Coal In Apple’s (AAPL) Stocking For Christmas

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Morgan Stanley (MS) said what everyone already knows. It cut earnings estimates for Apple (AAPL) and several other hardware stocks. This holiday season will be a bitter one, even for those children who have been good.

From 2004 to early 2006, Apple rallied on increasing iPod sales. As those slowed a bit, the shares moved down. But, as the Mac took the baton, Apple’s shares rose again from late 2006 until the end of 2007. Apple’s significant run ended there. Despite some enthusiasm due to the iPhone, the stock has not retaken its all-time high of $202.96 which was posted late last December. Recently, the shares have been below $140.

Apple is not likely to go up again, at least not for some time. The big growth years are behind the iPod and weak consumer spending will make that worse going into the holidays. Mac sales will cool off for the same reason.

The iPhone should be new enough to post sales counter to the consumer’s reluctance to shop. Problems with power adapters and the handset’s 3G connection capacity are killing the chance for a surge in iPhone holiday sales.

Apple is about to have the worst October through December sales period in five years.

Douglas A. McIntyre