As of Wednesday night the stock was down about 3 percent, after having been down as much as 5 percent. And over the past three months, it’s down 22 percent, equivalent to $130 billion in market cap.
The fall was prompted by a story in the financial press Monday morning that Apple was cutting orders to its supply chain “by half.” That lead to a waterfall of bad news and scary headlines. As a stock analyst, I always get suspicious when there is a sudden wave of bad news, especially from vague or unnamed sources. There are very few coincidences in this world. As usual, John Gruber was quick to call all this out, and he linked to several other posts from Forbes and Seeking Alpha, both of which make good points as to why things may not be so bad after all.
And for what it’s worth, I had lunch with a component supplier to Apple on Monday. They get half their revenue from Apple. At least, I think they do. They would never admit to me that Apple was even a customer, much less if they’d just taken a big hit to orders. But they certainly didn’t act like someone who had just seen a quarter of their revenue disappear over the weekend.
Nonetheless, the tech community is once again worried about the long term viability of Apple’s success. I have heard a lot of the old arguments dragged out again: Android is growing faster, markets are saturating, consumers are losing interest. Etc., etc., etc.
I think all of this is overblown.
First, does anyone really question that Apple probably just had an incredible Christmas season? Up until January, it was hard to find an iPhone 5 or iPad Mini in most Apple stores. So despite what we analysts say, consumers somewhere still love Apple products.
Second, Android may be growing faster, but largely through heavy discounting. It is always easy to gain share by cutting prices. But Apple still has immense brand loyalty, and that has to count for something.