“Usually, on days when Apple Inc. (AAPL) reports earnings, giddy investors have a chuckle about the company’s famously conservative forecasts and proceed to load up on the stock—confident that Apple’s closely guarded pipeline of new products will keep sales and profits on the rise. But in a reflection of the gloomy mood on Wall Street over the prospect of a recession, investors found little to laugh about in Apple’s latest forecast. After the company said earnings in the March quarter would come in 14% below analysts’ expectations, the share price fell more than 11%, to $137.93,” Peter Burrows reports for BusinessWeek.
“Yet on closer inspection, there are signs that Apple can not only weather an economic contraction but emerge stronger than ever. Most important is the strength of its Mac business. Sure, Apple sold a few million fewer iPods than analysts expected, but Mac sales were scorching—particularly the desktop iMac, whose sales grew 53% in a market that expanded just 10%,” Burrows reports.
Burrows reports, “There’s little question how Apple executives feel about the company’s prospects. During a conference call for analysts and shareholders, Chief Financial Officer Peter Oppenheimer said: “I couldn’t be more confident in what we’re doing.”
“Strength in the PC business is much more of a positive than slightly disappointing iPod sales are a negative… There’s a silver lining in the iPod sales numbers as well. While the 22.1 million units were 2 million to 3 million shy of consensus expectations, Apple met Wu’s revenue target for its famous MP3 line. That means the shortfall was mostly for Apple’s cheapest, least profitable product, the iPod Shuffle, says Wu. So while consumers normally opt for cheaper models in nervous economic times, Apple’s customers clearly see the value in the company’s swankiest products. That’s good news for Apple’s well-rehearsed iPod strategy: Bring out a headline-grabbing gizmo at a high price and spend the next few years milking demand by maintaining that price for new high-end models while bringing out cheaper models to reach thriftier shoppers,” Burrows reports.
Burrows reports, “Apple is likely far more prepared for an economic downdraft than most other tech companies. Sure, many consumers may put off purchases of the latest iPod or iPhone if the recession hits hard, but Mac sales should hold their own, says Harvard Professor David Yoffie: ‘Apple sells to the least price-sensitive part of the market. While no company is immune from a recession, Apple is a little less vulnerable.’ Needham & Co. analyst Charles Wolf puts it another way: ‘I think this is an outrageous buying opportunity. It’s not a cheap stock, but you’re getting a company that can grow at 25% a year for who knows how many years, at 25 times earnings. To me, that’s a steal—recession or no recession.'”
Much more in the full article here.
[Thanks to MacDailyNews Reader “PhillyMac” for the heads up.]
” AAPL is a steal”
That’s what Eve said….
Finally an article with some sense and not panic, speculation and fear mongering.
Buying more today.
Having 18.7 billion in the bank is a wonderful hedge against a recession.
“Having 18.7 billion in the bank is a wonderful hedge against a recession.”
Yeah, that is what I was thinking too. Combine that with being debt free and they are in the best position to ride out any recession.
recession, yeah, right…
I could have told you that. Maybe I should become an “expert”.
I’m still trying to work out what parallel universe I’m living in where a forecast (at around 8:40 of yesterday’s conference call) of 29% sales growth ($5.264 billion growing to $6.9 billion) is considered weak, especially when the growth between Q2 ’06 and Q2 ’07 was only 20.76%.
We appear to now be in a situation where the level of expectation on Apple is becoming totally unrealistic: they could have announced that Apple had solved the problem of cold fusion yesterday and the bears would still have found a reason to cause havoc.
Apple stock took a beating yesterday despite the best quarter in the companies history. Why? Well if you read between the lines there are not going to be any major new products this year from Apple and there will be no new software for OSX. Leopard is it for 2008 although there might be updated patches with minor improvements. This is what happens when you become more of a media company then a computer company and should send up a warning flag to all Mac users.
The Mac has been gaining in market share over the last 12 months and why not? Windows Vista is a major disappointment and a lot of people are switching to Mac’s rather than upgrading their PC’s. Leopard was released late primarily due to lack of resources as Apple concentrated on the iPhone. That should have been a major warning alarm to the people at Apple but it now seems that the next major release of OSX will not happen in 2008. This of course is great news for Microsoft as it gives them a chance to play catchup with the new Windows OS which is due in 2009. Leopard may see some minor updates but it seems that there is no major update planned at all for 2008.
True the iMac’s were just updated with a new look and slim keyboard but if Apple is to continue to make inroads into the PC market share then they are going to need to continue to innovate and that means that OSX will also need to continue to evolve. I guess I was expecting a new OSX every year but then that would have required resources and a devotion to the Mac base rather than to the studios and AT&T;. I read this morning that one analyst, after a call with Apple, now feels that there will not be any new additions to the MAC product line this year or to OSX for all of 2008 and early 2009. “We expect upgrades periodically to Leopard but we don’t see any major upgrades to OSX within the next 14 months….
In a bad bear, Apple is not insulated from anything: it will fall as hard as any other stock. There are many reasons why “good” stocks are sold in a bear market. But, when the market turns up, AAPL will be among the first to skyrocket.
For those getting giddy about buying AAPL now because it is a “steal,” just be careful: to paraphrase, “if it looks like a steal now, imagine how great a steal it will be when it’s at 100.”
Any chance AAPL hit $100? Imagine that… an opportunity to triple your money in the next 2 years. You feel like yelling at wall street “C’mon guys, just keep on panicking!!!!!!!”
That only proves that numbers have nothing to do with it.
Brokers manipulate the market and they need an excuse when someone asks why did you dump Apple shares. They wait till stock gets high, then dump it to cash in, no matter how good company does, then they come up with excuses, oh, outlook is bleek, oh, analyst expected more, oh, housing market is bad, oh, my ass itches. Then they wait for all that got scared to dump their shares and they buy back really cheap. F$#@ bastards.
Exactly. Apple will do very well when the market legitimately turns up. But it’s the old adage of catching a falling knife.
IF this really is the beginning of a bear market, AAPL has further to fall; there may be rallies, but there’s still a LOT of downside potential to this market.
Look, I owned the second Mac model ever sold — the 512K Mac released in 1984; I’ve only bought Macs ever since; I bought a Macbook last month, and I just ordered a Mac Pro with a 23″ cinema display, so I’m hardly an Apple basher. I’m just saying that we are in a very weak market now, possibly a longer term bear (not the mention the horrendous mismanagement and appalling state of our economy), and where the market goes, so goes the vast majority of all stocks.
I hope AAPL keeps dropping for at least a few more months, so I can buy some handfuls of shares. AAPL will head back up eventually. Wall Street is full of morons.
One more thing, the only ones who are loosing are regular Joes like us.
Brokers make money anyways, sell or buy. They have first hand information and they use it.
“Well if you read between the lines there are not going to be any major new products this year from Apple and there will be no new software for OSX.”
What lines? Cite your sources or STFU.
And WWDC, June, 2008 will be what then? A concert? A Star Trek movie marathon?
“I read this morning that one analyst, after a call with Apple, now feels that there will not be any new additions to the MAC product line this year or to OSX for all of 2008 and early 2009.”
Yeah, that’s convincing. Maybe he was referring to Media Access Control.
Apple is a Steal?
What is it a joke of what, have you seen the quote market, it’s -10
c’mon
Apple has no new blockbuster products in the foreseeable future.
At MacWorld it´s big announcement was a very high-priced, designer notebook computer for a very, very small group of buyers. (And Apple TV – no matter how they try to re-invent it is a small market product.).
Apple is now in coast mode and the market sees it. Nothing new and exciting going to happen at Apple this year so better to put the money somewhere else and get a better return.
@Rob
But nobody seems to complain when manipulation drives the market up. There are many styles of trading, some people are in for the long haul, and some have a shorter horizon. Why NOT ride AAPL up and then sell when it looks like its topping (buy low, sell high…)? There are many technical traders who do just that.
And, despite what our government says, our economy really is in appalling shape. If this is a bear market, it’s probably overdue, and it will have to run its course. No “stimulus package” will have any lasting effect. We’ve gotten so greedy and desperate for instant gratification that we seem to have forgotten that markets have cycles, the root of which is credit expansion and credit contraction. And if we haven’t had horrendous credit expansion over the last few years, then I don’t know what you’d call the housing mess, the 9+ trillion dollars in debt we’re facing (much of it to Asia, and many nations much poorer than we are). Even the “stimulus package” everyone keeps talking about will be financed by other countries, adding to our national debt and increasing inflation. This country needs between two and four billion dollars each day in foreign money to keep our economy afloat. And when we drop interest rates (which seems to make everyone so giddy) we reduce the incentive for foreign nations to invest in our country, which is something we desperately need right now. Our investment banks are in such bad shape that they’re selling themselves to the highest foreign bidder. And with the roughly two trillion we owe to just China and Japan, how much autonomy do we still have over our own economy? The dollar has lost about 40% (I think that’s the number) of its value since Bush took office, and about 99% of its value since the Federal Reserve Act became law in 1912. We’ve removed ourself from the gold standard in a quest for easy money and exorbitant spending, the sources and reporting of which can be easily hidden and manipulated… The final cost of the Iraq war is estimated to be about $2 trillion after all is said and done, all of which has been financed with borrowed, foreign money that we will be paying back for the rest of our grandchildren’s grandchildren’s lives… And this is just part of our whole mess.
I hope this is not a bear market, but there are plenty of reasons why it might, and should, be.
“Nothing new and exciting going to happen at Apple this year . . .”
Your FUD schtick and baseless trolling about the future is getting old.
You are obviously a very desperate astroturfer.
“a very high-priced, designer notebook”
Sounds like Ballmer isn’t paying you enough.
Here’s to hoping the 2008 WWDC will be a Star Trek Movie Marathon!
JTK: Or Clint Eastwood.
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Ampar – Wowza, you getting a tad bit excited or what?
What great new, products – potentially equivalent to an iPod or iPhone in sales success did Apple announce recently?
Answer: None.
Apple TV has been out for quite a while new. It got a software update and a drop in price (less revenue for Apple) because it was a dud.
A new notebook (MBA) is just an evolution of its other new notebooks. Looks nice, but Nothing new, exciting that the masses want or can afford.
The MBA is high priced and a designer notebook for people with lots of money to spend for a thin notebook that looks cool. What is your problem with that? You don´t think it is high priced? You don´t think it is nicely designed?
The bottom line, Ampar, is that Apple stock has dropped $60 because lots of people don´t think Apple can maintain the buzz that it had to get the stock to nearly $200. (Did Microsoft or Dell drop that much in the same time period?)
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Personally, I think Jobs made a mistake by not splitting the stock when it was up in the stratosphere. When it was at $150 he should have split it 3 ways.
Who are all the losers posting nonsense on this thread? The economy will most likely NOT enter a recession (see the CBO analysis released today) and, in any case, Apple is well-positioned for AT LEAST 25%-30% annual growth for the next several years. The Mac Book Air will be a very profitable niche computer filling a gaping hole in the Apple line-up (sub-notebook for road warriors). The Mac will continue to gobble up market share, which can drive growth even if overall computer sales stall. Further, renting movies will be HUGE for Apple, driving large sales of Apple TV boxes. Apple is now poised to take over the living room–the holy grail for tech companies for the last 5 years–don’t you guys get it?!?!
“Who are all the losers posting nonsense on this thread? The economy will most likely NOT enter a recession (see the CBO analysis released today)”
well, i married an economist, and guess who she hangs out with. even more economists. and guess what. out of hundreds of PhD’s in the field, many from places like Harvard, the outlook i am getting from them is not all that certain. don’t count on it…..
having said that, Apple is sitting well, and as Appleinsider pointed out, the MBA is far nicer than the gloom and doomers are saying, and will likely sell very well. the Apple market is growing, almost faster than it should in my opinion, and movie rentals may very well take off. i agree, they are winning the war for living room, something a lot of companies have tried and failed spectacularly at.
but Apple is NOT the entire economy. and the entire economy looks bad from here.