18 January 2011

Apple is Shot

Apple shares slid as much as 8% in Europe, and Nasdaq 100 futures, of which Apple comprises 21%, also fell 1.3% in the morning electronic trading. And you can’t really blame investors for over-reacting since Jobs is an integral part of Apple’s stock price.
Every time when you have a top executive taking an extended leave for whatever reason, the company’s stock typically will take a beating. However, very few corporations have its image and creativity so deeply linked to its CEO such as Apple and Jobs.

As I’ve said before, Jobs’ leave of absence is bad for the stock price, especially in light of increased competition in their marquee markets and their remarkably high P/E ratio.  Now the stock market backs me up.  My strategy was to short (something I was unable to accomplish), but now my strategy is to wait about a week before buying stock. I plan to sell before summer.

Jobs’ leave of absence will spook investors, but realistically, there isn’t really anything different in their short-term prospects.  Their competition isn’t up to full strength yet, and the Verizon deal should spur minor sales for the iPhone 4.  Their long-term prospects aren’t as good, which is why I’m looking for a short-term sell-off.

UPDATE:  Here are some links that analyze both Steve Jobs' departure and Apple's earning report.

Mashable on iPad sales

RWW on quarterly earning totals

Barry Ritholtz on long-term expectations for Apple 

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