“Apple (AAPL) is notorious for one thing: giving lowered guidance to their profits and revenues,” Kenneth Hartog writes for Seeking Alpha. “Why do they keep doing this every single quarter and end up being wrong every single quarter? Why the particularly lowered guidance this quarter?”
MacDailyNews Note: Apple guided below analysts’ expectations, but Apple’s Q2 08 guidance of “revenue of about $6.8 billion,” is 29.3% over Apple’s Q2 07 posted revenue of $5.26 billion. In other words, Apple expects their business to grow 29.3% year-over-year in Q2 08.
“I will answer all of these questions in one simple and quick answer: Money. Why would they lower guidance to make more money? Well, in my opinion, the people who work for Apple have no incentive to drive the price of the stock higher in the short term. In fact, their incentive is to drive the stock lower in the short term. Why? The people who work at the company are being paid in options. If you schedule your strike price for options to be set on a particular day, you are incentivized to have the stock as low as possible on that particular day. The only day that one wants the price to be high is when one sells,” Hartog writes. “Are any Apple insiders selling? Very few.”
Hartog writes, “In other words, and this is the main point, I that that what they are doing is driving the stock lower, essentially buying via their options plans, and then waiting for the stock to go higher to its ‘correct’ price. Brilliant. How could you not love such a creative company?”
Full article here.