Apple’s (AAPL) stock investing shares fell almost $28 to $127.90 in the company’s earnings report for December quarter. Apple (AAPL) delivered a 58% growth in net income for the period. But it issued a forecast for the current quarter that was below Wall Street’s predictions. This drop put Apple (AAPL) stock investing shares at its lowest point since August.
Peter Oppenheimer, the Chief Financial Officer, reported that Apple (AAPL) expects to earn 94 cents a share on $6.8 billion in sales for its second quarter. This forecast fell below the consensus estimates of analysts who estimated earnings at $1.09 a share on revenue of $6.99 billion.
Normally, Apple (AAPL) gives conservative forecasts, but the latest one was particularly disappointing. In Tuesday’s stock trading session, nearly every major tech stock lost ground in broad due to the fear of recession. Where were the stock warning signs?
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Caris & Co. analyst, Shelby Seyrafi, reduced his Apple’s (AAPL) rating to above average from buy, and he also cut his target price to $165 a share from $225. He said that he was disappointed in iPod sales in the company’s first quarter. Others saw a stock investing opportunity. Charlie Wolf of Needham & Co. raised his rating on Apple’s (AAPL) shares and left his target unchanged at $235 a share.
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22.1 million iPods were sold in fourth-quarter; however, this is only a 5% increase in units over the prior year. Many analysts forecast Apple (AAPL) to sell as many as 25 million iPods during this quarter. There was a lot of emphasis put on the sale of the iPod.
A new iPod was introduced in September in two models at $299 and $399. This was the most expensive iPod brought to market. Andy Hargreaves, of Pacific Crest Securities, said that the small growth suggests that the market for MP3 players may be slowing and “may be reaching saturation.” This saturation is believed to be because of Apple’s (AAPL) increased focus on iPod touch. This focus towards the higher-priced iPod touch helped the average selling price of iPods increase 11% from a year ago to $181. Hargreaves holds a rating of $210 a share price target on Apple’s (AAPL) stock, expecting high returns on investment.
While iPod sales declined, there was a 45% rise over a year ago in Mac sales. This was three times the growth rate of PC shipments world wide. This was likely because of an improvement in making the Mac capable of running Microsoft (MSFT).
Apple Chief Executive, Steve Jobs, said that the earnings growth results showed its highest quarterly earnings and sales in history resulting in high returns on investment. Apple (AAPL) credits its fourth-quarter to a strong holiday season. Not only did they sale 22 million iPods, they sold 2.3 million Macintosh PCs and 2.3 million iPhones in the last quarter of the year.
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