The big news is how Apple disappointed the stock market by revealing Q3 financials that missed estimates. Whose estimates? Not Apple’s. As usual, Apple came in above their quarterly guidance.
Let’s take a look at the basic numbers. Revenue was $35-billion. Net profit was almost $9-billion (Apple now has over $117-billion in cash). Everything was up from the same period last year, including the all-important gross margins.
Apple sold (not shipped) 26-million iPhones, 17-million iPads, and 4-million Macs. Apple’s iPad business, just two years old, is greater than the Mac business.
What’s the problem? Apple beat their own guidance handily and delivered stellar financial numbers during a worldwide economic downturn.
Here’s the problem in a nutshell. Every quarter Apple provides an estimate of the next quarter’s financials. Then, stock analysts ignore those numbers and create their own, using silly-assed methods like checking retail stores, trying to dig up numbers from suppliers, and pulling nonsense from their collective butts.
Apple didn’t miss their own estimates. Apple missed the collected analysts estimates which were much higher than Apple told the analysts they would be. Apple is more accurate at predicting their business than stock analysts are at predicting Apple’s business.
There isn’t a tech company on the planet that wouldn’t sacrifice their CEO and board of directors by tossing them into a volcano to have Apple’s numbers quarter after quarter.
By beating their own estimates, Apple is rewarded with a slap in the face, and gets blamed for dragging down a stock market that’s already dragging. Remember Microsoft? The company turned in the first loss ever as a publicly traded company, run by a CEO whose claim to fame is ownership of a flatlined stock price for a decade, and the market barely notices.
Apple exceeds guidance but misses crazy assed speculation from stock analysts who seem to think they know better than the company actually making and selling the products they cover, and Chicken Little makes an appearance on Wall Street.
In the end, regardless of the outcome, Apple remains a money-making machine with a price to earnings ratio that makes the high flying stock price a relative bargain. And smart people buy bargains.
Stupid people become politicians or stock analysts.