Fidelity Reduces Its Holding In Apple

  • Posted: 11 July 2002 12:46 AM

    FMR Corp., the parent and advisory arm of Fidelity, announced earlier today 7/10 that it had cut its holdings in Apple by about 50%. Please see the TMO report on the news and today’s Apple Stock Watch for more info.

         
  • Posted: 11 July 2002 05:12 AM #1

    Not good.  Not good at all.

    Apple really does need institutional investors as noted in TMO article.

    Heaven only knows what will happen after the fairly flat earnings report next week.  It could be a long, hot summer.

    Quite frankly I thought there would be more negative reaction to the Fidelity selloff than seems to have occurred.

         
  • Posted: 11 July 2002 10:43 AM #2

    One of the reasons the reponse has been muted is becuase it comes after the fact. No wonder there has been extraordinary selling pressure on Apple as of late.

    With well over $4 billion in cash and virtually no debt, there is only so far the stock can drop. Looking at Gateway, the company is trading just marginally above its cash position but has enourmous liabilities from the leases on the Country Stores.

    Apple is profitable, continues to roll out new retail stores, is acquiring needed technology and bringing new products to market. What’s hindering Apple is the lack of a consistent record of earnings growth and investor concerns that Apple is a one product company in the sense that each quarter Aple needs to look to one particular product, whether it be the iMac, iBook or a pro model to push revenue and earnings.

    In the quarters that Apple hasn’t had a new product or experienced disaapointing sales of new product, it dings revenues and earnings in a material way.

    One more thing to note: With interest rates at unusually low levels, Apple’s return on its cash is significantly reduced. The tens of millions made each quarter from interest, etc. on the comapny’s cash position had provided a cushion to earnings that currently isn’t isn’t as large as it has been in the past.

         
  • Posted: 11 July 2002 12:57 PM #3

    It’s certainly difficult to disagree with your basic remark.  Sustained, long term earnings have not been the hallmark of Apple.  Technology wins, mucking along despite the trends of others (but still mucking), popular one horse wins, etc. gives your comment a good deal of credibility. 

    Heaven knows that Apple has really not had a decent marketing plan sustained over time since the days of the Apple II. With the Apple Stores a plan at least exists. Given the fact that it’s still relatively new and not doing that badly, I wonder if now isn’t the time to be optimistic for those who supported the plan originally and also realized it would take a while for OSX to mature?

    The Apple Stores, selling Mac hardware and diverse related “digital hub” products of third parties at good margins need to grow sales. Let Sony and Adobe invest their share of R&D and contribute to direct and indirect sales at the Apple Stores.

    Keep the gadgets to a minimum unless they clearly won’t become an unneeded loss leader. There are few iPods. The opportunies for more Newtons, to be avoided like the plague, are great opportunities to lose money.

    Make 4 or 5 different Mac models, the greatest OS ever, sell a little bit of homebred stuff like FCP, and as you sell all these items don’t forget to sell a Sony DV camera and a box of Adobe web collection.  All of this is based on sales through the online and storefront Apple stores as presently contemplated.  This seems to be the plan and I still like it.

    But the bit of news about Fidelity remains a big negative IMO. Their forecasting software is a good deal more powerful than mine.  :(  OTOH it probably runs on Windows.  :D

         
  • Posted: 11 July 2002 02:03 PM #4

    Meanwhile, Apple closed up 98 cents today.  Oops. :D Gain of 5.66% in one day.

         
  • Posted: 11 July 2002 05:18 PM #5

    Wonders never cease.  :D :D

    The MDJ (Mac Daily Journal and Mac Week Journal) has a spin based on the fact that FMR may have halved its stake in AAPL, but overlooks the fact that they had only doubled their stake three months earlier, not your usual type of institutional behavior.

    This would certainly call into question that their actions be judged in the usual manner in which large institutional investments are made.

    I don’t know.  Fidelity’s move still worries me for the simple reason that institutional investment in AAPL gives it so much more credibility and stability in the market so I’m continuing to struggle a bit on this issue.

    Meanwhile I’ll just pat my wallet a bit with the boost given by a 98 cent move.  :D   Add that to the positive move last Friday, which outperformed both “computers” and tech on that crazy day, and I’m feeling a bit better than I did at the start of the day.  rolleyes  :D

    Maybe someone else thinks it interesting that Apple has a marketing plan that seems to be successful and growing?

    (oops, am I in the wrong thread or what on Fidelity?)  :wink:

    (Did I miss using any available emoticons?)  smile

    +5.56% 

    Really nice.  smile

    By my rude calculations (am terrible at math) in Excel it would appear that here at day’s end I could trot over to the Apple Store and pick up a couple of those “deals” on G4 Towers and get some good Apple monitors in the bargain.  It might just help the supposed inventory problems that are delaying the 1.4 and 1.6GHz models a month.  How sad that is.

      LOL  LOL  :D

    (Am obviously in a good mood and nothing beats clicking on an emoticon on MacObserver.  I wonder how long it will take for someone with a slow dialup to load it?  Ah, what the heck…....)  smile