Shining the Apple

So the shine is off the Apple. Or is it?

Apple announced that earnings were up 30% from a year ago. Sales were up 40%. And they made more than most observers expected. So why did the shares trade down?

Some say it was the downbeat guidance that they posted for next quarter. After all, the economy is slowing and people may not want to drop $200 on new toys. Others say it’s Apple’s price. At 32 times earnings, you could say that the stock is priced for perfection. And some say that the stock has just come too far too fast. Over the past five years the stock has gone up 16 times. Trees don’t grow straight to heaven.

Whatever the reason, Apple’s action today shows that sometimes bad things happen to good companies. Great products and a commanding market share just aren’t always enough to overcome ennui and skepticism.

I’m not saying that Apple’s a bad company or a bad investment. But with the market asking “What will you do for me tomorrow” a thoughtful review may be in order.


Douglas R. Tengdin, CFA
Chief Investment Officer
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