Cookie consent

We use cookies to improve your experience on this website. By continuing to browse our site you agree to our use of cookies. Tell me more | Cookie preferences

Is Apple starting to lose its bite?

Apple's flagship store in Beijing, China. Apple started selling the iPhone 5 on the Chinese mainland on December 17.

Story highlights

  • Apple's share price has fallen 25% since record high of $702.10 set three months ago
  • UBS, Citibank & Mizuho analysts all cut share price targets for Apple in past few days
  • Morgan Stanley: Record 19 million iPhone 5's forecast to have been sold in Q4 2012
  • iPhone 5S, 6 & rumored "iTV' may pull up Apple's share price in 2013, say analysts

Apple's share price has fallen more than 25% since its record high set three months ago -- no less than five analysts have lowered their price targets for the U.S. technology giant in the past few days.

To make matters worse for Apple, Android smartphones continue to reign supreme in global market share: for every one such device running on Apple's iOS, about seven smartphones running Android's operating system are computing away.

Is Apple losing its bite? In the short-term, investors and analysts seem to think so. But in the medium-term, they believe milestones exist that can put the shine back on Apple's share price and image.

Apples do fall

On September 19, Apple's share price closed at a historic high of $702.10, exactly one week after the debut of the iPhone 5. But as the freshness of the device's latest iteration wore off, so did the bullishness for Apple's stock. On December 17, it fell below the psychological $500-mark, to slide below $497 in pre-market trading. The company's share price quickly climbed above that threshold that day but still sits at lows not seen since mid-February.

The dive in Apple's share price has also been attributed to a cut in orders from its parts suppliers. One fear is that Apple may have produced too many iPhone 5s in the current quarter and it may now need to scale back manufacturing in 2013. Analysts from UBS, Citibank, Mizuho, Canaccord and Pacific Crest all cut their price targets on Apple leading to a further drop in the Cupertino-based company's share price.

      Just Watched

      Apple sells 5 million iPhones

    Apple sells 5 million iPhones 02:01
    PLAY VIDEO

      Just Watched

      Apple apologizes for Maps app problems

    Apple apologizes for Maps app problems 05:25
    PLAY VIDEO

      Just Watched

      Apple fans line up to buy new iPhone

    Apple fans line up to buy new iPhone 03:01
    PLAY VIDEO

      Just Watched

      iPhone 5 is successful despite flaws

    iPhone 5 is successful despite flaws 01:43
    PLAY VIDEO

    Another fear is that the iPhone 5 has not been selling as well as previous versions; however that has now been debunked. A record 19 million iPhone 5 units are estimated to have been sold in the U.S. in the fourth quarter of 2012, according to a survey by Morgan Stanley, which would represent a 33% year-on-year increase. Apple also sold more than two million iPhone 5 units in China when it debuted this past weekend.

    "Customer response to iPhone 5 in China has been incredible, setting a new record with the best first weekend sales ever in China," said Tim Cook, Apple's CEO, in a press release.

    "The Company remains on track to launch in 100 countries by the end of the year. In our view, this is a positive," said RBC's Amit Daryanani.

    Comparing Apples To Androids

    But for all the hope and the hype that surrounds Apple, Android smartphones reign supreme in terms of market share by operating system.

    Investment research firm Morningstar says Apple has much work to do in 2013. "Although Apple has a robust product pipeline and ample opportunity to gain share in its various end markets, short product life cycles and intense competition will prevent the firm from resting on its laurels," it wrote in a statement.

    Globally, less than two in ten smartphones that shipped in the third quarter of 2012 sported Apple's iOS operating software. But in that same period, Google's Android platform ran 75% of smartphones around the world. This also represented a 91.5% increase over the same quarter in 2011, according to International Data Corporation.

    Apple's iOS claimed just under a 15% market share in the same period.

    Apple's next crop

    Despite the recent release of the iPhone 5, analysts are already looking ahead to Apple's potential product releases for 2013 to pull the company's share price up.

    "For Apple we believe the sell-off is nearing a bottom but we acknowledge the fears around margins, maps, emerging markets, competition and execution. The company clearly needs to ease these concerns in the near future," said Barclays' Ben Reitzes. "It may take another round of new products and innovations to regain investor confidence and help drive another run."

    One analyst from Jefferies predicts an iPhone 5S may ship in the summer of 2013 and that iPhone 6 prototypes already exist.

    Speculation is also growing that Apple may debut an Apple television set, a so-called iTV, by the fall of 2013. In a recent Morgan Stanley survey, 47% of 1,568 respondents said they were "somewhat interested" or "extremely interested" in buying an Apple-branded TV set which could translate into 56 million units being sold in the U.S. alone.

    The report added a potential iTV rollout represents a new $13 billion opportunity for the world's most valuable company.

      CNN Business

    • An Iraqi worker adjusts a control valve at the Daura oil refinery on November 5, 2009 in Baghdad, Iraq. Iraq and a grouping of U.S and European oil companies Exxon Mobil Corp and Royal Dutch Shell PLC signed a $50 billion contract today to develop the West Qurna oilfield, two days after the Iraqi South Oil Company signed a technical service contract with Britain's BP and China's CNPC to develop the Rumaila oilfield. The Iraqi government is trying to attract foreign investment, especially in the oil sector, in hopes of reviving its war-torn economy. Iraq has the third largest oil reserve in the world but it is producing way below its potential. (Photo by Muhannad Fala'ah/Getty Images)

      Airstrikes, rebels seizing control of oil fields, plus a severe refugee crisis are a recipe for market panic. So why are Iraq oil prices stable?
    • A view of gloves and boots used by medical staff, drying in the sun, at a center for victims of the Ebola virus in Guekedou, on April 1, 2014. The viral haemorrhagic fever epidemic raging in Guinea is caused by several viruses which have similar symptoms -- the deadliest and most feared of which is Ebola. AFP PHOTO / SEYLLOU (Photo credit should read SEYLLOU/AFP/Getty Images)

      The biggest Ebola outbreak in history is taking its toll in Western Africa, hitting some of West Africa's most vulnerable economies.
    • People enter a casino in Las Vegas, Nevada, on April 18, 2009. Las Vegas is the most populus city in the US state of Nevada and internationally renowned major resort city for gambling, shopping, fine dining and entertainment. Las Vegas which bills itself as the �Entertainment Capital of the World� is famous for the number of casino resorts and associated entertainment. AFP PHOTO/Jewel SAMAD (Photo credit should read JEWEL SAMAD/AFP/Getty Images)

      Macau has overtaken Switzerland in the wealth stakes, being named the world's fourth richest territory by the World Bank.
    • spc marketplace middle east ata atmar a_00010015.jpg

      Saudi Arabian Bateel brand is best known for its delectable dates but it now has more than a dozen cafes and a new bakery in the works.
    • Vantablack designed by Surrey NanoSystems absorbs 99.96% of all light. It however will not be the solution to the creating the world's ultimate slimming black dress! A dress made out of this material would render the curves and contours of the human body invisible and would leave the wearer looking like 'two dimensional cardboard cut-out.'

      A British nanotech company has created what it says is the world's darkest material. It is so dark the human eye can't discern its shape and form.
    • Jibo robot is designed to be an organizer, educator and assist family members. CNN's Maggie Lake met him and says she was impressed with his skills.
    • A picture taken on March 15, 2014 shows children playing at the sprawling desert Zaatari refugee camp in northern Jordan near the border with Syria which provides shelter to around 100,000 Syrian refugees. Syrian refugees in the seven-square-kilometre (2.8-square-mile) Zaatari camp in Jordan fear that President Bashar al-Assad's likely re-election this year will leave their dream of a return home as distant as ever. The brutal war in Syria between the regime and its foes shows no sign of abating and has killed at least 146,000 people since it erupted in mid-March 2011. And 2.5 million Syrians have fled abroad and another 6.5 million have been internally displaced. Jordan is home to more than 500,000 of the refugees.

      Sandwiched in between Iraq and Syria, Jordan's destiny seems to be one of a constant struggle for survival. John Defterios explains.
    • SHEFFIELD, ENGLAND - NOVEMBER 18: Queen Elizabeth II wears 3 D glasses to watch a display and pilot a JCB digger, during a visit to the University of Sheffield Advanced Manufacturing Research centre, on November 18, 2010 in Sheffield, England. (Photo by John Giles - WPA Pool/Getty Images)

      At the last football World Cup, it was all about 3D. This time around, it's nothing less than 4K.
    • An Iraqi worker adjusts a control valve at the Daura oil refinery on November 5, 2009 in Baghdad, Iraq. Iraq and a grouping of U.S and European oil companies Exxon Mobil Corp and Royal Dutch Shell PLC signed a $50 billion contract today to develop the West Qurna oilfield, two days after the Iraqi South Oil Company signed a technical service contract with Britain's BP and China's CNPC to develop the Rumaila oilfield. The Iraqi government is trying to attract foreign investment, especially in the oil sector, in hopes of reviving its war-torn economy. Iraq has the third largest oil reserve in the world but it is producing way below its potential. (Photo by Muhannad Fala'ah/Getty Images)

      Iraq produces 3.3 million barrels per day and has the world's fourth-largest oil reserves. But the current crisis is putting all this in danger.
    • Valves of gas pipe-line are seen in the gas station not far from Kiev on March 4, 2014. The European Union will help Ukraine pay the $2.0 billion it owes to Russian gas giant Gazprom, a top official said Tuesday, as part of an aid package reportedly worth more than one billion euros. AFP PHOTO/ ANDREY SINITSIN (Photo credit should read ANDREY SINITSIN/AFP/Getty Images)

      The gas standoff between Russia and Ukraine could have a knock-on effect on Europe. Explore this map to find out why is the EU nervous.