Apple shares off but weather U.S. market selloff

By Noel Randewich

SAN FRANCISCO (Reuters) - Shares of Apple Inc (NASDAQ: AAPL) fell to their lowest since August on Monday following recent worries about potentially soft iPhone sales but fared better than a 2 percent drop in major indexes.

At one point Apple was down 3 percent and weighed more than any other stock on U.S. indices in the first trading day of 2016 after weak Chinese economic data reignited fears of a global slowdown.

But the stock recovered much of that loss to trade down just 0.4 percent at $104.78 at midday, significantly outperforming slumps of more than 2 percent for both the S&P 500 and the Nasdaq, even after Korean rival Samsung Electronics <005930.KS> said it expects a difficult business environment in 2016 due to weak global economic conditions and heightened competition in key businesses including smartphones.

Shares of Apple are down about 23 percent from record highs in April, reflecting recent worries that iPhone shipments next year could fall for the first time as fewer people replace their smartphones and following softer-than-expected demand for the most recent 6S and 6S Plus models.

"The bearish sentiment at this point has overshot," FBR analyst Daniel Ives said. "The New York City cab driver at this point recognizes iPhone 6S Street estimates were too high, and now it's all baked into the stock."

Since early December, about one-third of analysts tracked by Thomson Reuters have trimmed their estimates for Apple. For fiscal 2016, Apple is now expected, on average, to grow revenue by under 4 percent, a far cry from the 28 percent revenue expansion it achieved in the fiscal year that ended last September.

Apple's stock trades at 10 times expected earnings, its lowest since August, making the Cupertino, California company cheaper than Microsoft (NASDAQ: MSFT) at 19 times earnings and only slightly more expensive that IBM (NYSE: IBM) at 7 times earnings.

(Editing by Jeffrey Benkoe)

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