Apple's shares fall another $36 before results; IBM's by $17 after

Apple's shares fall another $36 before results; IBM's by $17 after

Summary: Apple's shares have fallen by another $36 ahead of this week's financial results, while IBM's shares fell by $17 following last week's disappointing financial results.

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TOPICS: Apple, IBM
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Apple's shares have fallen by another $36 over the past week, closing below $400 for the first time since December 2011. Last week, I posted that Apple's shares "tumbled to a 52-week low of $400.78"with some expectation that this might be the floor. After all, looking at Apple's cash position and expected profits, a $500 price does not look unreasonable. However, the price has fallen another $36, from $426.51 at the market close last Tuesday to $390.53 today.

During Friday's trading, the shares even hit $386.50. This is a long way from last September's peak at $705.07.

Graph of Apple's share price
Apple's share price has fallen further over the past week. Image credit: ZDNet screen grabs from Yahoo Finance's interactive chart

The fall has a knock-on effect. Companies are used to seeing their stock price increase when they become Apple suppliers, but they are now more likely to see it decrease. This may make them less keen to deal with Apple. It will certainly discourage them from devoting all or most of their production to the American company (see: Apple's dimming luster roils suppliers, investors).

All this means that Apple's next financial results, to be announced tomorrow (Tuesday, April 23), will be watched even more closely than usual.

Analysts already expect Apple's results to be weak, by its own extraordinary standards. According to Reuters, this could mean revenues increase by 8 percent and profits by just 2 percent. A much better result could change the direction of the share price, which is still trending down.

Either way, sentiment has changed over the past six months, thanks mainly to Samsung's success with Android phones. As Harvard Business School professor Clayton Christensen -- author of The Innovator’s Dilemma and the defining expert on disruptive innovation -- said earlier this year, Apple's proprietary devices are being disrupted by the open Android operating system. This is now good enough to serve buyers who were not being served by high-priced iPhones and iPads.

This represents a threat to Apple's future profits, on which its share price depends.

On Friday, IBM's shares also tumbled, registering their biggest one-day drop in eight years, following disappointing financial results. IBM's shares fell by $17.15 (8.3 percent) to $190.00.

The American company is reportedly negotiating to sell its $5 billion x86 server business to China's Lenovo, which has already taken over IBM's PC division.

Graph showing IBM's falling share price
IBM's share price tumbled following disappointing financial results. Image credit: ZDNet screen grabs from Yahoo Finance's interactive chart

According to the Wall Street Journal, "IBM pointed to contracts slipping from the first quarter into the second quarter, possibly because of the early Easter; a slowdown in business spending in China; and the weakening yen" to explain its weak results. In which case, there should be a rebound in the next quarter.

Nonetheless, when two of the leading tech companies see their shares fall, this casts a shadow over the whole industry. It is bound to raise doubts about claims that Dell is worth much more than its buy-out price, for example.

Topics: Apple, IBM

Jack Schofield

About Jack Schofield

Jack Schofield spent the 1970s editing photography magazines before becoming editor of an early UK computer magazine, Practical Computing. In 1983, he started writing a weekly computer column for the Guardian, and joined the staff to launch the newspaper's weekly computer supplement in 1985. This section launched the Guardian’s first website and, in 2001, its first real blog. When the printed section was dropped after 25 years and a couple of reincarnations, he felt it was a time for a change....

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41 comments
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  • Spam spam spam...

    ...please delete the spam account "lateefshah836"
    m3e
  • You can't compete with the competitors that make all your technology

    Even in this day of living off your name these exploding stars quickly turn into a black hole.
    sickntired44
    • What technology would that be?

      Screens made by multiple vendors, including Sharp and LG. Chips made by multiple OEMS, that Apple designs. Assembled at FoxConn. And on and on.
      And please, pray tell, how Apple is not competing? You did see the sales figures, right? You do know that stock price has no bearing on these figures, right?
      .DeusExMachina.
      • he's sickntired of

        facts...likes to make up grade school comments.
        ScanBack
      • Re: how Apple is not competing?

        Losing market share, and being forced to bring out profit-killing products (Ipad Mini).
        ldo17
        • First that has nothing to do with what I wrote

          second, you need to check your facts. There is zero evidence that the mini has affected profits.
          .DeusExMachina.
          • Re: First that has nothing to do with what I wrote

            You asked a question. You even begged for an answer: "And please, pray tell, how Apple is not competing?". I gave an answer. You don't like it?

            You know what you can do.
            ldo17
  • Payback's a bitch

    Apple has been cleaning Samsung's clock in patent court around the world. I'm guessing Cupertino was feeling pretty good about that for awhile. Now that Samsung is cleaning Apple's clock in the smartphone marketplace, I'm guessing Cupertino's not so happy.
    Sir Name
    • How, exactly, is Samsung "cleaning Apple's clock" in the smartphone market?

      The iPhone still outsells all Android phones COMBINED on every carrier that sells it. Samsung only beats Apple because their phones are available on more carriers. So, in other words, where they don't have to compete against Apple.
      Payback my ass.
      .DeusExMachina.
      • "outsells all Android phones COMBINED on every carrier that sells it"

        First of all, that's not true. Even windows phone outsells iPhone is some of the crappy little markets.

        Second: What you described is called winning the battle but losing the war.
        mrefuman
        • Name a carrier then.

          You can't because there aren't any. And no, Windows phone does NOT outsell the iPhone on ANY carrier.
          .DeusExMachina.
          • MTS Russia

            In Russia, iOS is the number 4 (yes FOURTH!) mobile OS. 3rd is Windows!

            From www.mtsgsm.com/blog/
            "According to the IDC, data presented in Barcelona, in Q4 2012 Windows Phone overtook iOS and became the third most-popular OS for mobile devices in the Russian market with a market share of 7%"

            In markets where consumer credit is tight and mobile phones are rarely sold on hire purchase , iPhone sales are not good.
            Russia, and credit stricken southern Europe, India, Africa and South America are not doing so well for iPhone.
            When iPhones have to sell at full price, they just don't move.
            warboat
      • Re: on every carrier that sells it.

        In most of the world, carriers are not the only sellers of phones.
        ldo17
        • By far the majority of new phones are sold by carriers into the channel.

          .DeusExMachina.
      • Plausible deniability

        "The iPhone still outsells all Android phones COMBINED on every carrier that sells it."

        Proof or GTFO with this BS line
        warboat
        • Burden of proof is on you

          As I am making a existentially verifiably claim, you can debunk it with a single example, whereas I would have to list EVERY carrier, and their market numbers.
          Which is why I have CONTINUALLY pressed you in specific to respond, and you never have.
          .DeusExMachina.
          • plausible deniability

            you make the bold claim, the onus is on you to back that up with data from ALL carriers or your claim is baseless.
            The fact is, your claim IS baseless and pure drivel.
            warboat
          • if I list a carrier will you respond with a retraction?

            will you admit that you hinged your claim entirely on plausible deniability?
            warboat
  • Ho Hum

    Another reminder that the stock market is just a big poker game played by the brokers with your money. The analysts extrapolate the upswings to infinity, and the downswings to zero, and the brokers make money either way. If you think Apple is an "exploding star" when its stock is overhyped, and a "black hole" when the stock price inevitably falls, you are buying into the soap opera of reward and punishment that the brokers are selling. That goes for all companies, by the way, not just Apple, or IBM, or Samsung, or Microsoft.
    Biotechguy
  • You know, I'm thinking it's just about time to buy some more Apple stock.

    It may not have hit bottom yet, but for some strange reason I think the current trend will reverse before the end of the fiscal year. Why? some product that nobody is really expecting--which means none of these current "iWatch" concepts.
    Vulpinemac