Microsoft Corp.’s gain seems to be Apple Inc.’s pain on Friday. The iPad and iPhone maker’s share price has been on a volatile path in recent trading sessions, but sank into official correction territory in afternoon trading, defined as a drop of 10 per cent or more from a high point -- even as the rest of the market, and Microsoft in particular, enjoy decent gains.
Apple shares were recently spotted at $575 (U.S.), down 10.7 per cent from their record high of $644 just last week. Meanwhile, as we’ve pointed out before, analysts can’t contain their bullish enthusiasm for the stock: According to Bloomberg News, the average target price is at a new high of more than $696. That’s up from an average of about $600 at the start of March and represents an increase of about $25 since the start of April.
So what’s weighing on Apple? The answer to this question might be made clear next week, when the company reports its much-anticipated quarterly results on Tuesday after markets close. Some evidence suggests that investors might not see Apple’s business as being as iron-clad as originally believed.
Barron’s Tech Trader Daily has a nice roundup of some of the concerns here, which might be emanating from what investors see in other corporate results. For example, some observers believe that Qualcomm Inc.’s quarterly outlook on Wednesday pointed to a pause in its chipset sales that go into the iPhone. And apparently Verizon Communications Inc. on Thursday suggested that iPhone sales might be slowing.
Apple shares aren’t expensive, based on trailing or estimated earnings. However, recent jitters do suggest that perhaps expectations were too high.