Linked by Thom Holwerda on Wed 4th May 2016 09:39 UTC
Apple

Apple CEO Tim Cook insisted last week that everything was great with his company despite its first quarterly revenue decline since 2003. He and Apple's chief financial officer used the word "optimistic" 10 times during a conference call with analysts. Then the company's share price pessimistically fell for eight consecutive market days -- something that hasn't happened to Apple in nearly 18 years.

Declaring victory didn't work the first time, so Cook made a trip to Jim Cramer's therapy couch on Monday to try to soothe investors. It's unfair to compare Apple's numbers to the 2014 debut of the iPhone 6, which was a tough act to follow, Cook said. He added: Everything is great. Look at how much money we're making. The smartphone market has plenty of room to run. Customers love us so much. Then Cook attended a gala at the Metropolitan Museum of Art.

Here's what Cook didn't say: 1) Apple has been misjudging its own business, and that makes it tough to believe what executives say; and 2) The company failed to prepare investors for an inevitable slowdown in growth -- even if that slowdown proves temporary. If one duty of public company executives is to underpromise and overdeliver, Apple has flopped in that job.

A lot of people will just mockingly file away articles like this under the "Apple is doomed!" moniker, but what these people don't understand is that most of the stock market isn't about whether or not Apple is doomed or not - it's all about meeting expectations. You can suffer a massive loss, but if the loss is less than what you and the market predicted, your shares would go up. You could be doing incredibly well like Apple, but if you underdeliver, your shares will go down.

And this article makes a strong case Cook failed at underpromising.

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Hand over fist
by FunkyELF on Thu 5th May 2016 12:08 UTC
FunkyELF
Member since:
2006-07-26

I'm not an economist, so I don't understand why it's not enough that a company is making money hand over fist. Why does it need to make more each quarter than the quarter before? Even when you continue to make more and more money it is perceived as bad if the rate at which your revenue increases is slowing down?

Is this sustainable? On a small island with 10 companies could they all show growth each quarter? How about a planet with thousands of companies?

Feel free to give me an economics lesson.

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