Actual headline: ‘Stocks Set to Open Down on Apple Shortfall’

“Apple Computer’s revenue shortfall and rising oil prices pulled on U.S. stock market futures in early trade Wednesday,” The Associated Press reports in an article headlined “Stocks Set to Open Down on Apple Shortfall.”

“Apple Computer quadrupled quarterly profit on sales of iPod music players and Macintosh computers, but revenue missed consensus estimates.”

Yesterday, Apple posted revenue of $3.68 billion and a net quarterly profit of $430 million, or $.50 per diluted share. These results compare to revenue of $2.35 billion and a net profit of $106 million, or $.13 per diluted share, in the year-ago quarter. For fiscal 2005, the Company generated revenue of $13.93 billion and a net profit of $1.335 billion, reflecting annual growth of 68 percent and 384 percent, respectively, and representing the highest annual revenue and net profit in the Company’s history.

Full article here.
Apple had their best quarter and best year in the Company’s history, but because it didn’t meet a consensus figure invented by analysts who haven’t been right about forecasting Apple’s earnings for years, The Associated Press calls Apple’s report a “shortfall.” Only where The Street meets The Mainstream Media. Apple easily exceeded their own guidance. Apple’s quarterly profit quadrupled! This, friends, is how Wall Street works and a valuable gift for those who missed out on Apple the last time around. This artificial hysteria presents quite a tempting buying opportunity, if you’re so inclined. We think it’ll be short-lived.

Remember, the number of iPods that consumers bought in July, August, and September will pale in comparison to the number that will be purchased as gifts in the current holiday quarter. And the steady increase in Mac’s overall unit sales momentum has to be extremely encouraging to Apple.

Related MacDailyNews articles:
Apple Q4 05 earnings report: best quarter & best year in company history – October 11, 2005

21 Comments

  1. The reasoning here is that the analysts had factored into their price of the stock the sales and profit that Apple would have over the quarter/year. Since it didn’t meet these estimates, they had to readjust their value on the stock. Yes, it has nothing to do with Apple per-say, but more to do with what the analysts were anticipating and factored into the price of the stock. Markets just opened and the stock is down 6.84%.

    Really, that’s not that bad.

    Most of the drop overnight was from small investors. 100 and 200 shares. There were a few of over 10,000 shares but only a hand full at most.

    This may sound like bad news, it really isn’t. If you have a couple of extra dollars around, it maybe a good opportunity for you to pick up a few shares.

    I anticipate Apple to be back over 50 in a couple of weeks, or end of the month at the latest.

  2. Headlines have so few words to use, it is difficult to tell the whole story in them.

    True that, the $48 open is quite a discount on the stock that was pushing $55 this time last week. The question is, does the same environment exist to drive the stock higher?

    AAPL is under the affect of “momentum investing” – same thing that drives Miami condo sales through the roof. Same thing that drives GOOG to 300+ on sales and a track record lower and shorter than AAPL.

    So what will keep up the momentum? The nano caused quite a spark three weeks ago. Perhaps today’s announcemnet will. If it does, certainly the stock with regain what it lost and savvy investors will gain 6% in a short time.

    But if today disappoints, or the market _percieves_ competitors gaining any ground, the stock will be punished for the risk. It isn’t fair, but it is the way the market works.

    MDN word: although

  3. people saying “expect the stock to be back” need to understand better how the markets work. The PE is still very high compared to the merket segment leaders. People (the 75% institutional owners I shoudl say) are NOT investing in Apple because of OS X or cool hardware, they are investing because of iPod and digital music.

    So Apple HAS TO makes those numbers work. Fair or not. They have to.

    What I heard on yesterday’s conference call is that iPod nano demand is so strong, they may not have equilibrium (supply = demand) until after Christmas. Oops. If today’s announcements are iPods, then it may muddy the watters on what people will buy for Christmas. Instead of a nano, maybe it’s a vPod. But this could cannibalize sales too.

    The sad thing about yesterday is that Apple proved the Halo Effect is working, and had they posted strong iPod sales (8 million) and flat CPU sales, the stock could have done the exact same thing.

    MDN word: her

  4. Analysts missed the big announcement. Apple is forecasting 4.7 B for Q1. That’s 1 Billion more than Q4.

    Watch AAPL going up again in 4 hours after Apple introduces the product(s) that will generate that extra $ 1,000,000,000.00

    MDN Word= Get; like ‘Get it?’

  5. MDN, we all know you are not well educated in business, but when you say “…but because it didn’t meet a consensus figure invented by analysts who haven’t been right about forecasting Apple’s earnings for years,…”
    it just reveals it even more.

    Apple gives the guidance that these analysts base their consensus figure information on. It is Apple that is setting the pole higher or lower regarding earnings.
    Yeserday, Apple set the target for the next quarter:
    “Along those lines, (Apple CFO Peter) Oppenheimer projected in-line results for its coming first quarter. The company expects to earn 46 cents a share — or 49 cents a share excluding stock-based compensation costs — on $4.7 billion in sales.”
    The last paragraph in this article:
    http://www.thestreet.com/_mktwrm/stocks/troywolverton/10246796.html

    So, MDN, edukate yerself on stok-piking matters.
    Apple sets the estimates, the stock analysts agree or don´t agree and base their stock buying or selling on it.
    Got it???

  6. Genius Stockboys,

    MDN/iPodDN actually gets it pretty much right. They called the AAPL correction immediately upon release of the earnings report – before many others even had the earnings report posted. And I think they’re right that it’ll be a short-lived dip and a prime buying opportunity.

    Apple easily exceeded their own guidance.

  7. Maybe I’m getting more conspiracy-minded as I get older, but doesn’t this smell like the big Wall Street players setting up the small investors to dump Apple stock so that the insiders could get it at a discount? As it turns out, those selling on the “news” were small investors. I bet the big guys are buying at this price and laughing all the way to the bank…
    Jake
    I’m normally not oriented toward conspiracies, but this one…

  8. To me, the AP headline simply re-affirms what many of us here have long been proclaiming. For a company that has beeen written off how many times, its resurgence has gained sufficient strength that, when it disappoints the Street–however stupid that may be–IT ACTUALLY MATTERS! In its own way, this is a stunning affirmation of Apple’s success.

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