“Normally, the newsflow surrounding Apple Computer in recent days would have been a recipe for disaster,” Troy Wolverton reports for TheStreet.com. “The ingredients were all there: skepticism on the Street, a mixed earnings report relative to expectations, disappointing sales of its most important product and worse-than-expected guidance, which analysts reacted to by reducing their price targets and full-year earnings estimates. But instead of spoiling Apple’s stock, the news seemed to sweeten it. In recent trading on Thursday, Apple’s shares were up more than 3%; earlier in the day, the stock was up nearly 7%. So what happened? While many factors were likely at play, the key ingredient, according to investors, could be summed up in one word: relief.”
“‘It’s a relief rally,’ says one fund manager who went long Apple following the company’s report Wednesday afternoon. ‘You have people thinking the quarter wasn’t great, but it wasn’t a disaster, either.’ Indeed, setting aside the Street’s expectations and forecasts ahead of the financial update, there was much to like about Apple’s report,” Wolverton reports. “Even though the company didn’t start shipping two of its three new Intel computer models until late in the quarter, Intel-based units comprised more than half of Apple’s computer sales. That success points to a larger point about Apple and its stock. Even if the company’s near-term results were disappointing relative to expectations, few expect Apple’s growth to hit the brakes anytime soon. In fact, many investors and analysts are counting on the company to see big sales and earnings toward the end of this year, as it completes its transition to Intel-based computers and likely introduces new iPod products.”
Full article here.
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