Shares in Apple Inc. bounced back from Friday's hammering with a 3.97 percent leap on Monday. Investors shook off broad earnings worries from last week's tech sector and remembered that Apple is scheduled to announce the iPad mini during a media event on Tuesday, and took back all of Friday's losses, and then some.
AAPL Chart for October 22nd, 2012
Source: Yahoo! Finance
AAPL ended the day at US$634.03, a gain of $24.19 (+3.97 percent), on moderate volume of 19.5 million shares trading hands. On Friday, earnings worries precipitated by Google, Microsoft, General Electric and several other companies sent the markets into a broad retreat, but AAPL investors shook off those concerns. Apple had shed $22.80 per share, for a 3.6 percent decline.
Investors apparently had enough of that, however, helped in part by iPad mini. The Street reported that UBS analyst Steven Milunoich called the device a, "giant step" for Apple's iOS ecosystem.
"One small step for the iPad, one giant step for the ecosystem," the analyst wrote in a research note. "Creating barriers to exit is critical to Apple's long-term economic model. Offering a lower-priced tablet not only brings more consumers to Apple's ecosystem, it increases their exposure to higher-priced content and increases switching costs."
He added, "The iPad generates 65% more revenue per app on average than does the iPhone,. Excluding Asia, the disparity is greater with iPad revenue per download more than double than the iPhone. Using Apple's estimate of 80 apps downloaded per iOS device, including apps not on device, iPad paid app content would be $56-80."
Mr. Milunovich reiterated a $780 price target and a "Buy" rating for AAPL.
All three major indices closed higher, with the DOW up 0.02 percent, the NASDAQ up 0.38 percent, and the S&P 500 up 0.04 percent. Unlike AAPL, those gains weren't enough to erase Friday's losses. Several of Apple's competitors, including Amazon, Google, and Microsoft ended the day lower, while Dell and HP both closed higher.
In addition to Apple's media event on Tuesday, the Cupertino company is also scheduled to release its fiscal fourth quarter (the September quarter) financial results. The Mac Observer will have live coverage of the media event and extensive coverage of the company's earnings report.
*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.