Apple Falls on Initial iPhone Activation Numbers

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How odd is this? AT&T saw an earnings increase due to its deal for the iPhone but Apple shares were actually down 4 percent because they failed to meet analyst expectations.

Shares of Apple Inc. fell 4 percent on Tuesday after AT&T Inc. issued initial subscriber numbers for customers of Apple's iPhone that were below analyst estimates.
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Well with the media hyping this item, and the pressure of all the claims this phone stated it could do. The stock is going to drop due to any flaw that the iPhone has, which includes not meeting the analyst numbers.
 
If they (Apple) release an update that fixes / tweaks a few things on the iphone, I'm sure that number will go right back up.
 
yeah, I just found it odd that the very same news was a boon for one company and not the other.
 
That's not odd at all. A stock price isn't based on anything concrete, but rather the perceived value of a company. If things alter the perception, alas the stock price changes.

The problem Apple has right now is that its P/E ratio is in the mid 40s. Established companies are typically in the low-to-mid-20s. What this means is that either a.) the price represents future potential that current earnings don't justify, or b.) the stock is over valued.

Today's decline is the result of "a." The sales potential didn't pan out as expected so the market is correcting by bleeding-off the additional market cap associated with heightened expectations.

The reason AT&T didn't take a hit is because the basis of the deal with Apple was confidential. Analysts were thinking the terms were more favorable to Apple than the carrier. Plus, AT&T gets to book the subscriber as guaranteed future revenue. Thus, if you buy an iPhone, AT&T gets to claim a minimum in $1500 earnings (presuming everyone got the most basic plan), which is then amortized over the life of your contract (minimum 24-months).
 
theDreamer said:
Actually it is a bit above, but not nearly that high.
Go check some other companies to see highly over valued and you will see.
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True, but ChristopherO still has the right of it (take for example MS, which has a P/E ratio of about 21). Google's is more in line with Apple's, in the mid-40s, presumably based on expectations of strong growth.
 
I bought AAPL at 87.75 in March and ignored my itchy trigger finger since. The growth to over 140 defied all common sense. Probably should've dumped then but we'll see. At this juncture any time Stevie farts the stock is going to drop 5%.
 
Apple and Google always made me wonder how they could be so high

As far as AT&T increasing, it's because they had been in such a hole the only way to go really was up, which the iPhone gave it. Apple on the other hand was expected to do really well from the iPhone but didn't meet its own lofty expectations.
 
Well I believe Google is high because they have a more limited number of shares available to trade coupled with a high perceived value. I know the inital stock was auctioned off for google when they went public.
 
stabilep said:
Well I believe Google is high because they have a more limited number of shares available to trade coupled with a high perceived value. I know the inital stock was auctioned off for google when they went public.
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They are, but that's only half the point. Google is so high both due to a limited number of outstanding shares and a strong expectation for future growth. Note, for example, that Google has a market cap of ~$160B (essentially, share price*outstanding shares). MS has a market cap of ~$290B. MS is making significantly more than Google is (we're talking 4x times more), but investors treat MS like a standard blue chip stock- P/E ratio of around 21 and expectations for increased profit. They treat Google and Apple, at the moment, more like tech stocks- P/E ratio in the mid-40s and an expectation for significant profit growth. At some point, when Google's revenue stream slows down and their profit starts increasing more slowly, their stock will drop significantly as the market corrects itself. I don't really want to try and predict when that will be, though.
 
masteraleph said:
I don't really want to try and predict when that will be, though.
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Spoken like a true market analyst. Always leave wiggle-room so no one can sue you if your predictions don't pan out. Then again, I do it too, which is why my above post was mostly lacking in any sort of seemingly decisive opinion. :D
 
masteraleph said:
At some point, when Google's revenue stream slows down and their profit starts increasing more slowly, their stock will drop significantly as the market corrects itself. I don't really want to try and predict when that will be, though.
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I thought google was/has been overpriced since the very beginning, and said to myself "this CANT possibly last".

ive been kicking myself ever since they went public.

of course im no professional.
 
Steve said:
How odd is this? AT&T saw an earnings increase due to its deal for the iPhone but Apple shares were actually down 4 percent because they failed to meet analyst expectations.
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Wait.. so this article is about how apple isn't living up to the hype and expectations?

Color me .. SHOCKED.. SHOCKED, I say! You mean the company that said they have the most powerful personal computer in the world, the first 64 bit PC, that g4's are faster than intel's product is misleading people?

Oh My God.. It can't be true!
 
CyberDeus-RagDoll said:
Wait.. so this article is about how apple isn't living up to the hype and expectations?

Color me .. SHOCKED.. SHOCKED, I say! You mean the company that said they have the most powerful personal computer in the world, the first 64 bit PC, that g4's are faster than intel's product is misleading people?

Oh My God.. It can't be true!
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How about waiting to see the number of sold units get reported.
I know a couple of friends who waited a whole week before activating theirs just because if some huge flaw was found they would take it back, that plus "minimal" activation problems can add up to a large amount of numbers not turned on. Apple gets a small percent of the monthly earnings from AT&T, but there main thing is selling the phone first.
 
theDreamer said:
How about waiting to see the number of sold units get reported.
I know a couple of friends who waited a whole week before activating theirs just because if some huge flaw was found they would take it back, that plus "minimal" activation problems can add up to a large amount of numbers not turned on. Apple gets a small percent of the monthly earnings from AT&T, but there main thing is selling the phone first.
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Sales #'s were being reported on the first day, wth are you talking about?
 
On Monday before this was posted, AAPL was trading between $142 and 145 ($145 being a 52 week high)... so trading between $135 and $140 with a close just below $135 on Tuesday didn't mean much.

There was a slight recovery today (Wed.) to close at about $137.

With AAPL's 3rd quarter results out, and "only" 270,000 iPhones apparently sold in the first two days...


in afterhours trading AAPL is up to $149.52 as of now - a new 52 week high.
 
After posting this story about a 4% stock drop - how come there's no follow up story on Apple's 3rd Quarter earnings results, and a new $148.50 52 week high stock price?

They are the number 3 computer retailer in the US, and have managed to hit a new stock high despite the recent stock market downturn.

I know it's not as funny as cracking wise about a guy burning down a trailer... but it is serious news.
 
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