Short lines for iPad Mini; Apple stock hits 3-month low
Consumers wanting to be among the first to get their hands on the long-awaited iPad Mini and fourth-generation iPad were greeted with short lines at Apple Stores on Friday. Instead of throngs of Apple enthusiasts lined up for a day or more, as has become typical of Apple product launches in the past several years, lines at many stores ran only dozens of people deep, and customers showing up after the stores opened weren't left in the cold.
Many perhaps were weary of the seemingly never-ending hype, and burned out after the release of the iPhone 5 last month and the third-generation iPad just seven months ago. Smaller crowds were reported at Apple Stores across the globe, from Sydney to London to Palo Alto. New York City was a notable exception -- there, amid cleanup efforts from flooding that shuttered two of the city's five Apple Stores, hundreds of customers turned out, and some models of the Mini sold out within the first half hour.
That turnout amid bad conditions was encourging to Topeka Capital Markets analyst Brian White. "The iPad Mini is off to a strong start and we believe this will be the next star in the Apple portfolio," White told Bloomberg News.
But other analysts remain unconvinced that the Mini -- a 7.9-inch device that at $329, still costs significantly more than comparably sized tablets from Google (GOOG) and Amazon -- will become a breakout hit. Piper Jaffray analyst Gene Munster, one of Apple's biggest cheerleaders on Wall Street, forecast 1 million to 1.5 million Minis will be sold over the weekend, less than half the number of third-generation iPads sold in its debut weekend last spring. Those numbers are alarming to some: "We believe Apple's first weekend sales of the iPad Mini needs, at a minimum, to top the 3 million first weekend sales of the iPad 3 in order to demonstrate that the management team can execute on ramping supply of new products and to provide some evidence that there is adequate demand for a smaller iPad at these price points," BTIG Research analyst Walter Piecyk wrote Friday.
Munster, however, is optimistic on the long view: "While launch lines and initial weekend sales may not be as impressive as previous iPad launches, the iPad Mini will be a hit product for Apple and become a more significant part of the story over the next two to three quarters," he wrote in a note to investors Friday, according to Forbes.
Shares in Cupertino-based Apple sank Friday to a three-month low, down $19.74, or 3.31 percent, to 576.80. It's fallen more than 15 percent from its all-time high of $705 a share in September.
Markets fall despite positive jobs report
The final federal jobs report before next week's election showed encouraging job-creation and consistent economic growth, but it wasn't enough to keep Wall Street from slumping.
Employers added 171,000 jobs in October, up from 67,000 a month from April to June, and exceeding even the most optimistic forecasts. The unemployment rate rose slightly, from 7.8 percent to 7.9 percent, an uptick than experts called an encouraging sign, as more people who had given up looking for jobs started looking again. It "could be a sign that people are starting to see better job prospects and so should be read as another positive aspect to the report," Julia Coronado, an economist at BNP Paribas, told the Associated Press.
But after a brief rally following the report, stocks fell to moderate losses for the day. All three major indexes fell about 1 percent, led by the tech-heavy Nasdaq's 1.26 percent dip. "The report itself was good, but just not good enough," Todd Schoenberger, managing principal at the BlackBay Group, told Reuters. Technology and energy were the worst-performing sectors, with Apple and San Ramon-based Chevron leading the fall. Chevron sank $3.09, or 2.77 percent to $108.37 after reporting earnings plummeted 32 percent last quarter in the wake of a disastrous fire at its Richmond refinery.
Investors may also have been discouraged because an improving labor market makes the Fed less likely to institute a bold new round of stimulus, according to a Forbes report. "Whether or not the Fed itself will view 7.9 percent unemployment as an all clear signal, I'm sure they won't," Bill Gross, manager at Pacific Investment Management Co. told Bloomberg News. "You adapt by assuming they'll continue to be dovish."
Wall Street is also nervously eyeing the fallout of Hurricane Sandy, which the New York Times reports caused an estimated $50 billion hit to the economy, and the results of the presidential election.
Groupon hits new low
Online daily-deals leader Groupon sank to an all-time low Friday, almost a year after its $700 million IPO.
Shares in Chicago-based Groupon closed down 20 cents, or 4.96 percent, to $3.83; for the shortened trading week, Groupon was down 12 percent, and has fallen 80 percent in the past year. After being valued at $13 billion last November, Groupon's current value is a mere $1.38 billion, according to Forbes, which calls it the worst Internet IPO bust of the era.
Groupon has been widely criticized for its accounting procedures, and on Friday released correspondence between it and the Securities and Exchange Commission over the past year regarding concerns that Groupon was not disclosing enough information about new services. Groupon's response, as reported on Silicon Beat by the Merc's Chris O'Brien, included a troubling explanation that the company's accounting system was unprepared and unable to deal with its rapid growth at the time. Groupon eventually agreed to more disclosures and the SEC closed their report on Oct. 4.
Groupon's business model has also come into question in recent months, with many analysts skeptical that the company can maintain strong growth in revenue. The company will report third-quarter earnings next week, and while analysts expect modest growth, many worry it will come from Groupon's lower-margin products and services rather than daily online coupons, the heart of its business which some critics fear is not sustainable.
San Francisco-based online review site Yelp joined Groupon in the doghouse Friday, after downgrading its fourth-quarter revenue forecast Thursday. The revision, attributed to poor ad sales, sent Yelp shares plummeting 14.65 percent, or $3.52, to close at $20.51.
Silicon Valley tech stocks
The tech-heavy Nasdaq composite index: Down 37.93 , or 1.26 percent, to 2,982.13.
The blue chip Dow Jones industrial average: Down 139.46 or 1.05 percent, to 13.093.16.
And the widely watched Standard & Poor's 500 index: Down 13.39, or 0.94 percent, to 1,414.20.
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