First up, Marketwatch:
Apple shares fell almost $19 to $136.78 in the wake of the company’s earnings report for the December quarter, in which Apple delivered a 58% growth in net income for the period but issued a forecast for the current quarter that was below Wall Street’s estimates. The drop put Apple shares at their lowest point since August of last year.
Chief Financial Officer Peter Oppenheimer said Apple expects to earn 94 cents a share on $6.8 billion in sales for its second quarter. The forecast fell below analysts’ consensus estimates for earnings of $1.09 a share on revenue of $6.99 billion.
Apple typically gives conservative forecasts, but the latest one delivered by Chief Financial Officer Peter Oppenheimer proved particularly disappointing in light of Tuesday’s trading session, which saw nearly every major tech stock lose ground in a broad market decline fueled by fears of recession. See full story.
“The company is lowballing the Street on the March quarter, but this is not a good environment to lowball the market,” said Romeo Dator, who manages U.S. Global Investors All-American Equity Fund and owns Apple stock as part of the fund. “The future stock price will depend on continued strong sales of products and what new products they will be releasing this year.”
That’s pretty fair.
Next up, FT:
This time it comfortably beat first quarter estimates. But guidance for second quarter earnings of 94 cents a share and revenues of $6.8bn was well short of the $1.11 a share and $7bn expected by analysts. Apple shares plummeted 12 per cent in after market trading. This could be the usual Apple modesty. But, with recession fear gripping investors, they are factoring in the potential for a serious consumer slowdown. That would put Apple, more than many technology companies, firmly in the cross hairs.
I am not sure why it is that Apple is susceptible to a slow down “more than many technology companies”. Other firms (Dell, HP) take a double whammy – because of both consumer slowdown and even greater enterprise slowdown.
Reuters headline blares:
Apple shares drop after missed forecast
Uhh? They missed forecast? Really?
Net profit for the first quarter ended December 29 was $1.58 billion, or $1.76 per share, compared with $1 billion, or $1.14 per share, a year earlier. Revenue was $9.6 billion, up 35 percent from $7.12 billion a year earlier.
That handily topped the average Wall Street profit target of $1.61 while revenue was about $100 million above the average forecast, according to Reuters Estimates.
Uh-huh.
But the outlook fell short of expectations.
Oh, I see. So Apple fell short of some Scott Moritz like random expectation that Reuters set by itself.
Apple blew past Wall Street’s expectations for the first quarter, but sluggish sales in the company’s iPod division prompted investors to keep the stock in a steep downtrend.
Ahh. So, it was the iPod sales that prompted the slowdown. It had nothing to do with Apple’s Q2 estimates.
Quarterly iPhone sales came in at 2.31 million devices. That’s likely to disappoint many analysts, who had been expecting iPhone sales to range from 2.2 million to 2.5 million units in the holiday season.
Translation: Scott Moritz told me that anything short of 10 million is failure.
Our old friend, Troy Wolverton, gleefully reports:
Apple sees success; Wall Street sees something else
DESPITE STRONG Q1, STOCK PLUNGES AS Q2 OUTLOOK FALLS SHORT
No you blockhead. Wall Street agreed it was a success. They didn’t like that Oppenheimer guided lower. Period. It had nothing to do with Apple’s Q1 sales.
SAI peddles Henry Blodget’s old whisper numbers campaign crap:
The concept of “whisper numbers” frustrates the hell out of people who don’t work in the investment industry
The concept is frustrating but it’s bs. BTW, is Scott Moritz in charge of the whisper campaign?
The bigger problem for Apple last night was that the company issued forward guidance that was below existing sell-side estimates. Apple is known for giving “conservative” guidance (see above), but in this case the guidance was so low that the difference was clearly not “conservatism.” Apple’s financial team is smart. It realizes that it is far better to take a hit now and set a bar the company can clear than hope and pray that the economy will hold together, miss the bar, and destroy the company’s credibility.
Yep. This used to be an old Microsoft trick.
