
Wall Street continues to ignore sequester cuts as D.C. debate continues
The three major U.S. indexes also managed to avoid following Apple down Monday, as stocks gained overall. The Dow Jones industrial average, the only major index to not include Apple, again neared its record level while reaching a five-year high despite continuing debate about the now past-deadline sequester, which will make drastic cuts that could damage the U.S. economy.
Investors continued to look past the current squabble, avoiding the giant swings that accompanied similar wrangling over the debt ceiling and "fiscal cliff" of late and looking for the bright side.
"Excluding this quarter, which will be impacted by the sequester, the economy probably strengthens as the year goes on," Michael Mullaney, chief investment officer at Fiduciary Trust, told Bloomberg News.
"The spending cuts have come and gone, and it seems like it wasn't the end of the world as some people thought," Joe Bell, senior equity analyst at Schaeffer's Investment Research, told The Wall Street Journal.
Silicon Valley tech stocks
Up: Workday, Zynga, LinkedIn, Yahoo, Tesla, Jive, Google, Intuit (INTU), Adobe (ADBE), Oracle (ORCL), Symantec, Intel (INTC), eBay (EBAY), SunPower (SPWRA), Gilead, Ruckes, Electronic Arts (ERTS), Yelp
The tech-heavy Nasdaq composite index: Up 12.29, or 0.39 percent, to 3,182.03
The blue chip Dow Jones industrial average: Up 38.16, or 0.27 percent, to 14,127.82
And the widely watched Standard & Poor's 500 index: Up 7, or 0.46 percent, to 1,525.2
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.