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Investors Not Biting on Apple (AAPL)


There have been several pieces of news about Apple (AAPL) recently, but the stock market is not buying them as reasons to think earnings will improve. Shares of AAPL stock are down from almost $206 on November 23 to under $193.

Apple will probably add Verizon Wireless (VZ) to its cellular carrier partnership list next year. Along with AT&T Wireless (T), this will make the iPhone one of the premier handsets among the products being marketed by the two largest carriers in the U.S. China Unicom (CHU), Apple’s iPhone carrier partner in China recently said it sold 100,000 units in the first 40 days that it had the handset available. Apple also sued Nokia (NOK) over several patents, which could slow the movement of the world’s largest handset company into the smart phone segment of the industry.

But, investors believe that Apple’s progress is being undermined by several mistakes the company has made and actions by its competition that could hurt the company.

Research In Motion (RIMM), the maker of the BlackBerry, is moving more aggressively into the consumer market in an attempt to get market share in the iPhone’s stronghold. The BlackBerry brand should help RIM be successful. Most other large handset companies, particularly Samsung and LG, are imitating the iPhones touch-screen features in an attempt to lure customers away. The iPhone, which had no competition when it launched, is now the object of new products from most of the important cell phone manufacturers.

Apple’s early progress in China could be hurt by the number of “unlocked” iPhones in the world’s largest cellular market. The “unlocked” product works on almost all of the Chinese cellular services, which should undermine China Telecom’s ability to rapidly increase sales.

Apple is rumored to be preparing a tablet PC that would have a 10-inch screen. One of the primary uses of the product would be as an e-reader that could be used to allow consumers to view magazines and newspapers on a portable device. Amazon (AMZN) already has a successful product in the market — the Kindle. Apple has to convince potential buyers that its tablet has better features than the hot-selling Amazon consumer electronics device.

Apple announced that it was going to have to delay the shipment of one of its new iMac computers. The rumor is that the screen has a flaw. The Mac has a reputation as the highest-quality portable computer in the market. Any news that undermines that perception of quality potentially hurts the brand. Dell (DELL) and HP (HPQ) have brought touch-screen PCs to market. Some analysts believe that could undermine Mac sales. The Dell and HP computers are priced below the Mac, which may make them attractive in a tight consumer market.

Investors are unlikely to pick up Apple shares until it announces earnings for the holiday quarter. If those miss the mark, Apple stock could sell off to its early September support level of $165 per share.

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