Despite first quarter net profit of $13.1 billion and earnings per share of $13.81, Apple shares were in freefall in after-hours trading on Wednesday. The stock fell to $461 per share, down from its September high of $702. Yet despite the panic from investors, Apple CEO Tim Cook seemed unfazed and confident in the company’s near-term outlook. "Apple is in one of the most prolific periods of innovation in its history," he said. "We’re very confident in our product pipeline."
Cook also alluded to the fact that Apple's sales of its iPad Mini and iPhone 5 were lower because of supply chain problems that could not keep pace with demand. But those sentiments weren’t enough to stop investors from pulling out in waves and now we’ll have to wait and see what happens on the horizon.
Even though the company still boasts astronomical profit margins and currently holds nearly $140 billion in cash reserves, it’s unlikely that investors will pump the stock back up before next quarter’s earnings call. And, at that point, there still may be nowhere for the stock to go but down.
The funny thing about that, of course, is that in the current global economy, what Apple has and is still accomplishing is incredible. Of course the company’s growth is going to slow. Of course they are going to lose market share to lower priced competition. That’s the nature of capitalism in a global economy. The fact that Apple has been able to maintain clear quality superiority for so long is nothing short of miraculous. And now that the Android platform is catching up and much of Apple’s functionality can be enjoyed at lower prices with other manufacturers, things are going to change. It doesn’t mean Apple’s products aren’t the best - just that their stock price isn’t going to reach $1000 per share as many previously assured us it would.
Cook also alluded to the fact that Apple's sales of its iPad Mini and iPhone 5 were lower because of supply chain problems that could not keep pace with demand. But those sentiments weren’t enough to stop investors from pulling out in waves and now we’ll have to wait and see what happens on the horizon.
Even though the company still boasts astronomical profit margins and currently holds nearly $140 billion in cash reserves, it’s unlikely that investors will pump the stock back up before next quarter’s earnings call. And, at that point, there still may be nowhere for the stock to go but down.
The funny thing about that, of course, is that in the current global economy, what Apple has and is still accomplishing is incredible. Of course the company’s growth is going to slow. Of course they are going to lose market share to lower priced competition. That’s the nature of capitalism in a global economy. The fact that Apple has been able to maintain clear quality superiority for so long is nothing short of miraculous. And now that the Android platform is catching up and much of Apple’s functionality can be enjoyed at lower prices with other manufacturers, things are going to change. It doesn’t mean Apple’s products aren’t the best - just that their stock price isn’t going to reach $1000 per share as many previously assured us it would.