On Thursday, Apple stock was down over 12% for the week. The Nasdaq had dropped a little more than 6%. By the end of the week, the consumer electronics giant was still off 5%.
The reason that this appears odd is that Wall Street has been unusually happy about the prospect for Apple's new line of Macs. The Apple computer's sales have been growing faster than the overall PC market. The Mac has 5% of the overall market, and some optimists think this could move toward 10%.
The iPod is still selling well, and RBC Capital says that its check of channels shows that the iPhone is selling very well.
Apple's stock price could be the victim of its own success. At least that's the convenient explanation. Despite the recent sell-off, the stock is up 80% over the last year. Even a slight problem with sales in one of its three businesses would be a disappointment.
But, that answer is too easy. Apple is, more likely, the victim of a phenomenon that has hit share of other companies like Amazon.com (NASDAQ: AMZN), Google Inc. (NASDAQ: GOOG), and, a few years ago, Microsoft Corp. (NASDAQ: MSFT). Apple is now the clear winner in everything it has done recently. Its success it so great that its upside going forward is limited. Its performance as a business is absolutely efficient and almost too perfect.
Just as Microsoft picked up over 90% of the operating system market and Google has more than 50% of search, the chances for failing may have become small, but, so have the chances for expansion.
The market can still make money on the imperfect. It holds out the possibility from improvement.
Douglas A. McIntyre is partner at 24/7 Wall St.