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What's Eating Apple?

The tech bellwether may be in for a rough ride as disposable spending dips
What's Eating Apple?
Christoph Nieman/BW

It was Jan. 23, and Apple (AAPL) shareholders were dismayed by the company's forecast for the current quarter. Apple's stock was having its biggest-ever one-day decline in dollar terms and Chief Executive Steve Jobs felt a need to make some reassuring noises. "Hang in there," Jobs wrote in an e-mail to employees. "Our stock is being buffeted around by factors a lot larger than ourselves."

Annihilated is more like it. For the better part of last year, a bet on Apple's stock performance seemed like a can't-miss proposition. Propelled by seemingly unquenchable demand for iPods, iPhones, and Macs, Apple stock surged to a record closing price of 199.83 on Dec. 28, after starting the year at 83.80. Analysts nudged price targets ever skyward. In October, Piper Jaffray analyst Gene Munster predicted Apple's stock price could reach 250 in 2008. Instead, Apple's stock has hit an air pocket. Its share price is off an alarming 34% on the year as of Feb. 13, to 129.40, a far worse performance than the Nasdaq index and technology stocks generally.