Apple Stock Rewind Buzz: Wins, Woes, The Fight, The Gift and Risk

Here’s your Cheat Sheet to everything important that moved the needle for Apple’s stocks this week:

Monday

Apple (NASDAQ:AAPL) managed to continue its run into the green from Friday by closing just above 1 percent higher on Monday at $479.93. There was some more discussion about the possibility of a lower-cost iPhone from the company, with two conflicting viewpoints. Meanwhile, on Tuesday chief executive Tim Cook is scheduled to speak at Goldman Sachs’ technology conference before sitting with Michelle Obama in the First Lady’s box for the President’s State of the Union address later in the night.

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Here are the top stories that created the buzz around Apple on the day:

A Low-Cost iPhone or Not?

Topeka Capital’s Brian White wrote in a research note that Apple was almost certain to unveil a cheaper iPhone device around the mid-year mark. The research firm discovered several unreleased iPhone prototypes during its market research at the end of last year and added that it believed the device was set to give Apple a bigger play in several high-potential markets, including China, Brazil, Russia, and India. But White’s assertions, the details of which can be read here, were in opposition to comments from Pacific Crest analyst Andy Hargreaves.

Hargreaves said the possibility of the existence of a new, low-cost iPhone was a bad one for Apple and will not only result in a loss of status for the company, but also the cannibalization of its much higher-margin sales. Such a device would violate Apple’s “core operating principles,” according to Hargreaves, because there was not “a single thing that a low-priced iPhone would do better than the current iPhones…” (Read more)

Look Out for iWatch

Meanwhile, it was reported that Apple was experimenting with a wristwatch-like smart device made of curved glass in its research and development labs and had even discussed it with its main manufacturing partner, Hon Hai Precision Industry. The device, straight from science fiction movies, would operate on Apple’s iOS platform. Sarah Rotman Epps, a Forrester analyst who specializes in wearable computing and smartphones, said Apple had made a lot of hiring in that specific area recently and was potentially the “biggest player of the wearables market in a sort of invisible way…” (Read more)

Australia Wants Answers

In some bad news for Apple, it is among three companies to have received subpoenas to be present at a March 22 public hearing of the Australian government and address allegations of unfair pricing practices. Australia’s House Committee on Infrastructure and Communications summoned Apple, along with Adobe (NASDAQ:ADBE) and Microsoft (NASDAQ:MSFT), to explain why their products sell at a much higher premium in that country compared to international prices. The probe first launched in July last year… (Read more)

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Wednesday

Most of the buzz around Apple (NASDAQ:AAPL) on Tuesday was generated from comments made by chief executive Tim Cook at the Goldman Sachs technology conference in San Francisco. And while analysts and watchers were busy reviewing the question-and-answer session from Cook, investors reacted quickly, and disapprovingly. Apple dropped more than 2.5 percent to close at $467.84, reversing the gains it picked up on Monday. Here is a cheat sheet to the stories around the company:

Resolution Deadline

With two weeks to go for its annual shareholders meeting, Apple is planning to respond quickly to the lawsuit filed against it last week by David Einhorn’s Greenlight Capital and find an early resolution to the conflict. The company is reportedly set to make a filing on Wednesday. Greenlight will follow with its own response on Friday before a hearing is set for early next week.

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Greenlight, the hedge fund led by David Einhorn, filed the suit in an attempt to stop Apple from putting limitations on high-yield preferred stock options for shareholders. If Apple’s proposal passes, the company would have to put preferred security to a shareholder vote each time it wants to issue it. The proposal is set to be voted on during the annual meeting.

It’s clear that Apple is hoping to solve the issue as early as it can so that it doesn’t take center stage at the meeting. Late Monday evening, Judge Richard Sullivan of the U.S. Court for the Southern District of New York granted the company’s request to fast track the case… (Read more)

Lawsuit A ‘Silly Sideshow’

Apple chief executive Tim Cook called the ongoing lawsuit proceedings versus Greenlight Capital a silly sideshow to larger capital allocation discussions, adding that the proposal being opposed by the hedge fund had been designed for the benefit of shareholders. “I find it bizarre we find ourselves being sued for doing something that’s good for shareholders,” Cook said while answering a question during the Goldman Sachs technology conference on Tuesday.

“It’s a silly sideshow, honestly … This is a waste of shareholder money, it’s a distraction, and it’s not a seminal issue for Apple.” Cook also defended the allegation from Greenlight’s David Einhorn, who said Apple possessed a “depression-era mentality” and was not moving with the times… (Read more)

Apple’s Ecosystem Wins

Cook had more to say at the conference. He also spoke about the company’s ecosystem stickiness, adding that Apple was not worried about the possibility of falling margins because it does not consider itself solely a hardware company and had other ways of making money.

“Because we’re not a hardware company, there are other things we’re doing and could do to have revenues and profits flow,” Cook said. “We don’t look at the sale of a product as our last part of the relationship with the customer, it’s the first. We are very focused on that. There’s also financial benefit in doing that.”

Specifically addressing the question of falling margins, Cook said that lower margins have to be often accepted for a product for strategic reasons, such as making an entry into a new sector… (Read more)

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Wednesday

Apple (NASDAQ:AAPL) managed to give up the small gains it made earlier in the trading day by closing just about 0.2 percent down at $467.01 on Wednesday. While the stock was up early presumably due to news that the company had a 100-strong team working on a new wristwatch-like product, a few setbacks later on erased the optimism. Here is a cheat sheet to the top stories related to the stock on the day:

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A Second Suit Comes Biting

Chief executive Tim Cook may consider Greenlight Capital’s lawsuit against Apple nothing more than an unnecessary distraction, but it appears the company will have to deal with two of those in the run-up to its annual meeting on February 27. A second investor filed a lawsuit against the iPhone maker on Wednesday, citing concerns similar to those mentioned by David Einhorn’s Greenlight hedge fund.

Brian Gralnick of Elkins Park, Pennsylvania, who has been an Apple shareholder since 2007, filed the suit with the U.S. District Court in New York in an attempt to block the company from voting on two proposals at its meeting. Arnold Gershon, a lawyer for Gralnick, said the investor will try and be heard during the scheduled February 19 hearing of Einhorn’s lawsuit. “The case has some overlap with the Einhorn case, but it is a broader case,” Gershon said… (Read more)

Trademark Woes in Brazil

Apple has now officially lost the right to use the iPhone name to sell its smartphone in Brazil, with regulators deciding to honor an earlier awarding of the trademark to a local tech firm. Apple’s request to be able to keep using the name was rejected by the Brazilian Institute for Industrial Property on Wednesday. The right instead went to IGB Eletrônica SA, a Brazilian electronics maker that since December has been selling a smartphone running on Google’s (NASDAQ:GOOG) Android operating system under the iPhone name. IGB’s Gradiente SA unit had applied to register the name in 2000, while Apple launched the first version of its smartphone in the U.S. in 2007… (Read more)

Mac Loosens Price Tag

With the personal computer market increasingly squeezed by the arrival of tablets, Apple has decided to start wooing Mac customers with an aggressive pricing strategy. The company introduced slight upgrades to its MacBook line on Wednesday, and alongside, announced that it was dropping prices of several of its notebooks. Worldwide PC shipments are falling in the face of the rising popularity of tablets. Apple, while benefitting from the rise of tablets, also reported a steep decline in Mac sales in the holiday quarter. The company sold 4.1 million Macs in the December quarter, down 21 percent from a year earlier… (Read more)

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Thursday

After being in the green for most of the day, Apple (NASDAQ:AAPL) closed 0.09 percent down at $466.59 on Thursday as the limelight stayed on the company’s capital allocation practices. Here are the top stories that moved the stock on the day:

Apple Files Response

David Einhorn told the Apple top management that getting shareholder vote would be an unnecessary roadblock to issuing preferred stock, the company said in a court filing on Wednesday. Apple was responding to a lawsuit filed by Einhorn’s Greenlight Capital fund against it in the U.S. District Court in Manhattan, hoping to block a February 27 shareholders’ vote on a proxy proposal. Einhorn wants Apple to issue perpetual preferred stock with a 4 percent dividend to existing shareholders.

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Apple said in its response that while it was not opposed to issuing preferred stock, it wanted to ensure that shareholders had a say in the matter. Einhorn “viewed requiring shareholder approval for his … proposal as a ‘roadblock that was not needed’,” Apple chief financial officer Peter Oppenheimer said in the filing.  “We told Mr. Einhorn that Apple was considering his proposal, but that the Board would not issue his proposed perpetual preferred shares without shareholder approval,” Oppenheimer added… (Read more)

Gift For Investors

With its capital allocation practices squarely in the limelight, Apple is set to pay out its third dividend sum to shareholders on Friday. The company is scheduled to distribute about $2.5 billion at $2.65 per share across its 939 million outstanding shares. Shareholders on record as of February 11 will receive payment. While Apple did not have a dividend system in place for more than 17 years, it initiated a $45-billion worth plan last year under chief executive Tim Cook while its stock hovered around $550 per share. Apple’s share price broke the $700-mark in September, but has since fallen fairly rapidly and consistently over the last few months… (Read more)

Fighting It Out

Apple may eventually have to go down the settlement route, but for the moment, the company is choosing to fight for the right to keep using the iPhone name in Brazil. The California company is challenging a ruling made by the company’s trademark authority, Brazilian Institute for Industrial Property, on Wednesday.
Apple lost the right to the trademark in the country on Wednesday after regulators ruled it belonged solely to IGB Eletrônica SA, a Brazilian electronics maker. Gradiente will now need to prove in over the next 60 days that it made use of the trademark between January 2008 and January 2013 in order to keep its trademark rights… (Read more)

Don’t Miss: Apple Will Fight For the iPhone.

Friday

The tumbles of Apple’s (NASDAQ:AAPL) stock price don’t appear to be ending. It closed Friday 1.36 percent down at $460.25 for a total fall of more than 3 percent for the week. Here are some of the top stories from the day for the company:

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A Lawsuit Freeze?

A federal judge urged Apple and Samsung (SSNLF.PK) to agree to forget about their patent lawsuit scheduled for trial next year until the two companies’ appeal on a separate verdict can be dealt with. U.S. District Judge Lucy Koh asked the two smartphone rivals if it was really necessary to start another major trial — scheduled for March 2014 — while the discussion on the famous jury verdict from their August case continues.

“I was going to ask if we can stay this case while the other appeal is going on,” Koh said during a hearing in San Jose, California. “I don’t know if we need two cases on this.”

Koh added that any possible resolution of the conflict would be “global” and cover patents being contested in either lawsuit.

A few aspects of the appeal from the August result remain active. Apple won a $1.05 billion verdict last year after a jury decided Samsung had violated six of its patents. However, the iPhone maker’s request for a permanent sales ban against several of the Korean company’s products was not granted. Apple has appealed that decision. Separately, both companies are appealing rulings requiring them to reveal financial information they want to keep secret…(Read more)

Widening the Reach

Apple is set to expand its retail distribution after reportedly being close to a deal with office supplies chain Staples (NASDAQ:SPLS). Several Staples executives sent out tweets on Friday saying the chain’s U.S. stores would start selling Apple products in the near future. Regis Mulot, the vice president of international human resources at Staples, announced on his Twitter account that after Canada, Apple products were on their way to the company’s U.S. stores. Although Mulot later deleted his tweet, Erin LaFlamme, a strategic accounts coordinator at the company also mentioned the development. Mike Goggin, a field services manager at Staples, added that the deal had been closed out… (Read more)

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Security Risks

It may not be as big as the maps debacle, but another software problem is threatening Apple’s reliability reputation. And the biggest hit for the company may come from the enterprise sector, where Apple has been trying hard to make inroads over the past few quarters. According to reports, an error in Apple’s latest iPhone operating system update is causing traffic overload issues for businesses. Microsoft (NASDAQ:MSFT) has advised customers to block iOS 6.1 from their corporate networks because the software update is causing Microsoft’s Exchange email software to overload with traffic. The iPhone maker also confirmed another flaw in iOS 6.1 that lets users bypass the password lock screen… (Read more)

Apple closed out the rollercoaster trading week at $460.16 per share.

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