Here’s Why Apple’s Stock Withered This Week

Apple Inc.’s (NASDAQ:AAPL) stock went a little rotten this week from competition concerns, iPad production cuts and supply chain worries. The stock dropped 3.1 percent between Wednesday and Friday amid a 2.9 percent S&P 500 rally.

Investing Insights: Is Apple a Sinking Island?

Here’s a few explanations for Apple’s bad week.

J.P. Morgan Says…

J.P. Morgan offered their take in a research note:

 1) iPad unit cuts at Cleveland Research, 2) CLSA warnings that iPad production cuts are larger than people fear 3) The Kindle Fire is getting plenty of attention and positive reports are going around on units potentially taking share, 4) The stock broke its 50 day which in the past hasn’t meant much of anything, 5) The stock is increasingly being shorted so any negative chatter results in shorts pressing. What does it mean? All of it seems somewhat expected given the iPad chatter in particular.

Ticonderoga Securities Looks to the Apple Barometer

Ticonderoga expressed their concerns after seeing unfavorable numbers from its Apple Barometers. The firm wrote about Apple’s supply chain as its “Apple Barometer” showed the company’s final October sales dropped 22 percent month of over month, below its six-year October sales average of positive 5 percent month over month.

This represented the worst October figures for the Apple Barometer on record.

Also affecting the October Apple Barometer was the challenging current economic environment and possible procurement problems affecting the Apple’s supply chain and share shifts. With Apple prepping for its iPhone 4s launch, September numbers were high but its September and October sales versus historical averages, the Apple Barometer  fell short–approximately 12 percent below past reports.

Ticonderoga sees a strong holiday season for Apple with its iPad 2 and MacBook Air but it plans to keep an eye on the company’s supply chain during the next few weeks.

S&P Analysts Downgrade

And a third explanation included a research note following the downgrade of Apple to Buy from Strong Buy from S&P equity analysts. Their research note included the following:

We still believe AAPL is the preeminent IT company on the planet. However, we see less excitement about products than we have in the past as we approach the holiday shopping season, increasing competition in key smartphone and tablet markets, the impact of the loss of Steve Jobs in a variety of areas from product development/refinement to employee recruitment/retention, and uncertainty about whether AAPL will continue to revolutionize markets as it has over the last decade. We still see notable value, and our target remains $500, but we have greater concerns about risk/reward.

One Bit of Positive News: Hong Kong 

Apple launched its iPhone 4s in Hong Kong on Wednesday and the phones flew off the Apple store shelves within a few hours. One negative for the phone is the Siri assistant doesn’t speak Mandarin. Apple is expected to include this for the phones by March 2012.

The company plans to sell the new phone in mainland China in December.

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