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What's happening to Apple's share price?

Karen Haslam | April 22, 2013
Last night Apple's share price declined to $392.05, wiping 44.16% or $310.05 of the value of each AAPL share since September 2012 (the stock closed at $702.10 on 19 September), and dropping to its lowest level since December 2011. In the first quarter of the year Apple was one of the worst performers of the S&P 500 in what is being described as a crisis among investors.

Speaking of falling profit margins. Also causing concern for investors are claims that consumers are purchasing the older, cheaper iPhone models rather than the more expensive iPhone 5. Verizon indicated this in its earnings report released yesterday. The company claimed it sold 4 million iPhones in the quarter, but only half of those were the 4G-equipped iPhone 5.

For investors the concern is that if consumers are choosing older iPhones (and the cheaper iPad mini) Apple will be making less profit. Should Apple launch a low-cost iPhone for emerging markets profit margins could also become an issue.

According to CNN Money, Apple's gross profit margin fell six percentage points over the year to 38.6%.

Apple will be highlighting its profit margins in its financial results, due out next week. During its January financial announcement the company explained that it was changing the way it provides guidance, including gross margins and operating expenses. The company estimated that its gross margin would be between 37.5 percent and 38.5 percent.

4) Fears about financial results next week

It's not only Apple's profit margins that have investors concerned; there is an expectation that earnings will fall short of expectations. It is even considered that Apple may report lower quarterly earnings, something they haven't done in 10 years. There is also concern that revenue growth will be less than usual.

Last quarter, Apple generated profit of $13.1 billion, but that was flat compared with the year-ago period.

In its financial results announcement in January, Apple estimate revenue for this quarter would be between $41 billion and $43 billion. A year ago the company reported quarterly revenue of $39.19 billion.

Among analyst the average estimate is 42.66 billion, ranging from a low of 41.06 billion to a high of 44.18 billion.

On average analysts expect earnings of $10.12 billion ($9.23 - $12 billion). This compares to $11.6 billion a year ago.

5) Samsung S4 to start shipping

Just days after Apple announces its results Samsung is set to launch into a new battle with Apple as it launches the Samsung Galaxy S4 smartphone.

The Galaxy S4 will be available to buy on Saturday 27 April.

The growing competition from Samsung - and Google Android - is another area of concern for investors. However, Apple did account for 69% of the smart phone industry's profits in 2012, according to Canaccord Genuity analyst T. Michael Walkley. Again, if Apple can maintain high profit levels marker share may not matter.

6) Apple has made no 'major' product announcements since October

Some reports suggest that Apple's share price suffers while Apple remains silent about its plans for the future, and the lack of new product announcements may not be helping its cause either.

 

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