Apple shares tumble on downgrades from investment banks
Shares of Apple bled more than 17 percent of their value in Monday morning trading on the Nasdaq stock market after analysts for investment banks Morgan Stanley and RBC Capital both downgraded their outlook on the company, citing a worsening consumer environment.
Morgan Stanley analyst Katy Huberty cited three primary concerns while downgrading shares from Overweight to Equal-weight, and cutting her fiscal 2009 per-share earnings growth estimate to 6 percent -- 9 percent below the Street's 15.5 percent consensus target. First, she said, PC unit growth is decelerating to the point where the remaining growth opportunities largely exist in the sub-$1,000 market, a segment where Apple doesn't yet compete.
The analyst also outlined a new series of performance scenarios where the best case would have the company's per-share earnings growth decelerating "meaningfully" from levels reported at the end of the June quarter. She now expects December quarter per-share earnings to decline 8 percent year-over-year, compared to the 29 percent growth witnessed during the June quarter.
