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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Ridiculous expectations
by mkone on Wed 23rd Jan 2013 22:49 UTC
Member since:

Apple just posted revenue of $54bn, 8bn higher than they achieved in the year ago quarter (in a reporting period that was one week shorter). If you correct for that, they would have had between $57 and 58bn revenue. They also reported profits of $13bn. Marginally more than in that quarter.

And people are disappointed!

They also sold more iPhones than they have ever in a single quarter. To put things in perspective, they sold nearly 50m iPhone, and just 5m iPhones less than they managed through the whole of 2011. Their iPhone revenue was $30bn.

The revenue for the rest of their products is also nearly as much as the first quarter revenue in 2011. (It was $27bn then.)

Apple was never going to maintain the kind of growth that some people expected. It's just not possible.

By the way, just did the calculations. Until the year ending 1 February 2012, Dell made total profits of $27bn. Apple made half that in a single quarter. They obviously know what they are doing, analysts be damned!

Reply Score: 3

RE: Ridiculous expectations
by Phloptical on Wed 23rd Jan 2013 23:17 in reply to "Ridiculous expectations"
Phloptical Member since:

God forbid the "analysts" on Wall Street do not see 20% growth quarter after quarter. Stocks are such a scam. You'd be better off gambling your money in a casino and putting the rest in a bank.

Reply Parent Score: 5

RE[2]: Ridiculous expectations
by galvanash on Wed 23rd Jan 2013 23:53 in reply to "RE: Ridiculous expectations"
galvanash Member since:

I you invested $100 in Apple in July 2002 your stocks were worth $700,000 dollars in July of 2012...

A few months later their stock price went all the way to $700 a share (from aobut $500). Now it is back down to $514 (its actually trading slightly up so far today surprisingly).

In other words ANY money you put into Apple during the 10 year period between 2002 and 2012 would yeilded a significant net gain, even though it lost a full 20% of its value since around Sept...

Even if you just invested in the S&P 500, you would still see about a 20% gain over that same time period...

The point is no, you can't get that kind of reliable return on investment in a Casino. And the risk calculation is completely different - all you have in a Casino is random chance, and it is carefully balanced to give the house an advantage. Always.

In the stock market, it is the other way around. Odds are you make money over the long haul. It is the short haul that presents a danger... And you actually get to use your brain and pick where you want to put your money.

Im not promoting Apple stock or anything. Just saying yeah, some people lose money in the stock market - but most people actually don't. if you avoid doing stupid things like day trading and what not and don't try and be too aggressive it historically has ALWAYS been a much better place to put money than under your mattress...

It is definitely a better place to put money than on a roulette wheel.

Reply Parent Score: 3

RE[2]: Ridiculous expectations
by JAlexoid on Thu 24th Jan 2013 01:51 in reply to "RE: Ridiculous expectations"
JAlexoid Member since:

Stocks are a scam, for people that don't understand what drives the price of said stocks.

Investments aren't made on what you currently do, investments are made on what you might do.

Reply Parent Score: 3

RE: Ridiculous expectations
by galvanash on Wed 23rd Jan 2013 23:24 in reply to "Ridiculous expectations"
galvanash Member since:

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

Reply Parent Score: 6

RE: Ridiculous expectations
by ndrw on Thu 24th Jan 2013 00:03 in reply to "Ridiculous expectations"
ndrw Member since:

Predicting is the *main* function of financial markets. Investors put their money at work because they expect earnings, so when they are inaccurate in their predictions there must be a correction.

This is a good mechanism. When working correctly, it transfers resources to places that use them most effectively (like Apple a couple of years ago). It also helps to absorb shocks - people expect e.g. oil to run out so its prices are growing *now*, encouraging investment and saving, and discouraging consumption.

Reply Parent Score: 4

RE: Ridiculous expectations
by robojerk on Thu 24th Jan 2013 04:48 in reply to "Ridiculous expectations"
robojerk Member since:

Investors are disappointed because higher number were predicted.

Reply Parent Score: 2

RE[2]: Ridiculous expectations
by Deviate_X on Thu 24th Jan 2013 14:58 in reply to "RE: Ridiculous expectations"
Deviate_X Member since:

Investors are disappointed because higher number were predicted.

And these missed targets are already the result of downgraded targets.

Reply Parent Score: 3

Bill Shooter of Bul Member since:

What you're seeing is people realizing that Apple has hit that point where its no longer a growth stock. Mutual funds and large institutions sometimes want to maintain a certain portion of their holdings in growth stocks. If Apple is no longer a growth stock, then they'll have to adjust their portfolio accordingly. I think that's what you're seeing now. Or at least it sounds like it to this complete financial noob.

So basically Apple's not doing a terrible job, but neither are analysts or people selling the stock. They just have different objectives and perspectives.

Reply Parent Score: 2

henderson101 Member since:

Ah, like Dell, HP and Microsoft... right! Gotcha!

Reply Parent Score: 2