Apple shares down 9.7% since February high

NEW YORK • Apple fell for a fifth day on Thursday, posting its first consecutive 2 per cent declines since 2013 and pushing shares to the brink of a 10 per cent correction. The slide comes amid a rout in China's markets that is occurring two weeks before the company reports earnings.

The iPhone maker's stock decreased 2 per cent to US$120.07, bringing its five-day loss to 5.2 per cent - a drop that wiped US$38 billion (S$51 billion) off its market value. Since reaching an all-time high of US$133 on Feb 23, the stock hsa fallen 9.7 per cent, leaving it about 40 cents away from a correction.

Losses in Chinese equities, where almost US$4 trillion has been erased in a month-long deluge, may leave consumers with less money to buy gadgets.

The California-based company releases its third-quarter results on July 21, its first report to include sales of the Apple Watch.

China's rout "and reaction from policymakers could create a bigger problem for the economy, causing consumers to retrench, which would impact Apple's sales", said Mr Walter Todd, who oversees US$1 billion as chief investment officer at Greenwood Capital.

"It's a risk that's certainly starting to be reflected in the company's shares."

RISK TO SALES

(China's rout) and reaction from policymakers could create a bigger problem for the economy, causing consumers to retrench, which would impact Apple's sales. It's a risk that's certainly starting to be reflected in the company's shares.

MR WALTER TODD, chief investment officer at Greenwood Capital

Analysts predict Apple earned US$1.79 a share in the three months ended June 30, compared with US$1.28 a year earlier, according to data compiled by Bloom-berg. The company has beaten estimates every quarter since 2012.

Deutsche Bank analysts, who rate the stock a hold, said in a July 5 note that sales of the Apple Watch are a "wild card" in the third quarter, and that the firm has trimmed longer-term estimates for the device. In the quarter, the company probably sold 3.9 million watches, they said.

Apple got 17.4 per cent of its revenue from China in its last full-year reporting period, compared with 15.8 per cent in the previous year.

According to chief executive Tim Cook, Apple plans on China eventually becoming its largest market. New larger-screen iPhones helped sales in China overtake those in the US for the first time during the first three months of this year.

China's market rout comes as Apple is rushing to roughly double the number of its stores there by the middle of next year.

"China is an important market for Apple," said Mr Jeffrey Fida-caro, an analyst at Monness Crespi Hardt, who has a buy rating on the stock. "Given the pullback in equities, if that has a ripple effect on consumer spending, you could see the stock react to it as well."

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on July 11, 2015, with the headline 'Apple shares down 9.7% since February high'. Print Edition | Subscribe