What’s at stake for Apple, Tim Cook next week
“Buy the rumor, sell the news,” says Yahoo Finance’s Henry Blodget in the video above.
Blodget believes the stock has fallen because of a downgrade by Pacific Crest analyst Andy Hargreaves and not because of security vulnerabilities in Apple’s iCloud service.
“We recommend taking profits in Apple,” Hargreaves wrote in a letter to clients. “Unless next week’s event details massive incremental profit opportunities, we are likely to downgrade Apple’s rating…We do not expect either new segment to drive incremental profits that are meaningful at Apple’s scale in the near to medium term.”
It was revealed earlier this week that hackers stole nude photos from the iCloud accounts of 100 celebrities. Apple CEO Tim Cook told The Wall Street Journal that Apple was adding security alerts for iCloud users and would start sending users notifications when “someone tries to change an account password, restore iCloud data to a new device, or when a device logs into an account for the first time.”
Blodget says Apple shares could fall even more in the near future because of the margin pressures Apple is experiencing on the iPhone. Right now users in the U.S. can afford to buy new iPhones because of carrier subsidies, but in China and other developing countries, the price of an iPhone is $600 or more. The iPhone is the number one source of revenue for Apple and the company has been slowly losing market share to rival Samsung. Apple controlled 11.7% of the global smartphone market in the second quarter compared to 24.9% for Samsung. According to Fitch Ratings, market share for both Apple and Samsung will slip in coming quarters as lower-priced models made by local competitors in emerging markets attract buyers.