Charles Haddad’s latest Byte of the Apple column for BusinessWeek focuses on Apple’s stock performance of late. In
No Shine to Apple on the Street, Haddad tries to get to the bottom of why Apple’s stock is as low as it is.
Despite some hot product introductions and better financial performance than many of its competitors, Apple’s stock is still low. Why? Haddad said that it’s because Apple’s stock performance is closely tied to ever-newer product releases. “Apple is a news-driven stock. Its fortunes are tightly tied to the product cycle,” said David C. Bailey, a vice president with investment bank Gerard Klauer Mattison & Co.
As a result, Haddad said, Apple’s stock price is dependent on expectation rather than results, echoing the old adage “Buy on rumors, sell on news.”
It doesn’t help that Apple is in what Haddad calls “the dog days” of its current product cycle. Mac loyalists can be counted on to buy new products, which helps to buoy stock prices. Haddad traces the peaks and valleys of Apple’s stock performance over the past eight months to releases of new products like the PowerBook G4, Mac OS X and the new iBook. Admitting that the market for all PC makers is “as soft as Jell-o” right now, Haddad doesn’t expect product demand to increase until late next year.
Haddad said that his suspicions are confirmed by big analysts who track Apple. Companies like Morgan Stanley Dean Witter are expecting Apple’s stock to trade between $9 and $20 for a while. This shouldn’t be too much for Apple shareholders to bear, though — Haddad said that having Apple stock has “always been a white-knuckle ride.”
“In comparison to longtime Apple investors, dot-com shareholders are pikers. Ha! Many of them bailed after the first collapse. One look at Apple reveals what a ride they’re missing out on,” said Haddad.