“The recent slide in Apple (AAPL) shares can be attributed to one thing: Steve Jobs playing games with expectations. Now it is coming back to haunt shareholders. Here is how it typically goes: Jobs gives guidance that he knows is too low and then Apple blows it away and the stock surges. Analysts have relied on those expectations to make their estimates and have traditionally been too low,” Todd Sullivan writes for Seeking Alpha.
“Not being idiots, they caught on to the game and have ratcheted their expectations higher than they expect Jobs to ‘guide them,'” Sullivan writes.
“A funny thing happened this week. Apple guided analysts lower than what they thought the ‘low ball’ expectation would be… The problem is that people just do not believe what Jobs is telling them,” Sullivan writes.
“In the current environment, indecision equates to fear and shareholders are suffering,” Sullivan writes. “If you are going to give guidance, conservative is one thing but playing games like Jobs has with it is just wrong because eventually it comes back to bite you. No one can doubt his genius or showmanship, it was hubris that was his downfall once and is hurting him again now.”
Full article here.
[Thanks to MacDailyNews Reader “MacVicta” for the heads up.]
There was the best saying I saw posted here a few days ago –
“Here’s how to make money. Be fearful when they are greedy, and be greedy ehrn they are fearful” It implies what the columnist doesn’t understand, the stocks are a game, but you need to play with it, to be in it, and against it to win. As MDN said before, it’s about money, and Steve Jobs is making it both ways, through the products, and through the stock.
On Oct. 2007 Apple guided higher ($1.42) than WS estimates ($1.39) for Q1-08, then beat that guidance ($1.76) and the stock still got clobbered. They can’t win either way.
“Apple guided above Wall Street expectations for Q1 08: Apple sees revs of $9.2 billion and earnings of about $1.42 per share. The Street consensus was for $8.58 billion in revenue and earnings of $1.39 per share.”
http://macdailynews.com/index.php/weblog/comments/15271/
bullsh1t. their guidance has been consistently conservative. Don’t blame Steve because the analysts are reading the tea leaves the wrong way.
The game of meeting (or not meeting) the expectations of delusional market analysts is totally psychotic and really has to stop. Nothing is ever good enough for them! Apple’s projected earnings have nothing to do with it. The analysts themselves have adopted a “top this” mindset which requires Apple to outdo itself each and every quarter or see Apple stock hammered in retaliation. Consider the situation: Apple has just announced earnings for its best quarter in history and the stock is going down because the results weren’t even more mind-blowing. That’s nuts!!!
The problems with the current stock market positions and the plummeting of values is entirely the fault of the analysts and the traders.
It is certainly not the fault of the companies being traded, it is not the fault of the credit squeeze or the bankers. It is solely the fault of those I have named and more sadly it has been their fault when the same thing has happened in the past.
I defy any of them to justify why a single company should lose a sizeable part of its value between one day and the next for reasons that have nothing to do with that company, its market share, its products, and its executive, and its actual continuing in business outlook. Yes virtually the entire market has been bitten in this way.
Why, because the analysts do not really understand what makes a business. They get their heads so far up their own rears they have lost sight of daylight. And the media is idiotic enough to not put the blame where it lies, with the analysts.
In the case of Apple. SJ did NOT lower forecasts but set them higher than they had been – just lower than these same idiotic analysts wanted them to be. Well boo to them. If there is a difference between a company’s actual performance and the analysts expectations then the right question to be asked is: Did the company’s actual performance rest consistently with its own projections? If so, then clearly the analysts got it wrong and their advice should be reduced in importance.
Common business sense possessed by even the simplest of small companies would say that where two people make projections about one company and one of them overstates performance and the other understates when compared with actuals, then the overstater, while they might be saying nice things, is more dangerous and is displaying the same symptoms of the compulsive gambler who always assumes things are going to be better than they will be. Who do you trust, the understater of course, because at least that way you have a more certain future and are not being mislead by the overconfidence and immaturity of the analysts who overstate and set expectations high.
If SJ had set expectations in line with the analysts own predictions just to satisfy them then when the company did not match that they would all want his blood. By following his own more conservative projections he is doing the responsible thing.
Once again, this current stock market plunge is 100 percent the fault of the analysts and traders and is totally artificial and being fed by panic generated by the media and people believing that the analysts are somehow not responsible for their own projections.
Apple has every right to be conservative in their estimates. Even to the effect of driving share value down because this economy is tanking. Anyone with a brain can see that the American economy loaded to the gills on debt it cannot feasibly pay off is going to crash worse than any recession and may even rival the Great Depression. Hard times are a comin and Apple, like all companies, are going to feel the effects for a long time.
MDN Magic Word: Fear. Have lots of it.
Oppenheimer is the CFO and is responsible for the guidance. Not Jobs. A CEO cannot control this (unless you want another ENRON).
This is a combination of poor overall market optimism and brokers manipulating the market to sell high and buy low.
If Apple were to give optimistic or aggressive guidance, and then miss horribly because there was a manufacturing problem in Taiwan due to a sudden parts shortage, typhoon, etc., then analysts would absolutely KILL Apple for giving such guidance.
The drop in stock price is due to the overall market, not Apple’s performance. Plus, Apple stock always drops after an earnings announcement as the profit-takers cash in.
@ Uh Oh: How the hell is Jobs guilty of stock manipulation??? All Apple did was provide “guidance”, which, by its very definition, is not a promise but rather giving advice or directing something. The only way Jobs can manipulate Apple’s stock is to either have Apple completely miss the guidance (as in making far less money than projected) or by having Apple outperform its guidance, which is his job as CEO!
Jobs is not sending out emails asking you to buy Apple stock because it’s a great opportunity so he can short sell his shares. Yes, he and many Apple execs have stock options. They are exercisable at a specified price. The execs actually do better if Apple’s stock is higher, not lower, when they sell their stock.
This is why people hate analysts. If I was a stockholder, I would *insist* on conservative guidance/ WTF is the downside? Whereas guiding too high would cause my stock to tank over the long haul.
And everyone who says this is an analyst problem is *exactly* right. Some of these idiots need to go watch ‘The Smartest Guys in the Room’ the brilliant Enron documentary.
If Apple wants to guide low, fine. If analysts don’t want to reward them when they beat the guidance, fine. But only a real idiot could argue that guiding low or “conservative” is bad for business. When a shareholder can look at Apple’s guidance and feel very, very secure in that number (and reasonably expect even better), that is corporate responsibility at it’s very best.
Quote Rob Irvine:
“Could you consider making a special section, called “Pump & Dump News”, to satisfy those whose only interest is in shares”
Rob, you don’t need to read the article if the headline doesn’t interest you. Having to read complaints in the reader feedback section of a stock article is what I consider insulting and a waste of peoples time.
The stock prices are the biggest Apple news today. As soon as I got home from work I came here to read all about it. I’ll be interested in knowing what tomorrow and the following weeks have in store for Apple stocks. I’m sure most all Apple fans will be interested.
I thought Monday was going to be a good day to buy. Boy was I wrong
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Any company that gives optimistic forecasts in the face of the meltdown of the US economy would be thoroughly irresponsible.
Cautious sensible guidance is always preferable to overly optimistic guidance. That Apple continues to surpass their guidance reflects both their ability to execute well, and good luck.
Apple may feel optimistic about next quarter, but much of that optimism will rely on the absence of negative factors such as the inability of a competitor to mount a convincing challenge (MS Zune for instance; numerous competitors to iTunes; studio downloads) and the willingness of partners to ccoperate with Apple’s plans.
It is ridiculous to assert that Apple should be more optimistic – and the consequences of being overly optimistic could be quite drastic. Shareholders burned by Apple’s failure to meet forecasts could sue.
The quality of US journalism is pathetic – only the BBC manages to be worse…
I have heard SO many of you on here talk about a melt down.
Let me tell you something, if things were that bad you assholes would not be able to afford the internet access you have to get on this damn board.
Americas unemployment rate is LOW, 5%, its low, compare that to Europe where NOW economists are saying that the economy is strong, BS. I’m not saying Europe is not a strong economy, but people working is what drives the economy, and people here for the most part have jobs. And there are lots of good jobs available.
Call me when people with a business degree can’t get a job.
Right now the job slow down is in the ridicules housing market that was bloated and stupid from the beginning, and if anyone didn’t see that coming, they were blinded by the bubble itself.
Example: Our banks lose 15 BILLION a peice, 10, 12, 15 banks.
Everyone cries, the sky is falling.
China just this week reported that $119 Billion USD was lost to irregularities, and no one even flinches.
People, we can afford $119 Billion, they can’t.
The majority of Chinese are in poverty, not our levels of poverty, oh no, not even Mexico levels, China’s poverty line is a whole separate beast. When you are poor in China, you don’t have a pot to piss in.
“Shareholders burned by Apple’s failure to meet forecasts could sue.”
That’s funny!
I should sue the weatherman next time he’s wrong.
It’s a forecast. It’s almost impossible to 100% be accurate. You don’t have to put your money into stocks if you don’t want to. What right do you have to sue?
“Stock prices go up and down on whims, not the quality of a company or its products and services. “
That depends on the time scale. Your statement is true for the short term, not the long term.
-jcr
@AMacpill
That’s right but it would have been nice to get out at $200 🙁
Mr. Sullivan—Please, let’s not have a repeat of the “Steve is cluless, have Scully fire him” era at Apple. You want to watch stock tank? Try ditching Steve a second time. Been down THAT road before folks—it didn’t work, it only made things worse. Leave Steve alone he knows what he’s doing. I bought stock the minute he returned to Apple at around 9 or 12 dollars. I think I did OK with Steve at the helm running MY money thank you, even if it did drop this week. Those who believed from the beginning were justly rewarded.
Dang! MacRaven, you were smarter than I. It wasn’t until it was $18 that I bought in. But after a couple of spits from the $18, that $130 looks just fine. And I’ll keep it until it hits $300, then cash in and retire. YeeHaw!
Apple is growing, has massive amounts of cash, and is in it’s best position to grow and make more money…
Stock holders bitching while in a massive drop in the economy and their “Vegas style” hopes while betting on the stock market are making the Apple customers worried…
F the stock holders, Apple is growing and making money at rates that would make most US companies green with envy and because a few gambling annon future members are not making the return they were hoping for in their wet dreams want to kick out his “Steveness”… are they smoking crack, do they want a second run of sweetened water hucksters?
Sounds to me like you guys are all amateurs.
Knowing how to buy AAPL stock does not make you guys experienced in trading.
If you’re not trading then don’t worry about these short term movements so much. AAPL outlook looks good to me (and probably many other people).
Rich folks have been “playing” these “games” for a long time.
You guys don’t even seem to know the “rules” and are complaining about how the “game” is “played.”
There are MANY, MANY market factors at work here.
All I know is I saw the value of my investment in AAPL go from $40,000 to $27,500 in a little under a month. Luckily using collars as a hedge I was able to preserve most of my peak value and used the excess capital to buy another 100 shares. This Bronc ain’t thrown me yet. Now I’m back in the saddle and ready to ride to the mountain top.
Shareholder class action suit in 5…4…3…2…
Cramer says he reckons a bottom is forming so maybe we will see a huge rally soon. All aboard! (Again!)
This guy is either stupid or just plain ignorant. Everywhere in the world, stock crashed because of USA’s recession. I won’t expect any stocks won’t get hit by it, including Apple’s.
There is something disingenuous about getting on the stage at MacWorld and stating that their sales have risen a certain percent again resulting in so much profit and a couple of days later telling investors that they expect a lower number.
Or, you could classify it as Steve playing Wall Street’s game.
As long as they continue making great products for fairish price, the rest is fairly irrelevant.
How dare these bozos call themselves analysts! They are in fact confessing that they haven’t got a clue as to Apple’s coming performance without Apple telling them what it will be.
I do not want Apple to “reward” stockholders with dividends since the socialist scum in Washington love the additional tax revenue on already taxed corporate profits. But a stock buyback would be one great option. Apple is now a great buy for anyone — why not for Apple? But then I can see other possible reasons for Apple to use their cash horde. I trust their judgement.
A lot of folks got burned by the massive power of the stock market manipulators — the Wall Street firms and financial institutions. I did not, except on paper, because I refuse to play the margin and options game — which I believe is rigged by WS in cahoots with the well bribed politicians. Well, at least this is one of the few areas of bipartisanship — corruption. These corrupt bastards only have the power that they do because too many of us play the volatility of stock prices on a battlefield prepared by deep pocket foes. The pump and dump — including reverse pump and dump — schemes used by the WS firms, especially the hedge funds — are designed to fleece the retail day traders out of their money and to get spectacularly low prices for themselves on the best stocks. That is why Apple got hit so hard. These crooks want your AAPL.
I hold my AAPL and ride the roller coaster, while watching Apple’s fundamentals — actual business, technology and earnings prospects. Eventually the price will have to rise. The crooks, even with their massive manipulative powers can’t stop the real value of Apple to eventually be recognized by the market.
Invest in AAPL, but do not speculate. That is the safe long term play.