Apple slides on iPhone 5’s
Every September the street is left wondering, what could Apple (NASDAQ:AAPL) possibly do next. However, over the last couple years the company’s technological progress has been anything but revolutionary. As the days of high growth come to an end, the company is left searching for additional revenue streams and sources of earnings per share growth. On Tuesday afternoon, Chief Executive Officer Tim Cook, released two new iPhones. The lower-cost model, the iPhone 5C comes in a plastic case and has the similar features as of the iPhone 5. The higher end model, the iPhone 5S, comes in a aluminum case and includes a faster processor and a fingerprint sensor for security, among other features. Cook confirmed the rumors that had made waves throughout the year, however, a sell the news mentality hit the street. Shares traded lower in the after hours session as it appeared the hype was overblown.
On Wednesday morning shares of the company continued further to the downside. Early in the session, at the time of this writing, shares were down by more than 5% to $469 per share. It seems the days in the 500’s are gone, at least in the short term. Analysts were quick to downgrade the stock following the news. Bank of America downgraded shares of Apple from buy to neutral. The report noted that Apple failed to address the lower-end market that accounts for most of China and India with its expensive smartphones. With the downgrade, Bank of America set a $520 price target. During the remainder of the week it will be interesting to see if any analysts take a positive stance. After all, a lower priced iPhone should allow a greater number of consumers in the developing world to gain access to the company’s portfolio. It is too soon to tell if the company’s gross margins will be significantly impacted with the production of the 5C. Until the next quarter, expect a difficult trading environment.
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