
Apple's Shares Swallow Biggest Loss in Four Years - rpm4321
http://www.reuters.com/article/2012/12/05/us-apple-shares-idUSBRE8B40VK20121205
======
josteink
Someone are also speculating this to come from China Mobila signing a deal
with Nokia for its Lumia Windows-phone 8 for it's 700 million subscribers,
potentially lowering the iPhone's market-share among smart-phones to well
below 10%.

It seems pretty clear the iPhone has peaked, and that leaves Apple the iPad
its only remaining mega-profitable venture. A venture increasingly facing
competition from much cheaper Android-devices, which people are now buying.

Apple needs to get back into the innovating business as opposed to the
lawsuit-business and quick. This minor drop is just a warning about that.

~~~
mtgx
Apple never passed 10% in China. Android has 90% right now in smartphones
there.

<http://www.techinasia.com/android-market-share-china-2012/>

Plus, it sounds very unlikely the investors sold their stock because China
Mobile chose Lumia 920. It's just another phone like many others on China
Mobile, and it's not like it's Nokia's first sale in China. What they would be
more concerned about is that Apple is not going to get the deal with China
Mobile at all, or not in a very profitable way, after China Mobile has already
made it clear in the press that they don't care much for Apple's demands.

Apple has learned to get its way with charging carriers the full $650 retail
price for iPhones (which are $200 worth of components), and I think some
carriers are going to have enough of it soon, and start asking Apple to give
them discounts for volume, just like they do with every other manufacturer.

------
dakrisht
Not sure I see Apple hitting $700 ever again

Supply chain problems? Sure. Stale products? Possibly. Demand dropping? Maybe.
Samsung destroying them in sales? Definitely. Tim Cook? Not helping. Ran out
of ideas? Haven't really anything but refreshes. iPhone 5S in June? Going to
be nothing special.

I think the market is waking up, consumers still have a ways to go but they'll
get there...

~~~
Hari_Seldon
Strongly disagree, not being able to keep up with demand is not a bad problem
to have. As for being out of ideas, Please - the competition are mainly me too
products. No one else releases actual sales numbers and many android handsets
are free or cheap so are not in the same market as Apple.

~~~
CamperBob2
_Strongly disagree, not being able to keep up with demand is not a bad problem
to have._

Yeah, actually, it is. I've heard they're still having supply chain problems
with the iPhone 5. If true, that means that they've made some fairly serious
mistakes that they haven't made before.

~~~
Steko
"haven't made before"

Pretty sure they have had "supply chain issues" with every single iteration of
the iphone and ipad.

~~~
CamperBob2
They have, but only for the first couple of weeks. How long has the iPhone 5
been out now?

~~~
Steko
"only for the first couple of weeks. How long has the iPhone 5 been out now?"

Two months. Let's see how the Spring 2013 ipad was doing two months in.

[http://www.slashgear.com/apple-new-ipad-supply-situation-
eas...](http://www.slashgear.com/apple-new-ipad-supply-situation-eases-
again-24229808/)

It also really bears mentioning that Apple used to roll out globally over 3-4
quarters to manage supply. This time they pretty much did the whole world in
one quarter. There's some interesting discussion that this presages a new
standard 6 month release cycle.

------
itry
The big questionmark I see with Apple is: They artificially reduce the
usefulness of their products. Can this strategy work out in the long run?

They market themselfes as uber-user-friendly. But thats not the feeling I get
from their devices. I often feel frustrated by my ipad. Examples:

* I was on holiday in a hotel. Before leaving in the morning I looked up the road map of the local subway stations. They had a nice PDF so I wanted to save it. I didnt find a menu entry for that. I thought "Whats going on here? Where do you hide something as simple as the save command, Apple? I dont have time for searching!". In a hurry, I went to the internet for help and Googled "ipad save pdf". Answer: You cannot do it. What the fuck? You sell me a computer and then you dont allow me to save files on it? A real pain for no reason. I grabbed my android phone from my pocket, saved the PDF and was ready to go.

* Some days ago. I went out for lunch with a friend and wanted to show her a couple of photos I recently made. So I plugged my ipad into my notebook with the usb cable to copy the photos over. When I dragged the photos onto the ipad i got "action not supported". What? I got a strange feeling... googled "copy photos to ipad". And again... not possible. Is this a joke? Ok, so started a webserver on my notebook and then copied one by one in Safari.

Yes, I probably could achieve those actions with additional software. Itunes
on my other machines and some apps on my ipad. But I dont want to. I dont feel
comfortable with that. I have certain expectations about the basic functions
of a computer. I have enough other tablets, phones and notebooks laying
around.

* Development. Last year I hired a programmer to write a special tablet software for me. When we planned to go ios or android, from what I understood with ios you have to jump through a lot of hoops to get the software on your tablet. While on android you can just get an apk file and run it. So it was a no brainer to go with android. And it worked like a charm.

I heard similar stories from people who wanted to copy mp3s over to their ios
devices. And from people who wanted to use their iphones for tethering. I told
them "Well, on my android, theres a button for that. It must be on your iphone
somewhere too". Just to find out, that even the iphone hardware would support
it, there is no software for it built in.

Can that work? Artificially reducing the usefulness of your own product? Even
though the competition is offering fully functional products?

Are there any historical examples?

~~~
snprbob86
PDFs are easily saved by selecting "open in iBooks". Or, you can bookmark a
PDF by URL.

~~~
itry
I dont see "open in iBooks". I have an ipad2. Does it have this?

~~~
egze
Do you have iBooks installed?

~~~
itry
Not that I know of. If I have to do this, then please see the "additional
software" part of my post.

~~~
ghshephard
It's a free install. They don't include it as part of the operating system so
they can upgrade it on an independent cycle. iBooks is one of the "Ten Apps
that every iPad User should have" I'd also recommend GoodReader - which should
be on every iPad (Except the US Air Force, who got worried it was written by a
Russian)

~~~
DominikR
It doesn't make sense to argue about this, since different users expect
different things from their computers.

Either you think that users should be able to save any files they want to
their devices (and move them to other devices), or you don't.

Personally, I wouldn't accept this even if iBooks was preinstalled. There are
so many other file types that you just cannot move/save.

------
neya
I would love to see an ardent 'fanboy' like MG Seigler write an article on
this. Because he wrote a huge advertorial when the shares rose up 6%.

~~~
dakrisht
MG Siegler - unbelievable that guy - never written anything bad about an Apple
product. Somehow even managed to like the iPad mini's poor display. What a
clown.

~~~
neya
He's not just a clown, he's a _clever_ clown. He knows how to bring in
pageviews by creating controversies amongst his readers, which is why he is
still 'respected' by the people who hire him to write - Because pageviews are
everything for them.

~~~
josteink
Also referred to as a "troll" in all circles not blindly apologetic to Apple.

~~~
dakrisht
Most certainly a big-time King Troll that guy

------
sami36
Undoubtedly, Apple will continue to grow & be profitable. The question is
whether they'll be able to maintain those fat 40%+ gross margins on their
flagship products.

I'm a huge fan of Apple but even I would start to question the wisdom of the
iPhone 5 costing 649 $ (unlocked) vs a very capable & well-specced 349 $ Nexus
4. The same could be said about the iPad Mini & the Nexus 7. It's not the
Apple products have lost any of their shine, it's that Nexus Devices have
gotten a lot better.

Google's OS is getting polished by the day (Google Now's today update) & is
slowly but surely eroding the advantage Apple once had in mobile OSes.
WallStreet is expecting those margins to compress & that's affecting their
valuation.

~~~
kunaalarya
They can make a capable and well specced Nexus 4 for $349, but they're not
making any money off of it, which doesn't make it economically sustainable in
the long term. It's the same thing with the Nexus tablets. They're selling
them so cheap so they can gain marketshare. If it picks up and starts selling
like hotcakes, they'll have to take it off the market before every Android
manufacturer starts looking for other platforms because there would be no
reason for them to sell phones at a loss.

Source:
[http://www.knowyourmobile.com/blog/1666557/google_said_to_be...](http://www.knowyourmobile.com/blog/1666557/google_said_to_be_taking_a_237_hit_on_every_nexus_4_it_sells.html)

~~~
sami36
I agree, but only partially. Many companies thrive on 10% or less operating
margins. Amazon, Walmart come to mind. I'm not saying AAPL shouldn't make a
profit, I'm saying it's going to have to come down a little.

Now, as far as GOOG selling their tables at cost. It's because Google is not a
hardware company & does not expect their margins to come from devices. If you
step back a little to contemplate the entirety of their business plan, you'll
see that the see devices as conduits for their services & that's where their
profits comes from, ad impressions.So, the fact they're selling their devices
to break-even is only a piece of the puzzle.

------
ohwp
Apple is Dead (<http://www.paulgraham.com/microsoft.html>).

Lately I had to think about PGs essay "Microsoft is Dead". And I think the
same is happening to Apple. Imho that's a good thing for consumers, developers
and even Apple.

Previous discussions:

<http://news.ycombinator.com/item?id=9770>

<http://news.ycombinator.com/item?id=2085601>

------
ghshephard
[http://seekingalpha.com/article/1046581-the-reason-behind-
ap...](http://seekingalpha.com/article/1046581-the-reason-behind-apple-s-
beating)

"“At this point, the most plausible explanation is not very reassuring. It
seems that COR Clearing is increasing Apple’s margin requirements to 60% from
30% due to excessive concentration,” Santos writes. “This is supposedly
leading to mechanical selling to re-establish maintenance margins of leveraged
traders.”

------
Cookingboy
Usually large cap stocks mean less volatility and more fundamental based
trading, but Apple is looking more and more like a special case. It has the
largest market cap yet people treat it very emotionally and it is being traded
heavily by both large institutional investors and small retail investors,
often for completely different reason. (For example the recent sell off was
triggered by investment firms re-balancing their positions at the end of the
year, but that combined with the fiscal cliff thing spooked a large number of
retail investors as well, thus triggering an even larger sell off) The end
result is it can seem unpredictable and the stock trades like a penny stock.
There is a Chinese saying "The bigger the tree is, the more it sways under the
wind", maybe that's what's happening here?

------
kunaalarya
There's other reasons for the drop outside of company performance. This is all
based on stock prices and nothing fundamentally has changed. Apple is cheap in
comparison to other related companies. Especially with $120B+ in the bank -
expected to be $150B in a quarter or so.

From a comment on VentureBeat that seems very plausible for a drop:

The reason why Apple sold off today is that clearing firms are raising their
margin requirements for positions due to fears of being too heavily
concentrated in the company. One firm, COR Clearing, raised its margin
requirement to 60% from 30%. Doubts regarding their current and upcoming
product lines have already been priced in for weeks; this price movement seen
today was the result of advanced algorithms scanning the news and executing
trades, and investors who traded on margin selling shares to meet the new
requirements, all of which put heavy downward pressure on the stock.

[http://venturebeat.com/2012/12/05/aapl-sheds-a-yahoo-yelp-
an...](http://venturebeat.com/2012/12/05/aapl-sheds-a-yahoo-yelp-and-linkedin-
worth-of-market-cap-35b/)

------
WildUtah
Apple's price-to-earnings ratio is in the low teens, below the market average.
Usually a growing tech company is much higher.

Those earnings largely depend on the ability to sell iPhones for $700-750
each, including carrier subsidy. Google just proved they could sell the Nexus
4 for $299 unlocked without subsidy. How much longer can Apple expect the
carriers to play that game? At $500 each or even $400 Apple would be
enormously profitable but maybe not biggest-market-cap-in-the-world
profitable.

~~~
leak
I'm not sure the carriers have a say in what Apple charges. It's probably the
market. People go nuts for the iphone. Lines still happen for the iPhone.
That's what sets the price. I don't know how many lines were made for the
Nexus. As awesome as Nexus or any other phone may be, they're definitely not
on the same market level as the iPhone, in terms of popularity not in terms of
percentages.

~~~
vidarh
A market segment that makes up a smaller and smaller proportion of the market
goes nuts for the iPhone.

That means that carriers have less and less incentive to care about whether or
not Apple walks away from the negotiating table if they ask for lower prices.

Apple will still have the diehard fans who are willing to buy unsubsidised
directly, if the iPhone market share dips low enough that carriers see the
iPhone as optional enough that they feel they can afford to lose it, Apple
will have to choose reductions in sales or lower prices.

------
logn
"The sell-off, fueled by a forecast ... that the iPad maker is continuing to
cede ground to rival Google Inc Android gadgets"

That's an unfair comparison. Google doesn't directly make money off of
Android. A better comparison would be Apple to any other single Android
manufacturer.

~~~
nmridul
It doesn't matter whether Google is making money or even loosing it. What
matters for the Apple shareholders is whether Apple can make money.

If more people are going to buy Android phones, then less people are going to
buy Apple. It means less people getting locked into their eco system. That is
not good for their future.

So you sell off your shares and take whatever you can get from them.

------
camus
Apple still has plenty of cash , and its fundamentals are strong. They may
have been over priced for a fews years it's true but they'll hit the 600$ a
share soon , i'm sure job didnt "left" without some new ideas to exploit. Tim
Cook might however not be the best CEO for Apple.

~~~
intended
Tim Cook definitely hurts for not having Jobs' Reality reality distortion
field.

Just thinking about it recently, and I'm surprised that they manage
expectations before the launch a little better. Most people were expecting a
jaw dropping new phone.

Instead they got the i5 and Tim Cook.

I suspect if it was Jobs they would have got the i5 but along with : "I spend
a lot of time on my devices just listening. And you know how much you pay for
_good_ sound? So we made these amazing, beautiful and cochlear perfect (tm)
headphones which are world standard, and only @ 25. This is why Apple is the
cross roads of liberal arts and Tech."

And then apple would have made a killing on selling overpriced head phones
with a 400% profit margin, while everyone ignores the Meh-ness of the phone
itself.

~~~
camus
true ! upvoted.

