Apple lost almost a quarter of the market capitalization since the beginning of the year, as company’s shares fell under $400 for the first time since December 2011, amid fears company’s sales slow down in an increasingly crowded market, which is fast approaching the saturation.
Apple stock on Wednesday in New York closed down 5.5% to $402.8, the lowest closing quote at the end of 2011, 24% lower than the level at the end of 2012. Apple shares reached during the trading session a minimum of $398.11, the lowest level since December 2011. Today the stock fell under $392 around 4PM (EST) on NASDAQ.
Apple in September reached a record price of $705.07 per share and the market capitalization of the company then briefly exceeded $660 billion. Now (4PM EST) the market cap is around $368 billion.
Cirrus Logic, manufacturer of audio chips, which are used in the iPhone and iPad, announced that it has too much parts in stock, a situation which suggests a slowing of Apple sales. Approximately 91% of Cirrus Logic electronic components go to Apple.
Previously, the Taiwanese group Hon Hai Precision Industry, which owns the electronics manufacturer Foxconn, reported the steepest revenue drop in 13 years, also indicating slowing sales of smartphones, tablets and computers. Foxconn is the largest supplier of Apple, assembling most of the iPhone and iPad models.
Apple revenue rose to $156.5 billion last year from $24.6 billion in 2007, the year the iPhone launched. The decline in Apple shares, which have lost about 40% since the record high in September last year, is determined by investors’ fears of potential future development and growth of the company, in an increasingly crowded industry.
iPhone, the main source of income and profit of Apple, compete in a market that is rapidly approaching saturation, while the company’s successful new products such as the iPad mini, provide a lower profit margin.
CEO of Apple, Tim Cook, who took over the company after Steve Jobs’ retirement, previously warned investors not to consider isolated cases from vendors as indications of the company’s financial situation.
Some analysts believe that the accumulation of stocks reported by Cirrus Logic may be due to Apple’s transition to a new supplier or opt for a new Cirrus product without notifying the company in advance.
Apple reported for the last three months of 2012 a profit increase of 1%, the lowest since 2003, to $13.1 billion, while sales rose 18% to $54.5 billion. Both results were below analysts’ estimates, mainly due to lower than expected demand for the iPhone.
For the second fiscal quarter, during January-March 2013, analysts expect a 18% decrease of net profit to $9.5 billion, the first decline in 10 years.
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