Can one ‘bad’ Apple spoil a whole barrel of tech stocks?

“Apple reported earnings that beat analyst estimates on strong sales of iMacs, laptops and iPhones. But its cautious outlook led investors to slam the stock Wednesday morning, and take much of the Nasdaq down with it,” Jon Fortt blogs for Fortune. “Why?”

Fortt writes, “To some extent, it’s a case of one bad Apple spoiling the bunch. Steve Jobs & Co. is seen as the most innovative, growth-producing group in tech. And if the U.S. consumer’s economic troubles are starting to rattle mighty Apple, high fliers like Research In Motion and Google might not be immune, either.”

Fortt writes, “Indeed, Apple’s holiday performance showed signs that the company’s not unstoppable in 2008. In particular, Apple’s cautious outlook, weakness in U.S. iPod growth and the unpredictability of iPhone sales left Wall Street’s pessimists plenty of reason to doubt.”

MacDailyNews Take: Let’s take a look at that last sentence, shall we?
• Apple’s cautious outlook compared to Wall Street analysts who don’t seem to understand (or perhaps just don’t care) than Apple almost always issues a cautious, conservative outlook. Apple’s guidance expects 29.3% year-over-year revenue growth in Q2 08.
• Weakness in U.S. iPod growth due, at least in part, to the introduction of the iPhone (cannibalization: we bought iPhones last year, therefore didn’t need an iPod) and the fact that Apple’s iPod touch is a highly sought after, but most expensive iPod model (this year, we’ll buy Janie a Wii and Jimmy an iPod touch, instead of getting them both nanos). Even given that, Apple’s iPods unit sales grew 5%, set a new record, and iPod revenue surged by 17% YOY. The iPod mix is getting richer.
• Unpredictability of iPhone sales means that Apple has never sold iPhones in the upcoming quarter, so, quick, chickens, the sky is falling, sell, sell, sell!

Fortt continues, “[iPhone] cannibalization [of iPod] would be a bad thing. It would mean that iPhone growth doesn’t purely add to Apple’s results — it also takes away from the iPod.”

MacDailyNews Take: People should learn about how iPhone revenue differs from iPod before making foolish pronouncements. iPhone sales are the gift that keep on giving to users – and Apple. Apple doesn’t get paid by carriers for each iPod sold.

Fortt continues, “Apple’s outlook made Wall Street nervous. For this current quarter that will end in March, executives promised revenue of $6.8 billion and earnings of about $850 million. And while ordinarily analysts would take that number with a wink and expect Apple to easily beat it, this year they’re not so sure Apple can.”

Full article here.

MacDailyNews Take: So, when Apple does beat their own guidance will the analysts replace the tens of billions in lost AAPL shareholder value from the past month of fun and games?

Wall Street is a game. Play it well or sit on the sidelines watching in bewilderment trying to decipher who’s playing whom and by what, if any, rules.


  1. I’m no JazzDrummer, but I can add and subtract.

    AAPL shares are currently $17 dollars over the close on Goldman’s quite old sell proclamation.

    I can multiply, too. Can you?

    I bought 10,000 shares after reading Goldman’s lunacy. How much am I up today? And, I’ll be up five times that by the time the anniversary of her ridiculous recommendation rolls around.

  2. The whole thing is STUPID! Record earnings and they still aren’t happy and twisting the truth as an excuse. I think they all have lost there minds! I wonder what Steve Jobs and the executives have to say about this NON-SENSE!!! As far as taking the rest of the market down with them, GREAT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
    Who’s fault is that? Not Apple’s!! Wall Street and the stupid people on the floor control that, obviously.

  3. Remember Wall Street’s motto : Instant Gratification takes too long”. There is no way that Apple could sustain the level of innovation. Lets look at what has happened;

    -New iMac’s: Introduced in 2007. Only new upgrades will be faster processors probably mid-year.

    -OSX: Leopard is here at least through the first part of 2009 but there will be improvements along the way.

    -iPod: How many iPods can they sell? Growth of iPods is bound to level off without the introduction of newer video iPods with bigger screens.

    -Tablet Mac: Maybe late in 2009 not this year

    So Apple has put themselves in position to keep earning money with movie rentals and upgrades to Apple TV but this is no good enough for the street. When you consistenly deliver outstanding innovative products the street says “that was yesterday what have you done for me today”.

  4. MDNs take brings up a good point, the iPhone’s deferred revenues. Last quarter added about $950M in deferred revenue. Imagine if it weren’t deferred, but had been realized in the last quarter? That’s almost another Billion!

    Look at Apple’s cash position, it increased $3B, when earnings only added, what, $1.5B? What a huge cashcow.

  5. “Wall Street is a game. Play it well or sit on the sidelines watching in bewilderment trying to decipher who’s playing whom and by what, if any, rules.”

    It’s kind of hard to sit on the sidelines when most people only have a 401K plan with their employer. Pensions are a thing of the past for most. And even the remaining ones have to invest. The stock market effects us all, one way or another. We are simply pawns for the rich.

  6. for whatever reason they sold. that’s a fact. you can’t argue with reality. i have got 1000 shares, bought at 65$ and i’am in for the longterm. no doubts and fears can change that. beside that i took the chance to make some quick cash. bought 100 at 126. will sell them tomorrow. that makes probably 1799$ in 2 days. guess what i will buy for it ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

    magic word: fear

    no comment!

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.