The survey that squashed Apple
When RBC Capital analyst Mike Abramsky downgraded his Apple rating on Monday — helping spark the sharpest selloff in the company's shares in eight years — he cited a survey that RBC conducted with ChangeWave that suggested that sales of Apple's hot-selling computers were cooling off.
RBC's version of the survey showed that the percentage of technology consumers who plan to buy a Mac in the next 90 days had dropped from 34% in August to 29% in September, the biggest such decline in more than two years.
ChangeWave's version, which was released Monday here and is displayed in the chart above, focused on corporate purchase plans. It's based on a survey of 1,947 individuals involved with IT spending within an organization and shows declines in the percentage of companies planning to buy Apple desktop or laptop computers over the next 90 days — from 8% to 7% for laptops and from 6% to 5% for desktops.
[UPDATE: For an inside look at ChangeWave's consumer survey, see The survey that squashed Apple -- Part 2.]
These two bearish signals were enough to persuade Abramsky that it was time to downgrade Apple's shares, from "outperform" to "sector perform."
But in the context of the ChangeWave survey, Apple hardly seems to be performing like the rest of its sector. For one thing, Mac purchases have been trending up even as computer purchases across the board have been slumping, as indicated in this ChangeWave chart:
Moreover, in his write-up of the survey, ChangeWave research VP Paul Carton points out that the 1 point drop in corporate purchase plans for Macs was from a record high in May. He also notes that 18% of his respondents now say that their company is considering Apple for a future purchase, a 1 point increase. Finally, he adds:
"In an upbeat sign for Macs, respondents estimate that 18% of their company's workforce would choose to use a Mac if it were left up to the employees themselves – triple the 6% who are currently using Macs." (link)
So there are indeed signs of a cooling trend for Apple (AAPL), but it's not at all clear that they justify an 18% drop in its share price. Dell (DELL), by comparison, dropped 5.9% on Monday and its ChangeWave chart is a disaster:
From the Changewave Alliance website:
ChangeWave runs a proprietary network of 15,000 highly qualified business, technology, and medical professionals referred to as the ChangeWave Alliance. Alliance members are credentialed experts in leading companies of select industries who spend their everyday lives working on the frontline of technological change. (link)
This is just more highly misleading misuse of an inadaequate data set to come to WRONG conclusions. Let's see, could it be that Mac's huge popularity among students and academics means many would buy new products before the semester or school year begins? Yes, oh my God! Then the sales would be higher in August and fall off in Spetember. I can't believe I figured this out by myself
Abramsky appeared to hike up his estimates for RIMM beyond the company's own estimates, before September 25, then jerk them back and downgrade RIMM as soon as they reported earnings in the range they had said — after he saw the price fall. Do analysts play these jerk-the-public-around games so that later readers of their stuff ignorant of the damage they've caused will imagine they were accurate? Deliberately inflating estimates before earnings would reasonably be expected to lead to disappointment. What conflicts of interest would that suggest…an analyst has friends with put contracts or short positions? Anyone notice the bid for $21.70 on Apple that took all the stops out last Wednesday? One day after the Google attacks leading to trades that were canceled? If this isn't terrorism by other means, I don't know what is.
you can run MacOS on a PC , infact the new macs are almost entirely PC hardware. Theres no need to spend substaintly more on the same thing when you can buy a 350 dollar computer and run MacOS leopard on it. or you can spend $1500 for the same thing. your choice
ex ped: How do you do that?
Apple computers are still a lot more expensive when you start doing comparisons of what you get for your money. But for a lot of users, they're more a fashion accessory than anything else, so in that case the price doesn't matter.
If you decide to build your own box, you can easily end up with a computer twice as fast as the average iMac, but for half the price including a decent 22" monitor. It's a no brainer.
Its pretty bad, when High Quality Apple computers are selling at 3% of the market, and Dell bottom of the line junk is selling at 31% of the market. Just shows the market is in buying junk. Im no apple fanatic, but with 36 years in computing, they do make quality hardware.
Octavio, you are an absolute fool. Firstly, you are referring to a religious icon, thus it is Prophet… not a business line item which is what 'profit' is. Secondly, the analogy you used has no basis whatsoever which underlines your inability to mention anything of substance.
I am not going to waste my comment refuting your worthless post, however on a lighter note, Apple has proved its ability to withstand the most difficult of economic hardships.
Given that the current global economy is in dire straits, people's disposable incomes are no longer at the level where they want to buy a $2500 macbook pro even if they could… but so long as Apple use innovation and value add to fuel their growth all should be well for them in the future. Not to mention the fact that most companies tend to not use apple computers for their offices, which sort of disproves the diagrams in the article above.
hey 'bill etie',
the reason you, "and all your technologically challenged" friends cling to apple computers is because you DON'T KNOW HOW TO USE A REAL COMPUTER!
lol to your small brained grasp of technology and how you can't even get your head around a simple device as a computer.
keep on using your macs….you can only remain stupid with your "no brains required to use" technology.
no wonder you dont like PCs; they do tend to be more for the people with the ability to think logically and thoroughly.
i've always liked macs but to compare macs to a PC is like comparing a monkey to Einstein.
sure the monkey is fun to watch and laugh at, but to understand Einstein takes intelligence, an open mind and a lust for learning!
speak for yourself 'pk de cville'.
i find it terribly amusing that anybody, let alone the lemming masses that you represent, would claim "he will be honored and remembered as one of the greatest designers and leaders of the world we live in…" "…we will all mourn an incredibly inspiring human being."
if that isn't the most pathetic thing i've read in quite awhile….
how little of a life does a person have, to actually put on a pedestal such a person. no different than any other person and no more capable.
i laugh so much it hurts at such idolizing idiots this country has created.
(i'm betting your an avid american idol watcher and voter as well…..pathetically, pathetic)
you're life, much like your idol praising, is a joke…i'd recommend getting out more and seeing what is really important in your very short time you have on this earth.
i guarantee you it isn't idolizing some person but i also guarantee, you're to blind by your own ignorance to ever see that!
Good article. Pretty fair description of what's 'out there'.
Another piece of the puzzle is the piece in Esquire about Jobs' health. He's beginning to look like the only CEO on Earth with a death watch over his head.
Hate to bring this up, but we all die at one time or another and, should Jobs not report some morning (in the next 50 years) for reasons of mortality, he will be honored and remembered as one of the greatest designers and leaders of the world we live in – so much of it, being the world he and his team forged.
Apple will survive and thrive after his leaving (with at least four years of success based on its huge momentum) and I'm sure some very capable person will pick up the torch and lead the incredible Cupertino team forward.
In the meantime, we will all mourn an incredibly inspiring human being.
What is it with Apple and their followers.
Whenever there’s a critical article about Apple you gather in large herds to defend your “almight” shiny box. I’ll give Apple one thing, they are great at creating a hype. Sort of like a religious cult. Maybe when people are talking about “Intelligent Design” they’re talking about Apple.
You people react to negative news about Apple like fanatical Muslims do a negative add about the profit Mohammed.
Its just a shinier computer folks, nothing more nothing less!!!
This article completely misses the point, and tries to compare Apples to oranges (pun intended). You refer to a survey of "consumers" but show charts of corporate numbers. Why would you try to mix the two? In fact, you seem to be giving a lot more weight to those corporate charts you show when the VAST majority of Apple's computers are sold to the CONSUMER market. Not an equal playing field. Why don't you show the charts Abramsky is referring to, and stop confusing people.
ex ped: Fair point, and one that I tried to make clear in the post (but apparently not well enough). Unfortunately, Abramsky did not publish the numbers he used. Or if he did, I haven't seen them.
Such a dumb, FUD-packed scam on the part of Abramsky and Hubert! They surveyed 15,000 BUSINESSES?? I suppose they feel proud at their perceived thoroughness, but to measure Apple's success at this or ANY financial time is an inaccurate reflection of their core user-base which are CONSUMERS.
It is in the consumer market where Apple has seen tremendous growth and, while Apple will surely see a decline in sales due to overall economic forces, they'll continue to enjoy the most positive public — CONSUMER — perception of their products they have ever been blessed with.
For Apple, growth in the business sector has always been a by-product of their consumer demand. Basically, there's nothing to see in this report — and if anything it probably reflects the best times Apple has ever been in. Care to guess what percentage of businesses were considering Macs TEN YEARS AGO? I'll guess that it was far lower than 29%!
Mac would have died were it not for Microsofts application support. First Word and then Office were the number one selling apps for Mac through the rough years where it was touch and go for Mac. Microsoft also did a substantial amount of the Mac OS development which is the primary reason the Apple suite against Microsoft was eventually settled. There just weren't enough parts of Windows that Mac could really call their own. Then who bought over 30 percent of Apple in the aftermath of the settlement? All you flag waving Mac freaks don't seem to realize that all the great stuff you rave about has been influenced more by Microsoft than any other single company.
I have used both OS's and their previous generations for well over 20 years and they both have their place. The Leopard launch was a disaster if you were upgrading. Sexier product launch, user interface, and backup package than Vista which is a piece of crap.
Hopefully be the second service pack Leopard will be OK. Or maybe Snow Leopard will fix the problems. Mac is nice but I can have two quad systems with high end graphics for the price of one Mac. I like the features on the Mac and I have Tiger running on my MacBook Pro — so why am I sitting three feet away from the Macs — working on XP Pro?
I think its just because I acquired so many more Windows applications that I needed more dedicated windows systems just to accommodate them. If the selection and price of great software was even close to what it is with Windows I'd probably have more Mac's than PC's but I have 3 to 1 PC's to Macs and the decisions were always software driven. However for sound engineering I use Mac almost exclusively.
I always have a good laugh at all the closed minded people who still cling to the old lame Micro$oft OS. PLEASE… come out of the 70's!!! I have to use PC's @ work & will tell you… there is NO comparison between the two! Give me an Apple ANY day! All my friends who switched never go back to Windoze… there's a reason!
Squashed, Chris. Not "quashed." Quashed means put an end to or suppress. That downgrade squashed the once juicy Apple. It was stepped on and squashed, the poor thing. 
Not quite as squashed today as it was yesterday, thank goodness.
"@Eric in OH
Dude, stop drinking the kool-aide for a moment. You’re going to tell us that Having to remove “crapware” is normal for an operating system?"
Well Eric in WA, I think you are smart enough to know that no matter what the OS is, if the applications that are written for it are garbage they can create a whole host of problems. Are you upset that I speak the truth and in reality everyone is fully aware that PC manufacturers load up all their goodies because they think we want them. Apple is very priveliged to be able to do what Microsoft is not allowed to do which is load their own software on top of the OS. Remember the Anti-Trust cases years ago. I think it is funny how when Windows proves itself that I must be drinking Kool-Aid. Well if you read the French Newspaper "Liberation" you will see that Mac Pro users are inhaling Benzene, which is toxic and can cause blood cancer lukemia. And is that alright for Apple to cover that up since 2007? Be real and try to come up with some better excuses besides "Kool-Aid". I know over 20 people with Vista and well I rather go off the real world experience that I see, and not just from what I hear. Apple fan boys are just upset that they can't grab much more market share. Get over it and keep up the hard work, you have alot of work to do besides smug commercials that play on people's coolness. Function over form any day.
Well I live in the UK. Moneys tight.. And its going to get tighter.. But my first fully loaded and upgraded apple iMac arrived yesterday. I paid about $4000… Why? Because its the nuts.. Apple are converting Window users. Everyone owns an ipod or two and are slowly being introduced to the beauty style and simplicity of Apple.
Thanks for that excellent article, Philip. Wouldn't there be a decline in August due to expected product updates anyway? Isn't there any seasonal adjustment for ChangeWave's analysis? Sales of iPods, iPhones, and Macs all decline a month or so ahead of any expected product updates. New portables are expected in a couple of weeks and new iMacs are expected in Nov.
Apple is already adjusting to the realities of the economy by offering its products at lower prices and with lower margins. The combination of dazzling new products at lower prices should help to at least maintain good sales. Profit and revenue growth rates will slow, however.
@Eric in OH
Dude, stop drinking the kool-aide for a moment. You're going to tell us that Having to remove "crapware" is normal for an operating system?
I mean, I guess it's normal if you're a windowz "IT" drone.
News flash, Companies spin in their adverts. MSFT, AAPL, they all do it. I don't personally trust one zealot over the next doesn't matter if they support windowz or apple's rotten cruft.
Eric in PacNW
Apple will be in the $200 range around January and it’s not unreasonable at all to expect and see it reach $300 by end of 2009. Mark my words I have been in Apple for 15 years and anyone who cares to research the history as it relates to the markets and the products will see that everytime Apple tanked in the past 8-10 years it was because of bad market or world conditions – NEVER because of Apple fundamentals.
The idiots that are still listening to the anal-ists and bankers who occupy seats in all the very institutions that got us into this financial meltdown and mess (not only now, but in the previous two crashes) …brokerage firms that went under because they really knew what they were doing right?????
Well anyone still taking their advise after that track record is even dumber and deserves to loose their pants
Hmm… I know several people who called the SEC on this.
This type of market manipulation is so obviously made to screw the little guys and mark up the books of hedge funds that it will be made illegal one day. (yes, you can mark "up" short books by creating a drop in the underlying security.)
Good luck in the perp walk to all that were involved.
todd,
those $250 promoters you talking about are in the corner, hiding from all of us kickin the S#$%T outta themselves for buying aapl on the cheap at 150-175. LMAO!!!!
great deal guys….remember…your market strategy is BUY HIGH…SELL LOW!!
at least the price is coming back to where the actual value of the company really stands….it has a few more dollars to drop but i'm glad to see it facing reality…in the distortion field?!?!?
Mr. Markus,
You may want to check your own numbers. Just how many "sales" of Vista were XP in disguise? HP shipped a boatload of downgraded/downgradeable systems. According to one source, the overall number of users who downgraded to XP could be 35%.
http://news.cnet.com/The-XP-alternative-for-Vista-PCs/2100-1016_3-6209481.html
and
http://www.tomshardware.com/news/Windows-Vista-XP-downgrade,6187.html
>>Mike Abramsky does have a 5 star rating on Yahoo finance, a rating that means he has been accurate in the past… But Kathryn Huberty has always been wrong and it is her quantum of downgrade from 170 to $115 that roiled AAPL… It is a perfect buying opportunity I bought at $111 and may add more to<>Piper Jaffray’s Munster and Citi were way out of line. These analysts should be fired for misleading clients when they should have been aware of the economy in general.<<
Folks… some clarity is in order. Gene Munster has been remarkably accurate in his earnings estimates and pps projections. Kathy Huberty has been the absolute worst, and was off in her revenue forecasts for Apple by as much as a billion. That's BILLion.
http://bullcross.blogspot.com/
This is all part of the game being played right now to position for a new prolonged ascent in share price.
I think that the market conditions we are in will make some people take a look at Vista over a Mac as a way to save money. I can go out and purchase a PC with all the bells and whistles for under $800 and for a comparable model from Mac is gonna run me over $1200+. And now that Microsoft is hitting back at Apple for their deceptive commercials, I think people will start to realize that Vista is not what Apple said it was. I have so much exposure to Vista its not funny and quite honestly I am glad we are using it in my company because guess what, I never have to support it. Remove the PC manufacturers crap-ware and you got a rock solid, fast machine. Its funny how some people are so manipulated and believe everything they hear. The first signs that we are all becoming sheep to America's materialistic society.
The commenters that were pushing Apple to $200+ by the end of the year are all gone. I think that Citi's analyst has downgraded Apple's stock from a target price of $287 to $170. Just like that. I knew the target prices of Piper Jaffray's Munster and Citi were way out of line. These analysts should be fired for misleading clients when they should have been aware of the economy in general.
These people contribute to outrageous expectations from a good company by saying things like Apple is recession-proof. The only thing that's recession-proof are these analyst's undeserved salaries. They should realize that Apple's share price is one of the weakest in the industry and just the slightest investor doubt will collapse the stock. Now the best Apple investors can expect to end this year at is about $150 a share. What a letdown for long-term investors.
Those overzealous rah-rah commenters of $200 a share might see it by the end of next year, when they said it would probably be at $300 by then. Such misguided BS they spread. That's what happens when people get carried away by emotions and then reality slaps them in their face.
I agree that Apple as a company will outperform other computer companies by a wide margin and will continue to experience market growth. iPhones will continue to sell in large quantities. Still, the Apple's share price has nothing to do with company growth. It's too easily manipulated regardless of company strength.
I feel really bad for recent investors that bought at the $170 – $180 level influenced by analysts and zealots that don't have a clue about a company's value in the real world.
Apple is an amazing company. Apple stock should soar again. Whoever thinks that Apple stock climbed too quickly doesn't understand the power of innovation. We need more innovative companies like Apple As for me… I just invested a whole lot more in APPL.
Mike Abramsky does have a 5 star rating on Yahoo finance, a rating that means he has been accurate in the past… But Kathryn Huberty has always been wrong and it is her quantum of downgrade from 170 to $115 that roiled AAPL… It is a perfect buying opportunity I bought at $111 and may add more to
Anonymous – Might want to check your numbers. MSFT has sold over 175 million copies, which puts it on par with XP for the same amount of time on the market.
MacDaddy – "headlines have made the consumer afraid to spend money on anything but absolute necessities" – Sounds like that would include a Mac, no?
I have to say that I love Apple Computers, but I wished they could come down in price a bit. I need to upgrade my two MACs, but I just can't do it. Apple is gaining market share, but in this economy price point is going to be a large factor in purchasing higher end products. 200 bucks for an Ipod/iphone is a no brainer. 1.5 to 2K for a good MAC is a hard call for people that can get a decent PC for about 600 bucks.
Wall Street is constantly undervaluing and overvaluing Apple's stock. They never seem to get it right, and for a while it's been very overvalued. So it looks like it's going to be undervalued for a while, meaning I better call my broker.
Hmmm, So corporate IT softens spending outlook. What does this have to do with the consumer outlook for Mac purchases? I thought that it was a widely held view that Apple was more focused on the consumer market. Seems like basing a prediction of Big Mac hamburger sales on view point of rural farmers. Nice work Mike Abramsky.
The Mac/iPhone/iPod OS X platform is going to increase its rate of growth compared to the market throughout this turmoil. The rest of the market are doing all they can to try and halt it because they are terrified by it. For example, Blackberry RIM spent $380m just on marketing to fight the iPhone in their last quarter. Microsoft are spending $300m (badly as usual) to fight the hugely successful Mac and PC adverts. HP and Dell are cutting jobs and factories. And everyone is trying and failing to copy and get close to ANY Apple product, be it hardware or software.
But the real deal is OS X. It is a platform that is now 7 years ahead of the competition – but of course in 7 years time Apple will have taken it ahead another 7 years all being well…!
At current prices APPL is a complete giveaway. And in 18 months they will be $300 and growing strongly, reflecting the market share gains made by OS X in computers and mobiles.
If you have to ask Yahoo Finance to find out what analysts have a good track record, then perhaps they don't have a good track record. Earnings after earnings, the analysts have been pretty poor, as a group, in predicting Apple's earnings.
The undertone to all of this remains Jobs' health issue. The Company has never disclosed its succession plans, nor has any individual or dedicated team, in the entire history of Apple, been accredited at a peer level to Jobs.
When Jobs goes, Apple will lose its rudder and go aground. Bigger, smarter and longer lived companies have folded (or merged) for failure to plan for the demise of the founder(s).
Apple stock climbed way faster than it should, so now it's down in like manner. As the old canard says, what goes up, must come down.
I am right here, Todd. Do you believe for one second that the selloff in Apple is not the result of macroeconomic fears? It had nothing to do with Apple's execution of it's business plan or the rate of sales of its products, but rather it was based on on the rampant panic that trampled the markets yesterday. Hedge funds are huge holders of Apple stock. Hedge funds are among the biggest users of leverage (credit). Banks extend this credit to them. Stock prices are falling, resulting in margin calls for the hedge funds that use stocks as collateral. Hedge funds sell Apple to raise money to meet the bank's margin call, not because they believe the Apple story is over, but because Apple is liquid and is easily tradeable. Add to this the fact that headlines have made the consumer afraid to spend money on anything but absolute necessities and it becomes apparent that Apple's stock price must go down. The selloff has nothing to do with Apple and everything to do with factors beyond the company's control.
Thanks for the additional analysis. This confirms my intuition, that overall tech sales (both consumer and corporate) are likely to go down, but -proportionally- Apple sales are likely to go up. And that would be "sector outperform" (If only I had some loose $ to buy AAPL right now…)
dave
Toddie yes. You'll likely see $450+ within about 3 years. Watch.
Related factoid : Do you realize (for example) that at 2007's (nevermind 2008's) figures Apple gross revenue overtakes copysoft's by 2010?
Now's your chance to buy. 50-100% by March. Don't fight the love.
Check out the previous track record of Mike Abramsky and you will see a person who has repeatedly come up with bad analysis after bad analysis. He is one of the most unreliable predictors of Apple behavior out there. His motivation is certainly suspect and the short siders must absolutely love the guy! Does he hold any long or short positions in Apple stock?
ex ped: Actually, Abramsky has a pretty solid track record when it comes to predicting Apple's EPS, according to Yahoo Finance's Star Analyst ratings. See here.
Apple will outperform this quarter, next quarter, next year, …
http://apple20.blogs.fortune.cnn.com/2008/09/22/analyst-apple-will-sell-5-million-iphones-in-q4/
Is there a chart to show the iPod and iPhone sales within two years which is part of Apple business? And combine all three major products from Apple to show the actual future business projection.
You forgot to mention that considering Microsoft's failed OS (vista) was introduced, sales have been lower overall. Yes it is user-friendly and it looks great, but performance-wise…it lacks. Most people chose to keep their safe and working old OS (2000, XP) or switched to apple. The number that switched was alot less than what apple advertises.
Gee,isn't nice to put things in perspective.You just might have a better chance to make a well informed decision. Maeve
@ Linus and Glen
Glen: Most people do not want to build their own system. If you are a hobbyist who enjoys doing that, then fine – have fun! Most people do not care to spend their time on that.
Linus – quit the ridiculous hype
Dell XPS One Desktop 20" screen
Apple: iMac 20" incl kbd + mouse
both: 2GB RAM, 320 GB driv
Dell: — $1,349
add kbd, mouse $100
Total $ 1449
iMac – $1349 $100 CHEAPER!!
——
I will bet that your $350 PC will not come close to comparing with a $600 Mac mini
Also with Mac you get the great OSX and the iLife software.