“As predicted, the headlines reporting Apple’s (AAPL) quarterly earnings last week — and the market’s immediate and violent negative reaction — failed to take into account that Q1 2013 had one less week Q1 2012,” Philip Elmer-DeWitt reports for Fortune. “Even Tim Cook did lousy job explaining it.”

P.E.D. reports, “It fell to the Braeburn Group’s Robert Paul Leitao, an independent investor who writes a blog called Posts at Eventide, to put the situation into plain English: ‘Apple’s fiscal quarters are usually 13 weeks in length and always end on a Saturday. Every 5 or 6 years, depending on the number of leap days in the multi-year period, Apple adds a 14th week to its first fiscal quarter to align fiscal quarters closer to calendar quarters. On a weekly basis, Apple’s revenue was $4.2 billion in the recent December quarter versus $3.3 billion in the prior-year period. On an equal week basis, revenue in the quarter rose 26.7%.”

“What Leitao is too polite to mention is that the companies that make up the S&P 500 grew their revenue a comparatively anemic 3.8% in the same period, according to Capital IQ, and that without Apple’s contribution that growth would have been even lower,” P.E.D. reports. “Yet the trailing PE ratio of the average S&P stock is 17.5, and in the past week the market — driven in large part by computer algorithms that respond to ‘sentiment’ (i.e. headlines), not fundamentals — has pushed Apple’s trailing PE down to 8.6.”

Much more in the full article here.

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