Today: Apple (AAPL) continues to slip as analysts grow cold, projections show bad news and Samsung gets ready to show off its newest competition. Also: Wall Street continues to set records as Dow grows for eighth straight day, but tech stocks dive.
Analysts, projections and competition continue to hurt Apple
Apple's fall from the good graces of analysts and investors -- who were clamoring for the company a year ago as it shot to record highs -- continued Tuesday, as more bad news and views helped send the company's stock down again, even as Wall Street's record run (barely) continued.
The Cupertino company saw its beleaguered stock price slip 2.2 percent Tuesday to $428.43, a few dollars higher than its 52-week low of $419. Apple has fallen as much as 44.6 percent from an all-time high of $705.07 reached on Sept. 21, 2012 -- the day the iPhone 5 was released in the United States.
Reasons for the long-term decline can be tracked to large investors selling their shares to take profits, but continued weakness points to a changing view of the company's future and present, as detailed in-depth by Jay Yarow of Business Insider.
For a microcosmic view of Apple's issues, however, Tuesday had it all: an analyst's changing tune, projections of declining growth and invigorated competition.
Jefferies analyst Peter Misek summed up feelings on Apple by saying in a note Tuesday, "When handset makers fall out of favor, they fall faster/further than expected." Misek is a perfect example of how that happens: The analyst had a $900 price target on Apple stock in August, just before the stock price peaked; on Tuesday, he dropped his target from $500 to less than the current price, $420.
Many analysts point to Apple's lack of a surefire new consumer product in its pipeline, as rumored devices continue to not appear. Misek said just last month that Apple would introduce its first step to a television set in March, with the iTV itself debuting before the end of the year; Tuesday, he said that will not be the case, as the device has been pushed back to 2014, part of a chain of such predictions from Misek.
Misek also said that the chances of an iWatch this year -- another product that analysts and media have predicted for what seems like eons -- are greater than 50 percent, though not assured, while iPhone sales and Apple's revenues could come in well below consensus forecasts.
Tracking firms usually offer more hard data than analysts, and an IDC report Tuesday also harmed Apple's image, as the company said Android will take the lead in tablet market share in 2013. The news is not horrible for Apple: IDC predicts that it will keep a healthy portion of the market, with 46 percent market share in 2013 and 43.5 percent market share in 2017, with similar projections in between. In a market that IDC expects to grow about 11 percent a year -- from 190.9 million shipments in 2013 to 350 million in 2017 -- that should continue to provide healthy revenues and profits for Apple and its investors.
However, it does not match the incredible growth rate and mobile dominance that Apple has experienced in the past few years, as the iPhone and iPad have run roughshod over all competition. As the IDC study shows, however, the competition seems to have caught up -- Google's (GOOG) Android is projected to beat Apple in the next five years, with manufacturers lining up to offer competitors to the iPad and iPad Mini.
The smartphone market, more mature than the tablet market, shows what happens when Apple' competition completely catches up. Anticipation is building for the debut of the Samsung Galaxy S IV, the latest smartphone from Apple's main rival in sales and in the courtroom, and is likely to arrive on shelves before Apple's next iPhone.
With an ad campaign that targets Apple with derision and a product well-received by consumers and critics, Samsung has already taken the title of largest smartphone manufacturer worldwide from Apple, and is building considerable buzz on its own.
With all of these factors working against Apple, a falling stock price is to be expected. However, a mega-bear-market correction such as the one Apple has seen in the past six months could be too drastic, leaving Apple's future stock movement as unpredictable as its recent past.
Dow narrowly squeaks out gain as 'buyers' exhaustion' takes hold
In 2012, the conventional thinking was, "As Apple goes, so goes Wall Street." That has not even been near the case in 2013, however, as the Dow Jones industrial average set yet another record closing price Tuesday with its eighth consecutive gain, the first time the index has accomplished that feat in two years.
The Dow needed a late rally to record a gain on the day, however, and it was ever so slight -- a gain of 2.8 points, or 0.02 percent. Meanwhile, the other two major U.S. indexes, which include Apple, unlike the Dow, fell on the day, with the Standard & Poor's 500 breaking a seven-day run of its own that had pushed it near its own record high.
With so many records and increases, experts said Tuesday that the downturn Tuesday was just sheer exhaustion, which may result in short-term losses.
"You have a little bit of buyers' exhaustion at this juncture. We've had this move that has been startlingly smooth in terms of progression of advances, both since the beginning of the year and certainly over the last six to seven trading sessions," Mark Luschini, chief investment strategist at Janney Montgomery Scott, told Reuters "Investors are waiting for this collective correction ... for some time, and it's teasing more and more buyers out of the market."
Ryan Larson, lead trader at RBC Global Asset Management, agreed in an interview with Bloomberg News, "After setting new all-time highs for several consecutive days, the market may be a little tired, and rightly so. With little in the way of catalysts, it would not be surprising to see the streak end. That being said, as long as central bank accommodation remains, any pullback should be short-term in nature."
Zynga and Yelp give back gains as tech stocks dive
Tech stocks were a negative driver for the markets Tuesday beyond Apple, as the tech-heavy Nasdaq had the worst day of the three major indexes and the SV150 index of Silicon Valley's largest technology companies performed even poorer, drooping 0.8 percent.
Zynga lost much of Monday's bounce from speculation about a possible Yahoo (YHOO) bid, as Macquarie Capital analyst Ben Schachter threw water on that fire with a note calling the speculation "unfounded" and an acquisition by any company "unlikely." Zynga dropped 5.1 percent and Yelp, also mentioned as a possible Yahoo target, declined 5.6 percent; Yahoo lost 0.9 percent on the day. Other social-networking stocks also had tough days, with Facebook declining 1.1 percent as it scheduled new conferences and LinkedIn decreasing 0.6 percent.
Google, one of Silicon Valley's hottest stocks, also declined Tuesday after a fine for violating privacy standards was confirmed. Oracle (ORCL), down 1.3 percent, and Cisco (CSCO), down 0.8 percent, also dropped.
On the positive side, Hewlett-Packard (HPQ) gained 1.8 percent as it fought back against critics calling for the ouster of directors from the Palo Alto company's board, and San Jose's SunPower (SPWRA) gained 3.6 percent.
Silicon Valley tech stocks
The tech-heavy Nasdaq composite index: Down 10.55, or 0.32 percent, to 3,242.32.
The blue chip Dow Jones industrial average: Up 2.77, or 0.02 percent, to 14,450.06.
And the widely watched Standard & Poor's 500 index: Down 3.74, or 0.24 percent, to 1,552,48.
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.