Apple Inc. Share Price May Tumble Following Recall Rumors
Posted: July 13th, 2010.
The Apple iPhone 4 was considered the most successful Apple launch in history after the first weekend. By the time the next weekend arrived, problems with respect to reception, proximity sensor, upload speed, overheating,etc had cropped up.
The most significant (read mainstream) of these was the signal reception issue, more colloquially known as the “death grip“. Steve Jobs first instructed his loyal customers to stop holding their iPhones the conventional way. Apple later took a more defensive position and attributed the error to a software error. However, none of these positions from Apple have been able to convince the customers about the iPhone 4.
The nail in the coffin has definitely been the recent Consumer Reports article which redacted the earlier recommendation. The publication said that their engineers could no longer recommend the device following the antenna issues. All this has probably meant that Apple has no other go but to recall the iPhone 4 units. According to Matthew Seeger, an expert in crisis management, it is “critically important” for Apple to seek a recall of the iPhone 4 units.
All this has appropriately taken a toll on the Apple Inc. share prices. The Apple NASDAQ stock is now trading at 250.25, down 2.73%. To be fair, this is not a “tumble” as yet. However, expect the recall rumors to grow in credibility moving forward which could mean a drastic drop in stock price.
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Comments
Comment from Anand Srinivasan
Time July 13, 2010 at 4:52 pm
Of course, it’s speculation…
Comment from truthintech
Time July 13, 2010 at 4:56 pm
fall? to where exactly. the company is growing y/y revenues at 50% and y/y profit at 90%… yet it’s valuation is trading at ridiculously low ttm p/e of 21 and a fwd p/e of 15. i can’t recall a company with that kinda of growth trading at such a low relative valuation.
next week when they release earnings, the relative low valuation will even be worse unless the stock jumps 30+ points just to keep it’s current low valuation. if it stay where it’s currently at… the ttm p/e will immediately drop to ~17 while the fwd p/e will drop to ~13. we are looking at eps of 3.75-4.00 min while the analyst consensus is ~ 3.09
Comment from dave
Time July 13, 2010 at 5:02 pm
“critically important” and “has no other go but to recall”? This is total FUD. And Anand is right it is speculation. I speculate based on rumors that the author has a desire to short AAPL. It is just as obvious as the credibility of his sources. Just speculating.
Comment from Chris
Time July 13, 2010 at 5:04 pm
It’s not even speculation. There is zero chance of a recall, the author must know this but says recall is ‘no other go’. It’s not speculation, it’s a deliberate attempt to mislead. Garbage.
Comment from Anand Srinivasan
Time July 13, 2010 at 5:08 pm
Ok wait. The post was made after the stock took a minor slide despite the otherwise bright sale volumes. So, the speculations over Apple stock is not totally unfounded either.
And Apple has already been trying to suppress consumer getting frenzied over the Consumer Reports recommendation. The Support forum moderators have deleted close to half-a-dozen threads started on the topic. So, if the Apple PR machinery thinks a recall is necessary to allay customer worries, a fall in stock price is to be expected. FUD or not, it’s your personal opinion..
Comment from Shawn
Time July 13, 2010 at 5:12 pm
I have the phone and have not experienced these problems. When you are on top everyone tries to bring you down. I have purchased all four units and will purchase the next when it arrives. IF there is a problem then I am sure that their cash on hand will fix it…and help BP clean up the oil spill… with plenty left.
Comment from Chris
Time July 13, 2010 at 5:22 pm
Consumer Reports also gives iPhone 4 its highest recommendation. It’s ‘test’ was flawed. CR is just hit-whoring. Like this ‘article’.
Apple is selling every phone it can make. Companies do not recall products that can be fixed with software update, or products that they are completely sold out of.
Yes, the stock would take a huge slide if a recall was necessary. But it isn’t, and no one with an ounce of sense thinks that it is. The stock would also take a huge slide if all Apple products started spontaneously melting. Or if all iPads were found to be haunted. Or if all Macs gave you poison ivy. There is speculation, and then there is garbage.
Comment from Anand Srinivasan
Time July 13, 2010 at 5:32 pm
Oh..so you are sold on the “software update” BS from Apple? I’m no stock market expert though I have done the relevant courses..And this article is based on statements from a Crisis management expert (as noted in the article). So, feel free to call this garbage. I’m not offended.
But if you are basing all your stock analysis based on Apple’s PR releases, then I’m worried. I do know my tech, and can tell you this reception issue is NOT going away with a software update. If you think Apple is out of trouble once the software fix is released, you are in one word, Wrong..
Comment from Chris
Time July 13, 2010 at 5:39 pm
Oh, I see, you know your baseband hardware so well that you can analyze the problem from afar? You have just shouted your complete ignorance of tech by insisting it cannot be fixed with a software update. Perhaps it can’t, but you sure don’t know that it can’t. And even if it can’t, people are going to continue to buy every iPhone they make.
Comment from Anand Srinivasan
Time July 13, 2010 at 6:18 pm
Oh well, assuming you are not Steve Jobs nor work for Apple, can this also imply that while Apple may not recall iPhone 4 units, you for sure also do not know if they actually end up doing so?
Quite a few ifs in your argument as well as mine..And there’s an English word for it – “Speculation”..
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Comment from Chris
Time July 13, 2010 at 4:49 pm
What a load of crap. FUD FUD FUD