Apple has dropped 9.9 percent since reaching a record on April 9, through April 20, the biggest nine-day slide since August. Fueling the descent were reports indicating a possible shortage in key components for mobile devices and a decline in sales of the iPhone at Verizon Wireless, the top U.S. mobile phone company. Some traders also took cues from trends that show there’s little precedent for surges like Apple’s.
Investors will find out whether the concerns are warranted from a fiscal second-quarter report tomorrow that’s predicted to show profit rose 55 percent while sales increased 48 percent from a year earlier, according to data compiled by Bloomberg. Apple is benefiting from the release of the iPhone 4S in China and 21 other countries, and the debut of a new iPad. If results fall short, the stock decline may resume.
Apple slid 2.5 percent to $572.98 on April 20, cutting this year’s increase to 41 percent. The 48 percent gain in the first quarter was the biggest since the last three months of 2004.
Traders and investors who look to history for a guide see few companies of Apple’s size that have gained so quickly. Rapid ascents by technology bellwethers in the 1990s were often followed by equally dramatic plunges.
Apple’s market value gained more than $250 billion in four months through April 9, more than International Business Machines Corp. (IBM)’s current value, data compiled by Bloomberg show. That’s the most since the 1990s technology bubble, when Cisco Systems Inc. (CSCO) grew even more, expanding by more than $350 billion in eight months, while Intel Corp. gained more than $230 billion in four months.
Apple has represented more than 4 percent of the Standard & Poor’s (SPX) 500 Index’s value since Feb. 28, data compiled by Bloomberg show. General Electric Co., Microsoft Corp. and Exxon Mobil Corp. all reached the 4 percent threshold during the past 13 years. None stayed above that level longer than 10 months. Cisco lasted nine days.
Another report last week showed a drop in iPhone sales. Verizon Wireless said its iPhone sales fell to 3.2 million in the first quarter from 4.3 million in the preceding period, when the new iPhone 4S was released.
Bullish share-price predictions by Apple watchers, including Gene Munster, an analyst at Piper Jaffray Cos. who set a $1,000 price target, fueled speculation that Apple would become the first U.S. company worth $1 trillion.
Concerns over the iPhone aside, most analysts are sticking to projections that Apple shares will keep rising. There’s only one analyst -- Edward Zabitsky of ACI Research -- who recommends that investors sell Apple, compared with 48 buy ratings, according to data compiled by Bloomberg.
Some fund managers are also projecting that Apple will rally after tomorrow’s earnings report. The company will probably say net income rose to $9.95 a share, the average analyst estimate compiled by Bloomberg. Except for one case, Apple has released better per-share profit than analysts were predicting in each of the past 28 quarters, data compiled by Bloomberg show.
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