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.
