According to an article (Holiday CE sales slower than last year) at EE Times Asia, sales of portable music players (MP3 players) declined in the U.S. during the first three weeks of the holiday shopping season. Of course Apple dominates this sector of the consumer electronics market with its iPod MP3 players.
Several caveats before you sell your Apple (AAPL) stock: I don't know how accurate this report is. If it is accurate, it is possible that Apple gained market share, that is the losses came out of other player makers like Creative Zen, Sony, or SanDisk.
But here are some numbers on the bad news: "Dollar sales of MP3 players between Nov. 18 and Dec. 9 were down 16 percent from the same period last year, while unit sales declined 9 percent, the NPD Group said."
With dollar sales down more than unit sales, it is very possible that people are tired of $400 iPods breaking or being stolen. They are buying down market.
And who wants an MP3 player now, who does not already have one? Plus the Apple iPod is getting pretty retro; it does not look innovative any more. Maybe kids have learned that they don't need the iTunes music service to load music into their iPods or non-Apple music players.
Apple won't give Q4 numbers to investors until January 22nd. Sales of iPhones and iMacs may make up for iPod weakness, if there really is any.
But Apple's stock is flying pretty high, maybe not bubble high, but investors have shown a great deal of confidence that it can only go up, and that usually happens before a fall. Apples P/E (Price to Earnings) ratio is over 50. That is justifiable only if Apple revenues and profits continue to grow at the hot pace of the last few years.
On the other hand, Apple has its fans. If Q4 numbers are weak they may not be deterred. Maybe Steve Jobs will announce some fantastic income stream for 2008. Maybe he wants Appleheads to buy iPhones instead of iPods now.
Still, I'd advise caution to anyone thinking of buying Apple stock right now. Congratulations to those of you who bought it in 2000, when the future looked bleak.
Always diversify your risk. Any stock that has become a disproportionate position in your portfolio should be whittled down.
I don't own Apple stock, and I own stock in competitors like AMD and Microsoft (but also in chipmaker Marvell that supplies chips for Apple products).
My Apple page
Apple corporate investor page
Nasdaq Apple data summary page