Today: Apple (AAPL) CEO Tim Cook apologizes for Chinese warranty policy, but stock crumbles even more as Exxon takes Wall Street title. Also: Tesla stock skyrockets after CEO Elon Musk announces profitable quarter, but Silicon Valley stocks take a dive.
Apple apologizes for Chinese practices, stock slides again
After taking heat in the state-sponsored Chinese press last week, Apple CEO Tim Cook moved to calm tensions between the Cupertino tech giant and the nation
A man walks in front of a company logo outside an Apple store. (Reuters/Aly Song)
it sees as its biggest future customer by issuing an apology Monday. The move didn't help Apple's deflated stock price, however, and yet another day of weakness on Wall Street knocked the company from its perch as the most valuable company in the United States.
The apology appeared on the Chinese Apple website Monday morning, with a link appearing on the homepage of the site. In it, Cook promises Apple will provide Chinese customers with an improved repair policy on the iPhone 4 and iPhone 4S, clear and concise warranty information on the Apple website, increased
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supervision and training of authorized Apple retailers, and improved accessibility to feedback.
"We are aware that owing to insufficient external communication, some consider Apple's attitude to be arrogant, inattentive or indifferent to consumer feedback," a Reuters translation of the letter, written in Chinese, read. "We express our sincere apologies for causing consumers any misgivings or misunderstanding."
The apology stems from a campaign in state-run media faulting Apple's repair and warranty system, which claimed that Apple has different policies in China than in other parts of the world. Apple had attempted to fight off those accusations a little more than a week ago, posting a message on the same website that said it provides a 90-day warranty on repairs -- just like in the United States -- longer than the 30 days mandated by law in China.
However, the attacks continued to mount, proving that China -- which Cook has long said should be the largest market for Apple -- is a vexing problem for the tech giant.
"China has never been easy," independent wireless analyst Chetan Sharma told The Mercury News last week.
While some experts -- and Chinese residents -- believe that China is targeting Apple in an effort to distract people from domestic issues, the campaign could still have a damaging effect to the Cupertino company's efforts in the county, including an important deal with China Mobile.
"At a minimum, these attacks put a wrench into Apple's ability to strike a deal with China Mobile to open opportunities further in China," Citigroup Global Markets analyst Glen Yeung, wrote in a report, according to Bloomberg News.
It is not the first time Cook has issued a public apology in response to criticism, a route many believe predecessor Steve Jobs would have avoided at all costs. Cook also apologized for the company's Apple Maps app, which it released in tandem with the iPhone 5 in September.
The previous apology was the beginning of a long slide for Apple on Wall Street. The company's stock hit an all-time intraday high of $705.07 on Sept. 21, the day the iPhone 5 made its debut in the United States, but has fallen more than 40 percent since, including a 17 percent slide in the first quarter of 2013.
The decline continued Monday, with a large, late plunge costing the company the title of highest market capitalization for an American company, which it had held since jockeying with Exxon Mobil earlier this month. Apple dropped a total of 3.1 percent Monday, its third consecutive session with losses of at least 2 percent, to end with a share price of $428.91. The company's market cap -- the total value of all its shares -- slipped to $402.8 billion, while Exxon ended the session with a market cap of $406.7 billion.
Tesla soars to record highs after profitability announced
While Apple CEO Tim Cook sought forgiveness Monday, Tesla CEO Elon Musk could sit back and wait for congratulations after announcing Sunday that the Palo Alto electric car maker had turned a profit for the first time. Investors sent those congrats in the form of a buying frenzy for Tesla stock, which pushed the company's shares to an all-time high.
The company announced Sunday night that Tesla had managed to ship more Model S sedans than it expected in the first three months of 2013, and therefore would show a profit for the first time since he founded the company.
"There have been many car startups over the past several decades, but profitability is what makes a company real. Tesla is here to stay and keep fighting for the electric car revolution," Musk said in the news release.
Armed with that information before markets opened, investors pounced on Tesla shares, sending the price up as high as $46.68, an intraday record and 23.2 percent higher than the previous close, despite analysts' doubts about the true nature of the profits. At the end of the session, Tesla stock was selling for $43.93, a 15.9 percent gain and all-time closing high; more than 14 million shares changed hands, about seven times the average daily volume for Tesla stock.
With Musk already riding high after living up to his prediction from earlier this year about profitability, he is expected to announce Tuesday another important Tesla development, which he teased on Twitter last week. For coverage of that news, go to www.sv.com at 2 p.m. Pacific time Tuesday.
Stocks head lower, with top SV150 performers turning around
Other stocks were more likely to follow Apple's lead than Tesla's on Monday, as all three major U.S. indexes declined. Tech stocks took the brunt of the damage, however, with the Nasdaq losing 0.9 percent -- far more than the Dow Jones or Standard & Poor's 500 -- and the SV150 index of Silicon Valley tech companies declining 1.1 percent.
Some of Silicon Valley's hottest stocks in the first quarter of 2013 retreated Monday, including Zynga (down 6 percent), Netflix (NFLX) (down 3.6 percent), SunPower (SPWRA) (down 3 percent), Hewlett-Packard (HPQ) (down 2.2 percent) and LinkedIn (down 1.4 percent). Facebook declined 0.2 percent in the first trading session since it announced an event later this week that is expected to be an announcement of a more advanced Facebook phone application.
On the positive side, eBay (EBAY) gained 2.8 percent to $55.71 as enthusiasm continued from the company's ambitious goals established at last week's analyst meeting. Google (GOOG) gained 0.9 percent to pop back above $800 as it exercised its usual plethora of April Fools' Day jokes, and Electronic Arts (ERTS) gained 1.2 percent as at least one news source fell for an April Fools' joke that claimed the company had named a new CEO.
Silicon Valley tech stocks
Up: Tesla, eBay, SolarCity, EA, Google, Oracle
Down: Zynga, AMD, Netflix, Yelp, Nvidia, Apple, SunPower, Palo Alto Networks, HP, Ruckus, Gilead, Intel (INTC), LinkedIn, VMware, Symantec, Applied Materials, Intuit
The tech-heavy Nasdaq composite index: Down 28.35, or 0.87 percent, to 3,239.17
The blue chip Dow Jones industrial average: Down 5.69, or 0.04 percent, to 14,572.85
And the widely watched Standard & Poor's 500 index: Down 7.02, or 0.45 percent, to 1,562.17