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 Shares of Apple, a mainstay of many Wall Street portfolios and the
largest component of the Standard & Poor's 500 index, have dropped
11 percent in the past five sessions.
That shrank the technology behemoth's market capitalization by $65
billion, about equivalent to Cambodia's net wealth.
Confidence in the Cupertino, California company has been shaken
since posting its first-ever quarterly decline in iPhone sales and
first revenue drop in 13 years on Tuesday, although Apple investors
pointed to the stock's relatively low valuation as a key reason to
hold onto the stock.
"If you're going to buy Apple, you have to buy it for the long term,
because the next year or two are going to be very tough," said
Michael Yoshikami, chief executive of Destination Wealth Management,
which owns Apple shares.
Faced with lackluster sales of smartphones in the United States,
Apple has bet on China as a major new growth engine, but progress
there has been a let-down.
Revenue from China slumped 26 percent during the March quarter and
its iBooks Stores and iTunes Movie service in China were shut down
last week after the introduction of new regulations on online
publishing.
Pointing to concerns that Beijing could make it difficult for Apple
to conduct business in China, long-time Apple investor Carl Icahn
told CNBC on Thursday that he had sold his stake in the company he
previously described as a "no brainer" and undervalued.
The selloff has left Apple trading at about 11 times its expected
12-month earnings, cheap compared to its average of 17.5 over the
past 10 years. S&P 500 stocks on average are trading at 17 times
expected earnings.
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"The tide is going out a bit, but it will probably improve in the
fall with the launch of the next iPhone," said Pat Becker Jr,
principal of Becker Capital Management, which also owns Apple stock.
"This is an opportunity."
Wall Street remains positive as 36 analysts tracked by Thomson
Reuters recommend buying Apple's shares, while nine have neutral
ratings and none recommend selling.
The median of the analysts' price targets is $120, down from $130 at
the end of March. The stock ended Friday at $93.75, down 1.14
percent.
(Reporting by Noel Randewich; Editing by Bernard Orr)
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