Originally Posted by jakeb
Can anyone explain to me why AAPL is down 8% aftermarket? Seriously now.
Sure. The "Market" believes that this is proof that the Steve Jobs Apple is dead. They don't see any growth in Apple's profits, which is fundamentally what a stock is valued at. Effectively every stock is valued based on the prospect for future profits. Past profits only provide an indication on track record, and cash and capital assets on-hand.
An investor wants a positive return relative to a "risk-free" investment for holding a stock. That can be in the form of dividends or the hope of appreciation in the asset value. A 30-year Treasury note has a yield of 3.67% today, and that is generally considered the risk-free rate. So, Apple has a dividend of 2.4% at current after-hours price. The prospects of improving that dividend appear to be limited, so the value of the stock needs to drop dramatically.
...So, what does it take for a company the size of Apple to improve cash flow to the point that it can double its dividend? Either they need to dramatically increase sales, or they need to dramatically reduce costs, or some permutation thereof.
Unfortunately, a whole lot of long-time Apple investors (like myself) are no longer confident in Apple's ability to make the kind of changes that would improve the picture. A lot bailed over the last 18 months, and this will cause even more to do so.
Companies like Google are looked at differently because they are "game changers;" Wall Street doesn't see Apple in that category anymore.