Apple's Stock Is Down 10%

Apple has tumbled nearly 10 percent from its all-time high amid a batch of negative headlines, but some analysts say investors should buy on the pullback.

The stock as down more than 2 percent earlier in the session, before recovering its losses. Still, Apple remains in correction territory, tumbling 10 percent from its all-time high of $705.07 hit on Sept. 21, the day the iPhone 5 was launched.

Despite the recent losses, Apple shares are still up an impressive 55 percent year-to-date, against a 15-percent gain on the S&P 500.

“In the near-term, there’s definitely some consolidation in the name,” Shaw Wu, technology analyst at Sterne Agee, told CNBC’s “Squawk on the Street.” “Negative headlines out there including Foxconn and minor complaints about the iPhone 5 are also causing some concern in the company. Broader concerns with the economy are not helping either.”

"Apple broke through the 50-day moving average several times over the last year so that’s nothing new," said Brian Marshall, analyst at ISI Group. "'Fundamentals are moving in the right direction and this is one of those periods where we see a consolidation. The stock continues to have legs so I think we’ll get up into $700."

What I find amusing is that Tim Cook, Jobs’s successor, is lionized for revolutionizing Apple’s supply chain, when in fact Apple fobbed it off on Foxconn. I’m pretty impressed, however, at Jobs’s founding of the quasi-religion of Apple evangelism. And it’s that religious devotion that makes it dangerous to short Apple stock. Apple fans don’t just buy the product; they also buy the stock.

Are the supply chain slaves still revolting?

I think you'd have to be located near the plants to know that. The Chinese government is clamping down on news of labor strife involving foreign plants for fear of (1) contagion and (2) China getting a reputation for labor strife which might drive away foreign investors. Chinese workers are treated better at foreign plants than at domestic ones, but they also tend to stick it to foreign operators simply because they can. When the government shows up to scotch their unreasonable demands, they pull out the patriotism card, as in government officials are a bunch of traitors for siding with the foreigner. This is in part why the government tends to be ride foreign investors a little harder - the unconditional obedience of the old god emperor cult where the Chinese masses worshiped the quasi-divine leader (Mao, for example) unconditionally also died with him. At the same time, the government understands the fact that foreign investors are building plants that generate economic value, as opposed to government spending that generates white elephants. My sense is that the government is clamping down on the unrest at Foxconn because it is worried about a slowdown in future foreign investment.

Foxconn does have better conditions than most foreign plants, and probably all Chinese-owned plants. The reason the "slaves" are acting up is not because Foxconn is all that bad, but because it is not only foreign, but Taiwanese. There's also the sense that Apple can take the margin hits, given its outsized profits. Ultimately, Foxconn "slaves" make 4x Indian or Vietnamese wages, 2x Indonesian wages and are on par with Thai wages. $500 a month isn't good money, but it's also double the average Chinese factory wage.

Foxconn is end-running Apple, opening up their own signature stores in offshore jurisdictions like Brazil, selling rebranded OEM products. Having your manufacturing done in China is like getting shagged by the devil. Zero accountability with your trade secrets.

Do you have a news link for this? As somewhat of an Apple skeptic (and Google and Microsoft fan), I'm always interested in details of Apple's pratfalls. I have my doubts about this rumor because Foxconn assembles stuff for everyone. Apple could simply switch assemblers and have Foxconn-assembled products barred from the US, which would bankrupt the company. Just off the top of my head, Flextronics (Singapore-based) and Jabil Circuit (US-based) are two companies that could do - also in China - what Foxconn is doing today for Apple.

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