Linked by Thom Holwerda on Wed 23rd Jan 2013 22:09 UTC
Apple "Apple Inc reported quarterly revenue that slightly missed Wall Street expectations as sales of its flagship iPhone came in below target, sending its shares down more than 4 percent. The world's largest technology company shipped 47.8 million iPhones, lower than the roughly 50 million that Wall Street analysts had predicted. Sales of the iPad came in at 22.9 million in the fiscal first quarter, about in line with forecasts." I'll leave the financials to the experts, but one thing that stood out to me: Apple sold 4.2 million Macs, almost a million below expectations. How much of a future does desktop computing have at Apple? Update: The NYT/Reuters changed the title during the night. Fixed it.
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RE: Ridiculous expectations
by galvanash on Wed 23rd Jan 2013 23:24 UTC in reply to "Ridiculous expectations"
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But that is what stock analyst do - it is their function...

They set expectations. For a poorly performing company that are showing signs of life, they declare a benchmark that must be met - and when the company meets meets or exceeds the benchmark low and behold their share price climbs!

Likewise, for a well performing company, they declare even higher benchmarks, progressively to the point of not being able to meet them... And when the company fails to meet the benchmark low and behold their share price tanks (edit - I should say dip, tank is too strong a word)!

Thats sounds awfully cynical, but its the truth. The benchmark isnt arbitrary, it is based on past performance and current stock price and valuation.

The point is keep investors grounded in reality. A company like Apple, who has performed exceptionally for a very long time now, doesn't necessarily deserve EVEN MORE INVESTMENT. At some point the upside is no longer there. You can't grow forever. It doesn't matter that they are still performing well - the point is they are no longer growing fast enough to maintain their current trajectory.

It would be dishonest to investors looking for a place to put their money to declare how wonderful Apple is doing when they are siting on so much f*cking money... In order for it to be advantageous for an investor to buy Apple stock right now, they have to significantly exceed past performance - prove that they are still producing revenue at a rate that makes their stock price realistic.

The point isn't purely business performance - it is really about the stock price. Apple's doing just fine - they have tons and tons of cash. They can afford to lose some valuation. What the market can't afford is investors being sucked into throwing money at a company whose upside is rapidly reaching a pointing of equilibrium... So analyst projections help to add some levity to the equation.

People complained about Apple being overvalued in the past... Well, now the market is essentially agreeing with them (at least a little bit). The beast does manage to correct itself from time to time ;)

Edited 2013-01-23 23:29 UTC

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