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Apple's Warning Comes Back to Haunt
Andrea Chalupa writes: Apple's share price inched back up today after leading the Nasdaq in a pummeling. The stock is barely up three points this morning after taking an 18 percent nosedive yesterday after two analysts cut their ratings on the company's stock. The tech meltdown yesterday showed that Silicon Valley is vulnerable to the shake up on Wall Street, which saw the Nasdaq reach its lowest level in over three years.
Today, Microsoft, which issued a statement calling on Congress to seriously reconsider and support the bailout, is up 3.23 percent today to 25.80 after falling 8.7 percent yesterday. Steve Ballmer, Microsoft C.E.O., implied a bailout would help rescue the tech sector, which is hurting across the board: Google fell 12 percent yesterday and is up 8.32 percent to 412.41. Yahoo, still trading at a five-year low, is up 3.44 percent to 17.46 after falling nearly 11 percent, and Amazon is up 8.41 percent to 68.72, and Cisco is barely up 2 percent to 22.22, at the time of this writing.
But yesterday's sharp drop by Apple shouldn't have been a surprise. As Footnoted blogger Michelle Leder noted on July 24, Apple warned that this was coming.
"In the [10Q] filing, Apple used stark new language to describe the current economic situation and its potential to have a 'material adverse effect on demand for the Company's products and services and on the Company's financial condition and operating results,'" she wrote yesterday. "The company also used the word depressed to describe consumer spending."
In July, the Consumer Electronics Association released a forecast that Americans' spending on consumer electronics would total $160 billion for 2007 and would be up another ten billion this year.
"What I'm hearing from the distribution chain is that while people didn't stop buying Macs, iPods and iPhones, they are opting to buy the lower end," Shaw Wu, formerly of American Technology Research told the LA Times on Monday. "At some point, we worry that even that is impacted."
