Apple (AAPL) Has Not Seen Its 52-Week Low

After Apple (AAPL) announced earnings and gave guidance, the stock looked a bit weak. The guidance was awful, but, in light of the economy, probably fair. Most analysts think that Apple gives out guidance which is too low as a matter of course. That lets the company look good every time it comes to market with the real numbers.

The Apple shares did get a big lift after Steve Jobs joined the earnings call, which is something he never does. The faithful hit the "buy" buttoms on their PCs and shares moved up and up.

The real danger to investors is that this time, Apple may not be kidding in its forecast. The next quarter is the first of the year in Apple’s fiscal and it is the holiday quarter, the one that is supposed to trump everything else. Looking ahead to that period, Jobs’ people gave numbers well below what Wall St expected.

For the first fiscal quarter, the company forecast EPS of $1.06 to $1.35, well below the analysts’ $1.65 consensus, and sales of $9 billion to $10 billion, also well below the Street’s $10.57 billion. Looking at those figures though the lens of what is realistic, the holiday quarter would still be well up from the $7.9 billion Apple reported for the period which just ended.

iPod sales barely moved, at least by the standards of the last few years. The iPod has probably had its run. There have been close to 200 million of them sold since Apple first brought the digital music player out  Apple’s Mac sales growth rate dropped by a modest amount in the last three months. Mac units shipped hit 2.61 million. If the economy drives off a cliff in the quarter ending in December, it is not hard to imagine that all personal computer sales could be undermined.

That leaves the iPhone which had a remarkable run, selling almost seven million handsets. The product is so hot that even a recession may only slow sales of the product by a bit.

The trouble is that the iPhone cannot carry the whole company. It has become a substantial part of the product line, but it cannot offset a fall-off in the growth rate for sales of the Mac and iPod.

Wall St. is so obsessed with Apple that analysts send people to stores to see how its products are selling. By the end of November experts should have an good idea of how the quarter is going. If Apple’s forecasts of a modest quarter appear to be right, the stock will face another sell-off like the one that has hit it over the last two months.

In late August, Apple traded at $177. Less than three weeks ago, it was under $90. That is a strong indication that the market is already skeptical about the company’s prospects in a bad economy. If there is a signal that Apple is not going to be perfect again, the shares could easily make another 52-week low.

Douglas A. McIntyre