Wednesday, January 23, 2013

Apple’s Profits Are Flat, and Stock Drops

I told you AAPL was oversold and overpriced. QB

Apple on Wednesday reported the kind of quarter most big companies would envy, posting a profit of $13.1 billion and selling 28 percent more iPhones and 48 percent more iPads, its two biggest products.
Apple's stock price has been falling for several months.
Its stock sank 11 percent.
What is going on? Because of its great success in recent years, many investors have come to expect nothing short of perfection from Apple. And while it is still widely considered the most innovative company in the technology world, a maker of products that its devoted customers cannot live without, Apple is facing a range of challenges.
It is dealing with increased competition from big rivals like Samsung and Google, and with so many people already using smartphones, the market is not quite as untapped as it once was. Apple is forging into cheaper product categories, meaning lower profit margins. And given that Apple has grown so big, with sales of more than $160 billion in the last 12 months, keeping up its heady growth rate is becoming harder and harder.
Once-euphoric investors, who pushed Apple’s stock to a record high of $702.10 last September, have become nervous, and in after-hours trading on Wednesday, the stock traded at $461.30, down 34 percent from its peak.
Apple has reinvented itself several times over the last decade with groundbreaking new products, and could do so again. Television and electronic payments are among the markets where analysts believe the company could make a push, leading it to new heights.
“Apple has really been able to invent whole new markets,” said John Gallaugher, an associate professor at Boston College’s Carroll School of Management. “That’s where it differs from companies like Microsoft. I don’t think the mojo of this team has evaporated.”
In a conference call with analysts, Timothy D. Cook, Apple’s chief executive, said the company’s pipeline of new products was “chock-full.”
“We feel great about what we have in store,” he said, without adding details.
In the meantime, though, the love affair that investors once had with Apple is clearly waning.
“There’s nothing that can help the stock from sliding now,” said Mark Moskowitz, an analyst at J. P. Morgan Securities, who said Apple’s holiday sales met his own forecasts, even though they missed others’ predictions.

Delta in talks with Airbus, Boeing to buy jets: Bloomberg

(Reuters) - Delta Air Lines Inc (DAL) is in talks with Airbus SAS and Boeing Co (BA) to buy $1 billion or more new jets, Bloomberg reported, citing people familiar with the matter.
The Atlanta-based airline is looking at current versions of the Airbus A320 and Boeing 737, not the newest versions, likely meaning a deeper discount to retail prices than normal, the news agency quoted one person as saying. (
The talks are for an order of twenty-four to thirty planes and deliveries would start in three to five years, it said.
Lindsay McDuff, a spokeswoman for Delta, told Reuters that the company does not comment on industry rumor and speculation.
The deal could have a book value of at least $1 billion, based on prices tracked by consultant Avitas of Chantilly, Virginia, Bloomberg said.
Delta, the No. 2 airline behind United Continental Holdings (UAL), is looking for a deal in which it could exchange some of its 50-seat regional jets for new planes from Boeing or Airbus, similar to a deal with Bombardier Inc (BBD-B.TO) made in December.
The sale of old aircraft is a part of a cost-cutting program at the company, which includes retiring smaller, less efficient planes from its fleet.
This could be the end of the Dreamliner for a couple of years. QB

Gold Rally Seen Sustained as Fed May Stick With QE3 Until 2014

Gold will rally this year and climb further into 2014 as U.S. Federal Reserve policy makers will probably maintain asset purchases for two more years to buttress the recovery, according to Morgan Stanley.
The metal, which advanced for a 12th year in 2012, may average $1,830 an ounce in the final quarter from $1,715 in the first, $1,745 in the second and $1,800 in the third, analysts Peter Richardson and Joel Crane said in a report today. Prices will supported by investment and central-bank buying, they wrote.
Gold had the biggest quarterly drop since 2008 in the final three months of last year as data showed the recovery in the largest economy gaining traction, boosting concern the Fed may withdraw stimulus. Minutes from the Federal Open Market Committee’s December meeting released on Jan. 3 said asset purchases will probably end this year. Each month the Fed has committed to buying $85 billion of Treasuries and mortgage debt.
“We are skeptical that dissenters within the FOMC on current monetary policy will succeed in overturning the current policy settings before the end of 2014,” the analysts wrote, citing elevated unemployment and so-called tail risks to growth. There would be an “ongoing commitment to QE3,” they said, using initials for the third round of quantitative easing.
Gold for immediate-delivery traded at $1,682.90 an ounce at 9:59 a.m. in Singapore after losing 0.2 percent. The price dropped to $1,625.85 an ounce on Jan. 4, the lowest level since August, after the release of the FOMC minutes.