Apple: No Need To Panic

Apr. 27, 2018 2:36 PM ETApple Inc. (AAPL)ASML, TSM273 Comments

Summary

  • Seasonally negative coverage.
  • Why Barron's was wrong about ASML and Apple.
  • Why Bloomberg was wrong about TSMC and Apple.
  • Analyst consensus points to iPhone growth, not decline.

Rethink Technology business briefs for April 27, 2018.

Seasonally negative coverage

Source: Yahoo Finance

Over the past few years, I've become accustomed to a seasonal downturn in Apple's (NASDAQ:AAPL) share price that roughly correlates with the seasonal downturn in iPhone sales. The weakest period for iPhone sales typically is in the April-September time frame. As can be seen in the chart above, Apple's share price often suffers sharp declines in the same period.

My opinion, and it's only an opinion, is that this is driven by negative coverage of Apple, and especially about iPhone, during the same time frame. Coming off the December quarter iPhone sales peak, there's a tendency in the media to play up the sequential decline as being more meaningful than it really is. This continues into calendar Q3 as consumers understandably start to hold back making new iPhone purchases in the runup to the September iPhone launch.

It's during this time that the noise level of media coverage reaches its peak. Speculation becomes rife in the absence of facts regarding the new iPhone models. Invariably, the speculation is negative. For instance, in 2016, media speculation claimed that iPhone 7 would be a non-innovative flop.

This year, the coverage has turned negative once again, but with some subtle differences. The attacks on Apple have become more oblique but seemingly more effective. As I write, Apple is in a steep sell-off that started last week, when ASML Holding (ASML) reported earnings. ASML is a supplier of lithography equipment for chip manufacturers, and the first seriously negative report of the season concerned ASML, Apple, and Apple's semiconductor manufacturer, TSMC (TSM).

Why Barron's was wrong about ASML and Apple

ASML has developed a new generation of lithography machines for semiconductors called Extreme Ultra Violet (EUV). Current generation lithography machines use deep ultraviolet (DUV) light

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This article was written by

Mark Hibben profile picture
19.24K Followers
Balanced, expert investing strategies from a technologist's perspective
Mark has a masters in Electrical Engineering from USC, is an independent iOS developer, and blogs about technology trends and companies, the focus of his investments.

Disclosure: I am/we are long AAPL, ASML, TSM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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