Apple Drops Below $600 After Executive Shakeup
Apple’s stock fell back below $600 in pre-market trading Wednesday and opened at $594.49 a share, down more than 1.5% from its previous close, following several big changes to the company’s executive leadership.
On Monday, Apple announced that Scott Forstall, the powerful head of iOS who some considered a potential successor to Steve Jobs, would be leaving the company. John Browett, the recently hired head of retail, is also leaving after just a few months on the job. The news happened to come out on a day when the stock market was closed due to Hurricane Sandy.
Several analysts have since put a positive spin on Apple’s decision, with top Apple analyst Gene Munster saying in a research note that it is actually a positive in the sense of “putting to rest a recurring investor concern,” namely the role of chief designer Jonathan Ive at the company. As part of the shakeup, Ive is now in control of both hardware and software design, essentially making him the decider for Apple’s entire product lineup.
Still, good or bad, there’s no doubt that the changes took analysts and investors by surprise, which is likely hitting the stock. As Shaw Wu, an analyst with Sterne Agee wrote in a research note, “We believe these changes make sense in promoting more collaboration but are still somewhat surprised with the sudden demotion of Scott Forstall.”
The stock’s decline is all the more stunning considering that the iPad Mini is set to hit shelves soon and has completely sold out of its first run, and Apple is reportedly one step closer to getting the iPhone 5 approved for sale in China, which should open up the product to millions more customers.
Apple’s stock fell below $600 in intraday trading Friday for the first time since July due to a disappointing earnings report the company’s lower-than-expected projections for its profit margin in the upcoming quarter. The stock ended the day Friday at $604 a share.
As of publication, the stock was hovering around $590 a share, a drop of more than 2% from the previous close. The company’s stock has now declined by more than $100 a share from its peak of $705 just before the iPhone 5 hit shelves in late September. Likewise, Apple’s market cap has dropped from a peak of about $656 billion to about $554 billion currently, a loss of about $100 billion.
Image courtesy of Flickr, Andrew*
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