A pedestrian walks by a window display at an Apple Store on January 27, 2014 in San Francisco. (Justin Sullivan/Getty Images)
CUPERTINO -- Apple stock Tuesday fell to its lowest price since the company's most recent product announcement, as analysts and investors clamored for a new consumer gadget to boost growth trends after the tech giant's record-breaking holiday quarter.
Apple stock plunged $44 to $506.50 Tuesday, an 8 percent decline to the lowest closing price for Apple stock since Oct. 17, a few days ahead of the first glimpse at Apple's newest iPads.
The iPad Air and upgraded iPad Mini announced in October joined a newly expanded iPhone line, which added the iPhone 5S and iPhone 5C in a September announcement, to push the consumer-electronics giant to its third consecutive record-breaking holiday sales. Apple announced Monday that it sold 51 million iPhones and 26 million iPads in the final three months of 2013, both all-time highs for a single quarter, producing record revenue of $57.6 billion.
Fourth-quarter net profit of $13.1 billion was the same as the year before, however, and Apple's profit for the full year declined 8 percent from 2012 while revenue increased 5.6 percent, showing a flattening growth curve for sales. Apple seemed to admit growth is an issue by predicting that revenue in the current quarter would be in a range of $42 billion to $44 billion, in line with the company's performance in the second quarter of 2013, when it produced $43.6 billion in revenue.
Analysts, who on average expected Apple to sell about 56 million iPhones, resoundingly said that Apple's single-minded control of the premium smartphone market will not be enough to spur growth back to previous levels.
"The clear maturation of the high-end smartphone market limits Apple's growth potential in the near term, and its valuation," Raymond James analyst Tavis McCourt wrote in a note Tuesday. McCourt downgraded Apple from "strong buy" to "outperform."
At least 14 brokerages reduced price targets on the stock after earnings were released, according to Reuters tabulations, with the chorus demanding new product categories in order for Apple to continue growing from its current record-shattering revenues.
"What we have gotten over the last year or so is impressive products, but they are really enhancements of current products and not necessarily the next new thing," BMO Private Bank chief investment officer Jack Ablin told Bloomberg News. "Apple investors want the next new thing -- that's the catalyst that people are waiting for."
The decline did not stop Carl Icahn from piling more money into Apple -- the activist investor announced Tuesday morning on Twitter that he had purchased another $500 million worth of shares, the third time in a week he has announced an Apple stock purchase of that size. All told, Icahn claims to have spent more than $4 billion on his cache of Apple stock, still less than 1 percent of the company.
Icahn is agitating for Apple to ship more of its large cash hoard back to investors, saying that the company's plan to spend $100 billion on dividends and share repurchases is not enough. If Apple were to increase the number of shares it repurchases, decreasing the overall supply, it could push the stock price up short-term, a prospect investors could be more interested in after Tuesday's plunge.
"We believe Carl Icahn's push for a more aggressive share repurchase program could resonate with shareholders, and we expect his voice to become even louder in the coming weeks," Cantor Fitzgerald analyst Brian White wrote Tuesday; White was one of the few analysts who did not change their price target, sticking with his $777 figure.
Contact Jeremy C. Owens at 408-920-5876; follow him at http://ift.tt/1drGiGq.
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