Apple Still Isn't Quite Hated Enough

 | Apr 02, 2013 | 12:16 PM EDT
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How do stocks bottom? Pretty simple: the same way they top. Stocks stop going down once everyone is negative, and stocks stop going up when everyone turns positive.

And that's what is happening to Apple (AAPL). Just as it received more and more love when it had momentum, it is receiving more and more hate as it goes down.

Today's move by Goldman Sachs, taking Apple from a Conviction Buy to a Buy, is typical of the process. Within that downgrade is nothing new that we haven't heard from many others. No new products that can move the needle. Not one but two missed quarters coming. A sense that the company peaked a year ago and is now rudderless with an endless tease of some return of capital that's no longer even important. Just an overall, "I am sad as hell, and I can't even take recommending it anymore" kind of sorry research piece, with an opportunity to say that the analyst has a gain on the stock before even that gets taken away, from this, one of the top-10 underperformers in the S&P 500 the first quarter of the year.

Now, before you think I am saying that the stock has bottomed, the bad news here is that there are some 60 firms that follow Apple, and five-sixths of them are still recommending it. That means we have plenty more downgrades to come, as many as the upgrades came when the stock was ineluctably headed to $1,000.

Now Apple compounds the case seemingly on a regular basis. We got the second apology now from this management team, this time to China. The impetus for the apology? How about arrogance and poor customer service. The last apology? That was just for the arrogance of swapping out Google (GOOG) Maps for an admittedly inferior product.

Great companies don't have to make a lot of apologies. On this score, Apple is no longer a great company.

Of course, we know that the Apple is stockpiling cash, and while its cell-phone iteration has been roundly and summarily beaten in the marketplace by Samsung, there's still an ecosystem worth trumpeting and still a plethora of products that, while not selling as well as they were, are indeed selling. There's the perennial promise of iTV. There's good brand loyalty, as we still don't hear of many people switching from Apple to Samsung in phones or tablets, and certainly not from Macs to Dell (DELL) or Hewlett-Packard (HPQ).

That said, the negativity hasn't reached a crescendo level, despite my calling it the J.C. Penney (JCP) of tech stocks right now. We need Barclays, Bernstein, Oppenheimer, Cowen, Raymond James, JPMorgan, Deutsche Bank and, most importantly, longtime bull Piper Jaffray to lower the boom on the company, and I think that they are pretty much willing to comply, as all their numbers are too high, and they still have positive things to say when only negatives are really called for.

Still, we are getting the key disgust factor, which is as stark as the key euphoria factor was in the $700s, and as long as the stock stays in the low $400s and not the $300s, where people will be afraid to downgrade because of the cash position, this stock is still fair game.

So, no all-clear on the Apple front, just a recognition that the big hatred is now game on, and when most of those firms break ranks, cut numbers and, in the end, say how disappointed they are in management, then it will be safe and ready to run again.



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