Not Even Apple Can Keep The Market Happy


So AAPL announced its Q3 results – and next thing we know its shares took a beating – almost down 5% in after hours trading when I looked. Did anything change fundamentally for AAPL to deserve this brutal treatment from investors? I doubt it – they are just paying the price for being a very successful public company for the most part. It is not as if they did bad in absolute terms – they made a lot of money in the quarter, but not enough to keep up with the market’s instiable appetite for more.

Their product cycle did not do AAPL a lot of favors – despite the excellent iPad sales, and a new mac model. Everyone I know – and me – are waiting for the new iPhone. Till next model comes out, large numbers of  existing customers will not pay for an existing model . It is not as if the analysts did not know it – they just did not cut AAPL any slack for it.

There is an interesting question here – how much of iPad sales is killing the traditional mac revenue? I know many who barely use a PC or Mac any more, and just use iPads. I have seen this more with ex-PC users. But this might be affecting mac buying behavior quite a bit too. I am sure some smart analyst has figured it out. I need to find out more. While AAPL is a clear leader with iPads,  the tablet market is getting brutally competitive. So they cannot slacken one bit on iPads .

AAPL has always been very conservative when it comes to guidance to market. It is now at a stage where Apple’s guidance and  analyst consensus is a few billion dollars apart for revenue each quarter. That is a lot of money to make up every time. Apple and Analysts need to reach some middle ground to avoid wide swings. It is hard to pull off though given AAPL’s success.

Some small investors will probably panic as always and sell now. My feeling is that some smart fund managers will just buy at the low price given the company has strong fundamentals and tonnes of cash.

AAPL might not be totally immune to economic issues in Europe – and that could be a long term issue. I would be keen to see how 4Q turns out for them. Guidance for 4Q is 34B USD – which is probably way too low for keeping analysts happy. I am pretty curious to see if they will revise it soon after seeing the stock take a hit.

 

 

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4 thoughts on “Not Even Apple Can Keep The Market Happy

  1. Given how the iPhone models are distributed around the world, where the 3Gs is still being sold in great numbers and even an iPhone 4 can run iOS 6 without performance issues, I’m pretty sure that past sales for the iPhone haven’t slumped too significantly prior to a new release. Plus, the next iPhone isn’t coming out for several months… October, right? So I don’t think there is a bunch of wasted sales as consumers are willing to wait through the summer.

    The bigger reason is their production. As much credit as Apple gets for their great supply chain, they’ve admitted in the past of not being able to produce as many devices as needed. The new rMBP opened up with a 2-3 week delay (though it’s down to 1-2 weeks now) and they were producing them prior to the event for weeks (rumor). They could make their damn targets if they could just produce more product.

  2. This just goes to show what happens when stock pumpers don’t get what THEY want, fail to listen to the company they claim to be ‘analysing’ and decide they know best. Of course in the crazy world of stock picking – heads the bankers win, tails they win.

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