• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Technology

Apple's Skin May Be Bruised, But Its Core Is Still Intact

Apple is having a tough start to the week following reports that the company's security was compromised over the weekend. 
By TONY OWUSU
Mar 07, 2016 | 11:56 AM EST
Stocks quotes in this article: AAPL

Apple's (AAPL) core has never looked so susceptible to rot as it does today. A cavalcade of bad news has left the internal and external security of one of the world's largest tech companies in question.

First was the U.S. government's attempt to get the company to unlock the iPhone of the terrorist who killed 14 people and injured 22 in San Bernardino last year. The company pushed back against the FBI, saying that creating a backdoor into the device would compromise the faith its customers have placed in its autonomy.

Apple's security has long been one of the company's major selling points over the years, as hackers have mainly focused their efforts on infiltrating PCs. However, the first fully functional ransomware installation on its operating system, which took place over the weekend, could change consumer sentiment about just how secure the company's systems are.

On Sunday, network security firm Palo Alto Networks published a blog on its site detailing how it detected the digital infection.  

Ransomware is a form of malware (short for malicious software) that works by infecting a computer and encrypting that computer's data. Users are then ordered to pay a ransom -- usually in a difficult to trace digital currency like Bitcoin -- to regain access to their own files.

Finally, today the U.S. Supreme Court decided that it will not hear the company's appeal of an appellate court decision to find it guilty of conspiring with book publishers to increase e-book prices. The ruling carried with it a $450 million settlement.

While the company makes enough to pay that fine in less than a week, Apple is also facing internal sales pressures.

Today, analysts at Pacific Crest reduced the company's price target to $127 from $132 due to soft demand for its ubiquitous iPhone device.

"While not much appears to have changed since mid-January, our demand and supply checks seem more consistent with sales volume at the low end of Apple's guided range," wrote Pacific Crest analyst Andy Hargreaves.

However, while bears may see these obstacles as a possible death by a thousand cuts, our Real Money analysts took a more bullish tone on the company today.

"While it is certainly of note to point out the first complete attack of this sort on Apple products, we don't believe there is any reason to expect that this would affect long-term sentiment on the stock," said Scott Berman, senior portfolio analyst of the Action Alerts PLUS charitable trust.

"Apple has a long, tried history of developing secure products and they always have their consumers' best interests in mind. They would never make any decision without thoroughly vetting potential outcomes and risks, so we know this hiccup is not being taken lightly, especially since maintaining their superior brand image is always of utmost importance for the company."

"As it relates to the phone hacking dispute with the government, these really are separate issues and shouldn't be linked to one another, but we understand how the timing is unfortunate and could add to some uncertainty for the stock in the short term, especially given its nearly 8% rally over the last two weeks or so," Berman continued.

"That being said, we think that Tim Cook has made it clear how much the company values its customers and their privacy, which should suggest how serious he will take this issue and its implications for the future. All in, we trust that Apple, from the top down, has taken the right steps to quickly correct this mishap and we know that they are working, as they always do, to make their products as secure as possible to minimize the possibility of any such issue reoccurring."

Real Money contributor Ed Ponsi also took a bullish view of the company recently due to the fact that it is currently undervalued.

"There are plenty of other reasons to like Apple," Ponsi said in a piece last week. "Apple trades at about 10x next year's expected earnings, while the S&P 500 is valued at about 16x future earnings. Apple's price earnings to growth (PEG) ratio of 0.93 suggests that at its current price, the stock is undervalued."

So while Apple may take a few hits in the short-term due to these headwinds, its core remains healthy. 

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long AAPL.

 

KeyBanc Capital Markets Inc. ("KBCMI") does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

TAGS: Investing | U.S. Equity | Technology

More from Technology

2 Big-Name, Single-Stock ETFs With a Foreign Twist Could Be on the Horizon

Mark Abssy
Aug 16, 2022 12:00 PM EDT

The potential offerings from Roundhill aren't geared solely to the retail investor but also could interest smaller institutions and other ETF issuers.

A Cannabis ETF and a Micro-Cap Stock That Have Grabbed My Attention

Bob Byrne
Aug 15, 2022 8:30 AM EDT

The ETF is showing signs of perking up and the micro-cap is a maker of electric outboard motors.

Don't Get Burned on First Solar's Rocket Ship Higher

Bruce Kamich
Aug 11, 2022 11:30 AM EDT

The stock may be getting to close too the sun.

A Post-Split Shopify Merits a Fresh Technical Look

Bruce Kamich
Aug 11, 2022 8:24 AM EDT

It appears the shares of the commerce platform provider should be able to sustain some upside, though a close trailing stop would be in order.

Hey, Traders, Here's How I'm Approaching QQQ, The Trade Desk and Roblox

Bob Byrne
Aug 11, 2022 8:10 AM EDT

It seems to be time to err on the side of caution when dealing with the Invesco QQQ Trust.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 02:23 PM EDT STEPHEN GUILFOYLE

    We're Cleaning Out This Retailer From the Bullpen

    Check out the latest moves in TheStreet's Stocks U...
  • 10:24 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    To Improve Your Trading and Investing, Spend More ...
  • 08:44 AM EDT PETER TCHIR

    CPI Beats Expectations, But Maybe Not the 'Whisper'?

    Slightly better-than-expected inflation across the...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login