Apple suffered the biggest share price fall in its history
this week following a mixed earnings report on Thursday but
there are sign the worst may soon be over.
Shareholders of Apple, the biggest United States company by
market capitalisation, punished the stock. Apple shares
dropped 12.4% to $US450.50 ($NZ543.15).
Craigs Investment Partners broker Greg Easton said the latest
result showed the growth in the smartphone market was moving
from high-end to lower-priced devices.
That was a trend highlighted by the likes of Samsung, which
had more than 80 touch screen handsets in the marketplace and
continued to see strong earnings growth.
''There has been some speculation that Apple will look to
enter the lower-end smartphone market with a new device to
try and capture that part of the market. While this will
inevitably lower margins, it should drive strong top line
Lower-priced devices were likely to be more successful in
emerging markets where disposable incomes were significantly
lower, Mr Easton said.
At current prices, Apple became a value play. For a company
easily posting double-digit revenue growth, the current
valuation appeared undemanding.
Despite recent market disappointment, Apple remained a
quality technology stock, albeit with a lower growth outlook,
he said. The company had strong margins, unmatched cash hoard
and relatively recurring revenue streams from users upgrading
to new versions of devices.
The latest quarterly report was a crucial period for Apple as
it saw the convergence of a number of factors which should
have helped to drive a strong set of numbers, Mr Easton said.
Going into the quarter, the company had refreshed almost
every product in its line-up which put it in a strong
position to grab the attention of customers.
The most talked about ''refresh'' was that of the iPhone with
the release of the much anticipated iPhone 5. Additionally,
the latest quarter included the US holiday shopping period
which traditionally saw strong consumer spending, he said.
The weak numbers did little to reverse the negative investor
sentiment which had been gaining momentum in recent weeks
regarding Apple's ability to regain the growth trajectory
which saw the stock hit an all-time high of more than $US700.
Although the company still posted revenue growth of more than
18% to $US54.5 billion, that came in below the market
expectations of $US54.8 billion, Mr Easton said.