“This quarter, Apple’s (AAPL) earnings failed to impress investors,” Stephen Rosenman writes for Seekign Alpha. “Wall Street promptly hurled it off a cliff…”
MacDailyNews Note: Apple’s record earnings were impressive to most; it was Apple’s Q2 08 guidance that failed to meet the Street’s expectations.
“But, wait. What if I told you that Apple forgot to enter 2 of the 2.3 million phones it sold this quarter, that they just skipped them, took the dough, are using it and just left it plain – well- out of the net income? Well, they did. They ‘deferred’ them,” Rosenman writes. “Apple’s earnings are far more impressive when you consider that their iPhone and [Apple TV] numbers are largely not entered in when they are sold. Rather, Apple stretches the revenues out over a two year period, only entering 1/8 of them each quarter.”
“Over the next two years, most of 3.288 billion dollars of deferred revenues will drop effortlessly to the bottom line. If Apple decided, quite legitimately, it could have taken those 816 million dollars as earnings this last quarter. Instead of 1.58 billion dollars, it easily could have logged 1.58 + 0.816, or 2.396 billion dollars, or about $2.65 a share. If they had reported that number — $2.65 a share — which is real net income earned, the stock price would be up to 230 rather than dropping to 130,” Rosenman writes.
“The earnings are there. They are real. They will be logged in over the next 7 quarters. The street needs to understand that Apple is reporting their earnings differently than most other companies and by doing so their explosive growth is vastly understated. There is nothing disappointing about this quarter. Au contraire, it is a blow-out,” Rosenman writes.
Full article here.
While normal investors earn money when the stock goes up and are able to sell at a higher price, traders and analysts play a different game.
In fact it is by CAUSING LOSSES that these traders earn money. They just manipulate the stock to their own advantage. They earn most when the stock market goes down, because they act with some kind of advance knowledge, and they rely on the panic that they are causing with the less informed.
IMHO if enough of them team up, they can let any company’s shares go up or down AT WILL.
There ought to be a law against this behavior. The techniques the traders use should be closely investigated and the rules should be refined such that the companies and their reliable shareholders earn most money, rather than those leeches.
The fact that iPhone and AppleTV revenues are deferred over 24 months is not a secret to anyone, especially any investor researching the company’s finances. The last line is telling: “Disclosure: Author has a long position in AAPL” — in other words, “Please buy AAPL!!! PLEASE!!”
Again…
Maybe the Glossy Screen Haters could take a sheet of P24 to their 50″ Plasmas. Then, use the shavings as a mesquite substitute at their Mastodon BBQs.
Back2Mac,
Have to kindly disagree. While the value of a stock split is not immediately realized, over time it is (generally). Say I have 100 shares of AAPL valued at $10 each. The stock splits 2 for 1, so now I have 200 shares at $5 each. Same monetary value, however if the value of the stock were to go back up to $10 I now have double the investment at no additional cost.
I’d also disagree that the major sources of investment “don’t care” what the price of stock is, for the very reason you say. If xyz mutual fund is buying stock in a company, they most certainly would want to buy at a lower price to increase their return on investment. When they invest billions, even the smallest up or down in the stock price makes a huge difference in the price they have to pay for that stock.
I hope Steve introduces a $1499 game Box. I know most people here will buy it if it is Sexy and made of Glass and Aluminum. That will help the stock out just like his $1799 No feature Laptop did…
And the funny part is, I’m only half joking. If Apple introduced a $1500 game machine, most of the fanbois here would run to buy it (whether their were games available for it or not) as long as it was “sexy, gorgeous, and environmentally friendly”)…
Where the high quality sub-1000 dollar machines Steve????
@Drew_III
I’m not trying to be rude, it just drives me crazy when I read this stuff. Too many people just don’t get this concept. It goes against human nature. More of something is always better, right?
You are correct. A move from $5 to $10 is better for you if you have twice as many shares. However, you’re missing the whole point. It’s not about NUMBER of shares, it’s about the $ value of those shares. $20,000 invested in Apple is $20,000 invested in Apple, whether it’s split into 20,000 shares or 1 share. In one case, we do not have 20,000 times the investment, it’s the exact same.
A move from $5 to $10 is a 100% move. That is a doubling in price. Again, it DOES NOT matter the starting price. If Apple or any company doubles in value, that’s a good thing. If you have 100 shares @ $200 that double in value, you now have $40,000. If you have 200 shares @ $100 that double in value, you have…. can you guess? $40,000!!! So, having twice as many shares at half the price is of no benefit.
Stock splits are absolutely meaningless in any financial or numerical way. The only “benefit” they have is psychological. Most small investors feel better in saying they have 200 shares than they do about saying they have 100 shares.
@BacktoMac
Totally agree. The only other physological difference for splitting stocks is that the apparent lower cost of buying into a stock if the price is lower. The values are the same in relative terms but a small investor may balk at $200 a share vs $100 or lower. I hardly think that that effect is significant since most inverstors probably don’t buy 1-2 shares considering that you have to pay a transaction fee for the trade.
Is it just me – or are people forgetting the whole market crashed – not just AAPL? Google went from 691 to 549, Amazon 96 to 74 the list goes on. Nearly all shares took a beating – it’s called a market crash. The shares will come back, people won’t be able to resist the cheapness of the shares. MacWorld and Revenue announcement really had little factoring – the market crash was the real reason for the downfall.