Apple fanboy now not hot on stock

He calls himself an "Apple fanboy", owns four iPads and two iPhones, follows the corporate obsessively and predicts it is going to keep turning blockbuster profits. But whether it is best to own the stock is another matter.

He says it's just not worth it.

Nobody is certain why Apple's stock finally stopped rising last week, but chances are you'll point a finger at Walter Piecyk, a veteran analyst who apparently has uncanny timing relating to issuing critical reports.

After Piecyk published a bold attack on Apple last week, the stock fell five days in a row, wiping out 10 per cent of the company's market value, or US$53 billion ($64.5 billion).

As though anticipating the drop, and maybe the dislike mail, Piecyk listed a dozen Apple products he owns, and why his family loves them, in his report on April 9.

"It is not in regards to the products," Piecyk said last week, because the stock finally broke its losing streak. "It's whether the stock discounts your entire risks."

Piecyk thinks one big risk is that Apple can have a harder time selling iPhones if phone companies stop subsidising a lot of the US$600 purchase price for purchasers.

He noted that AT&T has stopped procuring upgrades of iPhones for patrons in two-year contracts. Piecyk expects Apple to sell 27.5 million iPhones this quarter, down from 33 million the 3 months before.

However the details of his argument looked as if it would matter lower than his decision to take away Apple from his "buy" stocks.

Within the bullish analyst community, it was a heretical move. Trader blogs lit up with criticism and a few praise, as much for his courage as for his views.

Of the 48 analysts who cover Apple, eight have a "hold" at the stock, in line with FactSet, a provider of economic data. Nobody rates it "sell".

Whether everyday investors were even conscious of Piecyk's report is unclear, and what kind of it needed to do with the sell-off is impossible to grasp.

Others have pointed to a federal investigation into how Apple and publishers set the costs for e-books, and rumours that the corporate will launch a smaller version of the iPad that may hurt sales of pricier models.

Then there's the very best, perhaps best, explanation.

"i suspect it was due for profit-taking," said Shaw Wu, an analyst at brokerage Sterne Agee. "The stock has gone vertical."

Apple traded at about US$100 in March 2009. It climbed for 3 years and reached US$405 on the end of 2011. Then it really took off - a gain of greater than 50 per cent in three months.

Apple closed at an all-time high of US$636.23 at the same day Piecyk issued his report. By Tuesday, it had fallen to about US$580. Yesterday it regained ground, climbing to US$609.

Piecyk said he believes phone carriers are bored with seeing their profit eroded by the subsidies they pay to maintain iPhone customers. He noted that AT&T's subsidies explain why its profit margins in its wireless business have fallen from 44 per cent to below 30 per cent in two years.

Wu said he doesn't think subsidies can be cut since the iPhone attracts customers, and people customers spend more.

Wu predicts Apple will hit US$750 within a year and rates it "buy".

Piecyk thinks investors could have overestimated the willingness of shoppers in China, Brazil and other developing countries to shell out US$600 for an iPhone.

And he thinks investors are too confident that the corporate, after its success with the iPhone and iPad, will get a hold of the subsequent must-have product.

"There may be this expectation that there'll be this revolutionary new product," Piecyk said.

"But what if it doesn't end up quite as revolutionary?"

- AP

By Bernard Condon