Tech News Dominates
The broad indexes ended mixed, with the action dominated by technology names, after the Wall Street Journal reported on Sunday that Apple ( AAPL) had reduced its orders for iPhone 5 components amid slower-than-expected demand, citing unnamed sources. Apple's shares were down 4% to close at $501.75. The company will announce its results for its fiscal 2013 first quarter (ended on Dec. 31) on Jan. 23, with analysts polled by Thomson Reuters expecting earnings to come in at $13.34 a share, declining from $13.87 a year earlier. Jim Cramer said that "with the stock going from $700 to $500, what you're hoping to hear is that they increased orders," and he agreed that the sources for the Wall Street Journal's story might be thin. However, Cramer also said that one of his children was complaining that the "new iTunes is horrible," that the premium prices for Apple's products may no longer be justified," and that "there may not be as much in the pipe," in the way of transformative new products.
Bank of AmericaBank of America's shares are down 1% so far in 2013, after rising 110% during 2012. The shares had fallen 58% during 2011. Putting all those numbers together, the shares are down 13% since the end of 2010. Last week was a very busy one for Bank of America, with the company beginning the week by announcing that it expected its fourth-quarter earnings to be "modestly positive," as a result of its mortgage putback settlement with Fannie Mae ( FNMA) and because of its participation in an $8.5 billion mortgage foreclosure settlement with federal regulators. Then on Wednesday, Credit Suisse analyst Moshe Orenbuch downgraded Bank of America to a neutral rating from an "Outperform" rating, even though he raised his price target for the shares by a dollar to $12.00. The analyst said that the stock's "current valuation appears to be ahead of the company's near to intermediate-term performance and appears to be discounting significantly faster improvements in efficiency than we would be expecting." Orenbuch added that "At its current valuation, the shares appear to be discounting at least a 16% improvement in costs over the next year vs. our estimate of 10%," and that "despite the announced mortgage servicing sales, it will take until 2014 for the annual run-rate of expense saves. Separately, we think it will be hard for Bank of America to grow revenues faster than the 'average' bank."
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