Friday, October 19, 2012

Apple Inc. (NASDAQ:AAPL) Slips To 11-Week Low Ahead of Next Week’s Earnings, iPhone Supply Worries Remain

Shares of Apple Inc.(NASDAQ:AAPL) tumbled Friday by 3% to $614, its lowest level since early August. The stock has been showing heavy selling pressure ever since it had announced the first weekend sales of recently launched iPhone5. Shares of APPL are now off $90 or about 13% from a time high of $705 a month ago.

Although the company managed to get weekend sales record, but it fell analysts’ forecast- even the company failed to match the worst case scenario. The company sold 5 million of iPhone 5 during the opening weekend, which is very less compared to analysts target of 6-10 million during the week.

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Another main reason for the recent weakness is the limited supply by the company for iPhone, which has fueled several analysts to trim their iPhone sales target.

But while many had projected that delayed iPhone 5 sales would be pushed into the December period, continued reports of tight supply has raised worries that the constraints may last into early 2013.

So far, several large tech companied have reported disappointing quarterly earnings, which gives another reason to investors book profit ahead of AAPL’s earnings on Oct 25, 2012.

Analysts are projecting the company to post $8.85 a share on revenue of $36.23, compared to a year ago profit of $7.05 a share on revenue of $28.27 billion.

Last quarter, the company had missed analysts target by $1.05 or 10%, which was quite unusual for Apple.
In fact this time, analysts are cautious if the company meet analysts’ target and also targeting the company to provide more conservative earnings outlook amid uncertainty over the supply of iPhone 5.

An analyst at BMO reduced its iphone estimate by 4 million to 46 million, stating supply constraints. The supply shortage is not the new problem for the company as the demand for iPhone is much larger than supply.

Yesterday’s fall was further sparked after Verizon (NYSE:VZ) commented that they saw supply crunch in the latest quarter. Following this, analyst at Jefferies & Co. reduced its projections r total iPhone 5 sales unit sales in the quarter to 5 million from 8 and 10 million.

Moroever, the company is all set to host a media event on Oct 23, 2012 expected to feature new, smaller iPads as well as a possible re-design of the iMac.

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