“Apple Computer’s third-quarter report was sweet and sour for investors. The company blew through analysts earnings expectations and its own forecasts. But it offered a somewhat disappointing outlook for its fiscal fourth quarter,” Troy Wolverton writes for TheStreet.com.
“Apple projected it would earn 32 cents a share in the current quarter on $3.5 billion in sales,” Wolverton writes. “That’s slightly lower than Wall Street’s estimates. Sell-siders had previously predicted that Apple will earn 33 cents a share on $3.58 billion in sales in its fourth quarter… the report had some potentially troubling signs. For at least the second quarter in a row, the average sales price of Apple’s iPod fell in the third quarter. Apple saw about $179 for each of the digital music players it sold in the quarter, down from about $191 in the second quarter and nearly $290 in the year-ago period.”
Full article here.
MacDailyNews Take: Apple delivers the highest revenue and earnings in the company’s history and Wolverton sees it as “a mixed bag.” Does this guy want into the Enderle, Dvorak, and Thurrott weekly bridge game or what? Yes, this is the same Troy Wolverton who wrote last week that iPod demand “has slowed in recent months” because SigmaTel, which makes flash-memory for low-end music players, cut its second quarter revenue estimates and Creative Technology cut its own revenue outlook due to a shortfall on weaker-than-expected demand. For the record, Apple sold 6.155 million iPods; the highest Wall Street analyst had pegged iPod shipments at 5.5 million. Now, Wolverton wants to make Apple’s prudent Q4 2005 forecast ($3.5 billion) an issue, but he neglects to mention that Apple’s revenue forecast is a 50% increase year-over-year, the bulk of Tiger revenue has already been reaped, and the projection is based on a conservative outlook as Apple undertakes the transition to Intel-based Macs.
Related MacDailyNews articles:
The Street: the time may be ripe for Apple to get back to the Mac – July 13, 2005
TheStreet.com dubiously concludes that iPod demand has slowed, could impact Apple earnings – July 06, 2005
Apple shares surge in after hours trading on stellar earnings report – July 13, 2005
MacDailyNews’ live coverage of Apple Q3 2005 earnings conference call – July 13, 2005
Apple smashes street with record revenue, earnings; shipped 6.155 million iPods – July 13, 2005
Apple Q3 2005 Macintosh and iPod unit results – July 13, 2005
Apple can lower it’s profit margin and more than make up the loss in volume.
Don’t these idiots take economics 101 in College. Or were they stoned in college as well as they are when writing these articles.
I checked Troy’s article, he made no reference to his original analysis that Q3 would be down for Apple and proceeded to avoid any real discussion on the great results. Instead he tries to paint a bleak picture for Q4.. I guess he doesn’t want to be wrong and he’s trying to still be right.
Should we flame him in mass regarding how WRONG he is?
On our way to infinity. And beyond!
For the past 6 quarters, Apple has lowballed their EPS forecast by an average of 44.14%, and their revenues by an average of 10.44%.
An analyst doesn’t have to do much work to figure out these numbers, and yet none of them have.
Wolverton, Guglielmo, et al are first and foremost journalists. That is, they have the talent to produce x number of words on demand. Facts are inconsequential to the requirement that they produce on demand to fill editorial space.
Business analysts? Are you kidding? Have you ever looked into a cow’s eyes? There is no intelligence there, and that is what you’ll see if you were to ask any of them to explain a break even analysis, and how you can cut prices and make more profit when you operate above break even.
Apple’s Top Line was a record, Apple’s Bottom Line was a record, Michael Dell would kill for gross margins that exceed 20% (Apple’s were 29+%), Mac CPU shipments set a new record, iPod shipments set a new record, Mac shipments are growing at 3X the PC industry, iPod controls 83% of the US portable music player market (and growing), and the list goes on.
ANYBODY that puts any credence in internet business journalists is looking to lose a lot of money. I find none of them worthy of their titles.
One point no one seems to have mentioned is, when Apple lowered the price on iPods they also changed what was bundled with them, you only get USB now where they used to give you both USB and Firewire cables($29 CAD) and they don’t include the dock anymore ($49 CAD)
MW= “except” as in: I’d worry if I cared except I don’t!
There’s a lot of good stuff being written at MDN but the editors should stay away from commenting so much on financial news. They clearly don’t understand how the financial world works which becomes clear in their “take” on this story. Ridiculing the writer for calling it a “mixed bag” is just ignorant. Indeed Apple presented some spectacular figures but if you’re a financial analyst there’s also things that are not so good, or at least not as good as expected, thus it’s perfectly in line with calling it a “mixed bag.”
ANYBODY that puts any credence in internet business journalists is looking to lose a lot of money. I find none of them worthy of their titles.
I guess the same is applicable to MDN, then?
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CNET called it a bumper crop.. saying the future doesn’t look good for apple..
WTF?
iPods are on their way to becoming a commodity item. The price will continue to fall sales soar. The story of the iPod is just starting to unfold…
Anyone still cracking the ‘anal-ist’ joke thinking it clever should get with it…that was funny a long time ago but now just reflects sadly on you…
macz: no way are they justified in saying there was also bad news! Look at the last three quarters of stellar results and Apple has everytime been cautious as hell on the following quarter. And everytime the price drops because of that. What will happen is that Apple will again beat their own and the analysts predictions…by a margin. That is the way things are going for Apple. Its all to obvious that Apple is in a ‘positive spiral’ (hardware,software, music, retail, Pixar etc. etc.) and something monumentally bad would need to happen to stop it as the analysts all like to predict.
Go Apple.
I have to say it again folks. When you buy stock in a company you are not investing in that company, you are investing in other peoples impression of that company. That’s why Google is currently the good boy of Wall St. Apple has always been the troubled cousin of the street because people don’t expect it to survive, they constantly look for cracks in its foundation, something you will always be able to find no matter where you look. Apple stock should be considered a Hold to Sell right now not because the company is in trouble (Apple is going gangbusters and doing terrific work all around) but because the people who push the stock price (stock buyers and sellers) are not going to push it much higher, certainly not over the next 6 months. A company and its stock are not the same thing.
“Should we flame him in mass regarding how WRONG he is?”
We should, but I think he’ is already enduring enough torture. Look at the dude. His picture could be in the dictionary next to the word geek.
Guy’s like that when attacked just develop huge chips on their shoulders. Unfortunately he has a microphone.
OnlyMacs: I have to take issue with your assertion that a drop in profit margin suggests poor future sales. I believe the opposite is true. Any company looking at falling sales is going to try to maximize profits by holding the margin as long as possible; a company confident of continuing, and growing, sales is happy to let the margin slip because they know it’s going to be made up in volume. So let’s look forward to the next round of price cuts as a sign that iPod sales are strong!
2 ways to make money; high cost, low volume – or – low cost, high volume.
Malthus, I am with you
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low margin high volume ….
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Gee, I can’t think of any big companies that do THAT ?
Can anyone say WALMART ?
As long as the cost of producing and selling and item is below the price people pay for it you will make money. And if you make a little selling tons of htem, or tons selling a few you still make money.
Walmart has proved that high volume low margins works well.
Did you think that up on your own, sherlock?
“What is that phrase – even a broken clock is right twice a day.”
I prefer “even a blind squirrel occasionally gets a nut”.
A former MDN take.
I am happy to say that I bought an iMac this last quarter, and “acquired” an iPod 30GB.
Happy to be part of the bottom line, not many if any other companies I can say that about.