back to article Apple share-price-off-a-cliff: Told you that would happen

I was allowed to write this piece because in November I wrote to our glorious editor after a London Quant's Group seminar to say that the price of Apple shares would tank sooner rather than later. As you all know, that’s just what happened - from just shy of $800 to the mid $400s. The reason I don’t make all that much money …

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      1. Lallabalalla
        Big Brother

        Re: pathetically dependent?

        Nobody - almost nobody - buys an iPad to do WORK on. It's a toy, a gadget, a contraption, a device, a gimmick, a knicknack.

        You want to do some work? Quit reading The Register and get on with it.

        1. Anonymous Coward
          Anonymous Coward

          Re: pathetically dependent?

          Which means a luxury item and not something that will still sell when you have other priorities.

          Which means the true pathetic dependence here is Apple's - on your credit card.

        2. Nikolaus Heger

          Re: pathetically dependent?

          Not exclusively but I definitely work on my iPad.

          I even did an honest hour of good work on an iPhone recently, waiting for my computer to get fixed. I organized all the Pivotal stories for one of our projects using the Pivotal app for iOS. Pivotal for iOS is much better than the web version too.... e.g. it's better to use on an iPad (not so much iPhone because of the small screen)

        3. Anonymous Coward
          Anonymous Coward

          Re: pathetically dependent?

          BEG PARDON? You won't believe how much work you can get done on a tablet. Smaller, lighter, instant-on... perhaps you don't get work done on it, but I and many creatives do. With the right tools, sketching, editing, building maps, writing theses, updating docs whilst on the road are a real pleasure on them.

          And by the way, that goes for *any* tablet, not just iPad. Nexus 10 and Galaxy Tab are just as good at it.

          1. Greg J Preece

            Re: pathetically dependent?

            BEG PARDON? You won't believe how much work you can get done on a tablet. Smaller, lighter, instant-on... perhaps you don't get work done on it, but I and many creatives do. With the right tools, sketching, editing, building maps, writing theses, updating docs whilst on the road are a real pleasure on them.

            Depends what you're doing, naturally. I know artists that love having a tablet to doodle on. I'm a programmer. For me, tablets aren't particularly useful unless you turn them into a laptop, in which case....might as well carry a laptop.

            And I do! It's a Macbook, too.

            Runs Linux. :-D

        4. Anonymous Coward
          Anonymous Coward

          Re: pathetically dependent?

          Yes, you're paying perfect attention...no Fortune 500 companies are using iPads or iPhones for business applications.

          http://www.apple.com/ipad/business/profiles/

          1. Greg J Preece

            Re: pathetically dependent?

            Yes, you're paying perfect attention...no Fortune 500 companies are using iPads or iPhones for business applications.

            People in business spending money on shiny they don't need was covered in the article, you know. ;-)

      2. Philip Lewis
        FAIL

        Re: pathetically dependent?

        "Meanwhile, back in reality, there's a difference between an iPad and a thing you can actually do some fucking work on."

        Not everyone is a drone .NET (java or whatever) coder. I bet assembly line fitters cannot use them for anything useful either. For many people, work can be accomplished on a tablet very, very effectively compared to the alternatives (pen & paper).

        Broaden your mind and outlook beyond your incredibly tiny space. Oh sorry, you don't have one to broaden, do you?

    1. Chet Mannly

      Re: pathetically dependent?

      "I suspect you know that MS is also pathetically dependent on Windows and Office. MS has a greater PE number than Apple, but I know in my mind which has the brighter foreseeable future."

      Dependent on software that runs on 90%+ of the world's computers, despite everything its competitors including Apple and the DOJ could throw at it.

      MS sells despite the fact everyone hates them, many people buy Apple because they are fashionable, and as we can see by the way Apple is bleeding market share fashions change.

      That's why MS has a higher PE.

  1. Andy Watt
    Thumb Down

    An industry standard cynical outlook

    "As I said earlier, having a nice office helps you attract and retain good staff, but that wears off pretty quickly. The fact is that it makes senior management feel good. Have you ever bought an IBM xServer because Hursley Park has nice sunken gardens?"

    The fact is that the Apple employees I've known were intensely proud of working for Apple. Pride can come from working in a great looking building, and remember that Apple try to "impute" - everything is done for a reason, not just the standard executive bullshit.

    Don't judge how Apple behaves in the same way as Oracle, HP or Dell do, they just don't operate the same way. To suggest it is so is convenient for the purposes of this piece, nothing more.

    1. dogged

      Re: An industry standard cynical outlook

      Don't judge how Apple behaves in the same way as Oracle, HP or Dell do, they just don't operate the same way.

      Indeed. That would be like suggesting that the Church of Scientology acts like the Red Cross.

    2. Naughtyhorse
      Holmes

      Re: An industry standard cynical outlook

      Surely the point of the article was that the behaviour of the company is irrelevant, the price is determined by the markets expectations alone.

  2. Steve Todd

    Another choice for using its cash

    And one that Apple seems to be using quite a lot, is in stabilising its supply chain. It will prepay for some parts, help fund manufacturing capacity for others etc. Much of the cash on the balance sheet is listed at being in short term investments like this.

  3. Anonymous Coward
    Anonymous Coward

    I work for a large consultancy company whose share price has doubled recently due to Wall Street "liking what we're doing". None of the changes I have seen, as a technician on the ground level, could remotely justify a doubling in the company's intrinsic value.

    1. Anonymous Coward
      Anonymous Coward

      Pump then dump.

  4. Don Jefe
    Meh

    Cash Problem

    There are many reasons why having a cash pile is a bad idea but there becomes a point when even the most capatilistic countries won't let you grow out anymore. Take Google for example; because they make tons of money they've got to do something with it but every time they branch out into non core fields everyone gets bent out of shape. They know the pitfalls of sitting on too much money but get in trouble for trying to spend it...

    I decided years ago that small specialty companies can put stupid amounts of money in your pocket & the company coffers but you get to fly under the radar of regulators and the whiny folk who hate it when anyone/company does are distracted by hating on Big Firm (x).

    1. DragonLord

      Re: Cash Problem

      Google only get in trouble for it because they leverage their existing monopoly to promote their products. Microsoft learnt that lesson with internet explorer vs netscape and hasn't made the same mistake since.

  5. Mike Pellatt
    Thumb Up

    Big plush offices

    A sine qua non for an SME (especially in the tech world) going bust is having recently moved into large, plush, expensive offices.

    So whilst some of this article is questionable, I'm with Dominic on this one.

    1. Solmyr ibn Wali Barad

      Re: Big plush offices

      Had a city tour once. During some financial crisis.

      "And this is the centre of our city. Every big building you see here - their cost was exactly one bank per building".

    2. graeme leggett Silver badge

      Re: Big plush offices

      I believe that another outward sign is when they get rid of the fish tank in reception and biscuits in meetings in a bid to stave off bankruptcy

    3. Philip Lewis
      Facepalm

      Re: Big plush offices

      Are you suggesting Apple might go broke?

      just asking.

  6. Mage Silver badge
    Headmaster

    The point of Shares

    Shouldn't be to speculate in buying and selling the shares, but invest in the company and get a dividend from the profit related to your share of ownership.

    Apple don't pay dividends, nor issue new share capital so the only point of buying Apple shares is to speculate. They might as well be Tulip bulbs.

    Apple are also hurting the the US economy as their iShinies suck cash out of circulation to feed their Dragon Hoard and off shore suppliers.

    They are obnoxious. They spend more on lawyers, patents and market image than R&D or innovation. Jonathan Ives has even admitted the design styles are copied from Braun/Dieter Rams. The last worthwhile things they did was investing in ARM (for Newton) and Ditching OS9 for BSD based OS X.

    It's all smoke and mirrors marketing and egotism.

    1. danny_0x98

      Re: The point of Shares

      Apple does pay a dividend.

      iShinies and dragon hoard? I apologize for wasting every one's time. For a moment there I was taking you seriously.

      1. Oninoshiko
        Boffin

        Re: The point of Shares

        danny does have a point, Apple does pay a dividend.

        *looks it up*

        Seems to be 2.65 USD/share-quarter, which given the current price, means a yield of 2.28%. If dividends are how you intend to make money, there are definitely better options the Apple stock (at least at the moment).

    2. Anonymous Coward
      Anonymous Coward

      Re: The point of Shares ... [is to] invest in the company

      With one exception, this is not at all true.

      The exception is buying the shares, when the are issued, from the company itself. If you do that, the company has your cash, you are an investor. For the rest of the lifetime of those shares, the purchase price goes to the seller, which is nothing whatsoever to do with the company named on them.

      1. Mage Silver badge

        Re: The point of Shares ... [is to] invest in the company

        Which is why now it's broken and the "markets" are parasites.

    3. John Smith 19 Gold badge
      Joke

      Re: The point of Shares

      "They are obnoxious. They spend more on lawyers, patents and market image than R&D or innovation. Jonathan Ives has even admitted the design styles are copied from Braun/Dieter Rams. The last worthwhile things they did was investing in ARM (for Newton) and Ditching OS9 for BSD based OS X."

      Behold the iEadon.

  7. Anonymous Coward
    Anonymous Coward

    You could act for the good of the firm by saying “we don’t need more cash”.

    Too right, as someone who's staring at a "reduction in force" I just had to order $1.5 Million in equipment that's just going to sit around gathering dust because of the "if we don't spend it well get a cut in next years budget" approach to capital expenditure

  8. Anonymous Coward
    Anonymous Coward

    ...TOLD YOU THAT WOULD HAPPEN

    No, you didn't. All shares tank 'sooner or later', a valid prediction has to have a date of tanking as well as the extent of the tanking. Otherwise, even I can confidently predict that Apple shares will rise sooner or later. You heard it here first...

  9. David Kelly 2

    $705 is just shy of $800?

    Maybe $775 would be just shy of $800 but $705 is not close.

    1. Anonymous Coward
      Anonymous Coward

      Re: $705 is just shy of $800?

      I'd go so far as suggesting anything over $790 would be 'just shy' of $800 but $702 is a lot shy.

  10. Anonymous Coward
    Anonymous Coward

    Yes, the shares lost significant value...

    But does it matter ? Or does it matter at this time ?

    Share price is only significant in a specific case : if you -as a company - need dosh to either keep your company afloat or wish to attract capital for product developement : in both cases if you wish to bring new funds into the company. it does not matter if a share bought foor 700$ by a private investor is now being sold for 400$. This money was not in the company's coffers to start with, and is not returning to roost now.

    As far as I can determine Apple is still sitting on a very large pile of filthy lurce : they are able to fullfill their business commitments AND have sufficient funds to develop products with which they can increase their value once more.

    This does not have any bearing on the fact that these new products will be succesful : we will have to see what they come up with. A number of investors may be very unhappy at this point, but to Apple themselves it does not matter an iota. They'll only start worrying if they have to go looking for money outside the company.

  11. Simon Rockman

    It's going to get a lot worse for Apple

    The attribution of the phrase "Be nice to people on the way up, you may need them on the way down" may be in doubt, but it's value is not. Apple has not been nice to its customers on the way up.

    And by customers I don't mean consumers. Consumers are the people who buy phones singly. Customers are those who buy in bulk, the retailers, wholesalers and principally the mobile phone operators.

    If there was a theme at Mobile World Congress it was how much the operators hate Apple (and Google in the merging markets), how the operators feel that the Over The Top players have stolen their lunch money.

    Ever since AT&T's Ralph de la Vega sat down with Steve Jobs and did a deal which gave the iPhone a clear run at the market the mobile industry has been pouring money into the pockets of Apple and the industry has had enough.

    Their solution - Firefox - is not a good one but that won't stop the operators from doing whatever they can to move consumers onto something which isn't Apple, even if it has to be Google, and I see a rosy future for Windowsphone.

    When I worked for Motorola, and we were making rubbish phones - a decade ago - there was some sympathy and support from our customers because we'd made money for them in the past. They still ranged our products and maintained a good business relationship with us.

    Apple will get no such favours. The operators are itching to drop iPhones from their portfolios and at the first hint of consumers moving to the next new shiny thing they will.

    Galaxy S4 anyone?

    In the meantime expect lots of new marginal new products from Apple - the first sign of trying too hard will be when they start doing lots of fruity colours.

    Simon

    1. Kristian Walsh Silver badge

      Re: It's going to get a lot worse for Apple

      It's starting already. T-Mobile US is finally ranging the iPhone, but at the same time has dropped ALL handset subsidies - you want an iOS phone, you pay Apple's inflated retail price, or pay a higher monthly tariff (rental + credit repayment for the handset). This is novel for the US, where typically you pay the same monthly regardless of phone, and all phones are subsidised down to the same low price.

      Exposing the US customer to the real cost of their phone exposes Apple's biggest weakness in the market: value for money. Yes, an iPhone is better value to a customer than, say, a Galaxy S3 if both are $150 (and the monthly tariff is the same), but when you remove the unequal subsidies, and the Samsung is $350 to the Apple's $650, you really need to be a fan of the brand to buy the iPhone.

      Under this model, The operators will still get the high-spending iPhone customers, but those customers won't change their iPhone for the next model every time their contract expires; now that they have to pay the full price, there's no incentive for them to do so. That's bad news for Apple: they need that operator-subsidised handset churn.

      Verizon and AT&T are holding back for now, but they do want to move to the same model as TMobile, and the markets know it.

      I think this is the major reason why Apple's shares have tanked. Nothing to do with Maps, or a mediocre iPhone 5. Just simple business: their biggest money tap (the US operators) is in serious danger of being turned off.

  12. LPF
    Paris Hilton

    with a 150 Billion in reserves , apple can afford to do lots of bet the company stuff . Whats annoying the likes of you , is that the idiots that would like to have all that money to spend on coke and booze, while trying to sell all western companies to the chinese can tget their grubby mitts on it.

    The apple share price is decided by whats people think its worth, Apple however makes money faster than the US can print it, when they start making losses come and talk about it!

    Paris just for the hell of it !

  13. Anonymous Coward
    Anonymous Coward

    How to predict share prices.

    Look at the products.

    Shit products, consumers will eventually work it out, and stop buying.

    It's happened to Nokia, it's happening to Apple.

  14. Tim Worstal

    One addition

    Einhorn is right in that Apple should pay out huge whacks of that money in dividends.

    However, much of that cash pile is currently held offshore and would have to pay 35% US corporate income tax and then the recipients of the divvies would pay 15% income tax on it again.

    Given the tax situation it's not actually quite so clear that Apple should hand it all out. Even though the reasons given above mean that they should.......

  15. ecofeco Silver badge
    Windows

    Moot

    Wake me when I can afford to dabble in the Wall St Casino.

  16. Aldous
    Meh

    Overhyped bubbles normally burst

    The Apple price rode so high because of the near religious fever around Jobs and the iPhone/Pad. When Jobs died Apple stuff was already moving from "must sell kidney to own" to "its a nice shiney maybe i will get the next one"

    The stock price was rocketing before then as everyone could not shut up about how wonderful Apple were at every single thing (not just on their products, from the way most IT people i met spoke, you would think every single piece of technology from the 60's to today was created by apple). Now after all those years of hype the stock (and people's expectations) are adjusting back down to a more sensible level.

    See also: Every single dotcom company between 1998-2001. Some died, some survived and the ones that did had their stock price stay much lower then the bubble high

    1. Anonymous Coward
      Anonymous Coward

      Re: Overhyped bubbles normally burst

      What people ignore is the sales are still doing very well - iPad sales were up around 50% from the year before - in a global recession by a single company with 2 main models (Mini and 10" versions). 50% up compared to the previous 12 months.

      Plus look around - whenever I see someone using an iPad (and they are making their way into work and education) it's almost always an iPad. I know people who have Android tablets - most bought them as they were cheaper and many have never bought an app or any music whereas all the people I know with iPads actually buy media, apps and 'use' their devices much more fully.

  17. Anonymous Coward
    Anonymous Coward

    Apple are generating a huge amount of cash and have a very low PE ratio - compare it to Google, Amazon (haha) and Microsoft - they have cash reserves worth around 1/3 of the company's market cap making them an even better investment.

    If I had 10k to invest today into Apple or Samsung it would definitely go AAPL - Samsung will face much more competition from the likes of HTC, Huawei, Motorola, ZTE etc. than Apple.

    Plus everyone assumes AAPL do not have new products in the wings - they make some fantastic products that people are willing to pay for - Macbook Air, Macbook Pro Retina, iMacs, iPads, iPhones and have a huge and loyal installed base.

    1. John Smith 19 Gold badge
      Happy

      "compare it to Google, Amazon (haha) and Microsoft -"

      Wot, no Facebook?

    2. Anonymous Coward
      Anonymous Coward

      ... products

      "they make some fantastic products that people are willing to pay for - Macbook Air, Macbook Pro Retina, iMacs, iPads, iPhones and have a huge and loyal installed base."

      20+ quarters of uninterrupted growth in laptop sales, or some such statistic. And the Tablets while cannibalizing it a bit, did not really slow things down as much as the pundits thought.

      The idea that Apple is a one trick pony is broken, no matter how many anal-ists announce it

  18. Britt Johnston

    bet the company?

    "Apple is thus going to be forced into more “bet the company” launches. It can easily survive an iWatch failure, but to deliver high percentage growth it will need to bet a high percentage of the firm. "

    The art of portfolio management is to have a number of projects of differing size and risk. This helps avoid the military dilemma of repeatedly betting on all-out-wins, until your army gets hammered.

    Even then, given Apple's size, it may not be possible to find one project big enough to force them to bet the whole company's fortunes.

    1. Anonymous Coward
      Anonymous Coward

      Re: bet the company?

      iWatch, Apple TV, subscription media services, new iPhone models (a mini or maxi?) and new iPads. From what I can see the Galaxy S4 launch was a bit of a damp squib as guess what every new phone now is basically the one before with a few new features.

      1. Anonymous Coward
        Anonymous Coward

        Re: bet the company?

        "every new phone now is basically the same one with a few new features".

        Couldn't agree more. I spent an hour or two at the weekend, considering changing my phone. I've an iPhone 4 at present, bought more or less at launch (perhaps a month or two afterwards). I looked at an iPhone 5 and also at 4 or 5 high end Droids and even a BlackBerry Z10.

        Innovations I just don't need:

        - Voice control of any flavour

        - pocket busting screen

        - Eye control/hover

        I came home empty handed because, frankly, nothing I saw had enough extra going for them than my existing handset to justify the price. So what would I upgrade for? Sorry to be boring but longer standard battery life *from a single battery* and improved radio performance. Sadly they don't seem to be even on the list of "innovations".

        1. Anonymous Coward
          Anonymous Coward

          Re: bet the company?

          The '5' does have a better antenna / reception and battery life than the 4...

          Also just because YOU don't need a feature does not mean others may not - I'm not a fan of big screens on 'phones' but use voice control quite a bit.

    2. Dominic Connor, Quant Headhunter

      Re: bet the company?

      You're right that it may not be possible to find a *good* investment big enough, but the point I'm pushing is that *some* investment can always be found and that the perceived need to find the big new thing may mess with Apple big time.

      The fact is that to make a big difference to a business, the proportion of it you have to bet is about the same.

      That can lead Apple to over bet. Rather than gamble 250 million on the iWatch (or whatever) having more cash means it is tempting to go heavier on the marketing spend and past the point that is optimal. going to 350 million.

      If it's sluggish, then having more cash leads you to throwing good money after bad, or trying to change the market because it is "wrong".

      Recall that Sony occupied a similar niche to Apple, having lots of up market electronics that sold well. But even though it pretty much invented video recorders, its market share was dismal even though its technology was better, people wanted VHS not Betamax.

      So Sony bought some big film studios and music companies which sucked money and management time.

      Even if the new project fails

      1. Malcolm Weir Silver badge

        Re: bet the company?

        Dear Dominic,

        Sony didn't invent the Video recorder, Ampex did. Of course, Ampex then marketed stuff _with_ Sony, with the result that you're probably going "Amp-who?". Naturally, Ampex *also* shot itself in the foot several times, but possibly not as often as, say, HP did!

        1. Kristian Walsh Silver badge

          Re: bet the company?

          Ampex and Sony collaborated on professional VTR equipment, but it was Sony that launched the first successful *consumer* recorder.

          It's Sony's consumer electronics business that provides the closest parallel to Apple's current business model.

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