Apple, Traders, and Sqeegee Boys

You have to love stories like Apple’s today. After a stellar week last week, the stock is under pressure the last two days, so a reporter calls a few brokers this morning. He apparently finds one who says he’s heard on the desk rumors that Apple’s cutting iPhone production by almost half.

That story mutates in the telling, however, ending up being sourced to a “trading desk memo” at trading firm Miller Tabak, which admittedly sounds much better than “some random trader who took the call”. And then the story is off and running, hitting all the wire services, even if no-one was quite sure whether it was iPhones or iPods who production was being cut.

This stuff is so nutty. An Apple-related trading desk memo at a random firm that doesn’t even cover Apple? That’s, you know, horseshit.

First, trader rumors about manufacturing issues at tech stocks are basically on par with hearing the same thing sotto voce from a corner squeegee boy. They have entertainment value, but that’s about it.

Second, why did no-one follow-up? Not until my man Jim Goldman at CNBC knocked the story down late today did I hear about anyone who actually called Miller Tabak, only to find that there was no basis to the story, no “trading desk memo” — not even a runaway sqeegee boy answering phones.

Completely unbelievable, and yet it cost Apple a few billion in market capitalization today.

Related posts:

  1. Perspectives on Apple WWDC: Stick in Eye Marketing
  2. Engadget’s Apple iPhone Story & Stock Hackers
  3. Evaluate Traders by Their Stories
  4. Apple Nutters and the iPhone
  5. Clearing Up a Myth About L’Affaire Apple/Engadget

Comments

  1. Eric Savitz says:

    FYI, Paul, I called Miller Tabak, and blogged the results:
    http://blogs.barrons.com/techtraderdaily/2007/07/31/apple-iphone-production-cut-rumored-sued-by-eminem-ny-state-complains-on-iphone-battery/
    A quote:
    “Peter Boockvar, equity strategist at Miller Tabak, tells Tech Trader Daily the firm didn’t write a report or do any actual research; it simply “was passing along what we’ve heard from other people,” which was that Apple may have told suppliers that it was cutting production either of the iPhone or the iPod. Pretty sketchy, eh? “Extremely,” Boockvar agreed. He also notes that some analysts have come out and said the story is not true. Not much to go on there, but it nonetheless seems to pressuring the stock.”

  2. Eric — Interesting. What time do you make your calls? By the time Goldman at CNBC talked to MT they had seemingly backed away even further from the story they helped start.

  3. Lieronymous Bull says:

    Whatever you think of Goldman on CNBC…it was CNBC that spread the rumor the most….they are just so easily manipultaed into putting stuff on the air. A big part of the problem…I look forward to the Fox channel…maybe CNBC will take on a more responsible role.

  4. Hmm … I wonder if there’s a small trading strategy (relying on zero- commission brokers) somewhere in here :-) .