Despite record earnings, Apple’s guidance and ‘concern’ over CEO health drag down shares

“Apple dropped 10% in pre-open trade after reporting a softer-than-forecast fiscal fourth-quarter earnings outlook. Apple’s third-quarter earnings climbed 31% on growing sales of Macintosh computers and iPod music players,” Steve Goldstein reports for MarketWatch.

“Deutsche Bank analysts said concerns over CEO Steve Jobs’ health is playing as much a role in investor concerns as the group’s earnings view. Apple said Jobs has no plans to leave the company and that his health is a private matter,” Goldstein reports.

“‘While the topic is delicate, we believe the absence of a straightforward denial of health issues will increase speculation of a worst-case scenario,’ they said,” Goldstein reports.

Full article here.

In a healthier market, you wouldn’t see as much of these shenanigans happening with Apple (AAPL) right now, but people are worried, so AAPL is extra valuable to Wall Street right now.

Apple is an extremely strong company; a bright spot amidst a market full of uncertainty. But, a steady rise in share price as reward for producing stellar quarter after stellar quarter isn’t the optimal situation for a go-to Wall Street cash machine. If peaks and valleys can be made to occur in AAPL with some regularity, then profits can still be made during a rough market.

Money managers can see that Apple’s future is extremely bright, even — *gasp* without Jobs (may it never happen) — so, if AAPL can be manipulated downward, they have confidence that it will soon bob right back up. Just skim off the profits, wait for it to pop up again, and then once again grow oh-so-concerned about Apple’s guidance (which is always ultra-conservative), make up something else entirely to be “worried” about, or even stoop (scumbags that they are) to using Jobs’ past health history as a tool. Just call your favorite ignorant, friendly, and/or paid off “reporters” to get the story out there, scare off the skittish, and reap the rewards. Lather, rinse, and repeat. Oh, yeah, we almost forgot: accuse anyone who questions why a company that repeatedly posts record earnings inexplicably loses 10-percent of its value in a couple of hours every so often of being a crackpot conspiracy theorist.

It’s unfortunate that the SEC can’t even begin to get a handle on this painfully obvious market manipulation.

46 Comments

  1. SK – not

    I’m surprised with apple’s announcement of a “product transition” that the stock hasn’t become more excited. Apple usually doesn’t discuss such transitions if they are not significant.

    No Company is tied to a single man, not even Apple. Everyone forgets the makeover he’s done on the mgt team, and importantly, all the senior guys have been there for a while. Look at other CEO star managed companies, (GE ANYONE), and take a look at how their senior mgt ranks have turned over and over. I’m supremely confident that Steve has amassed a Company (more than just mgt team) that will drive on innovation for at least another decade with or without steve.

  2. I would be saddened to see Steve leave for health reasons, but I think AAPL is a mature company now. It’s no longer being run by sugar-water CEOs. While not everyone can be the visionary that Steve is, there are definitely others in the industry that get it, and most of them work at Apple.

  3. MDN hit it right on the head – as a former hedge fund manager i can tell you this is exactly what is going on. SK you are clearly a novice. Granted, the margin guidance is going to create some concern with some analysts, but any analyst that has followed the company knows the Apple has been referring to its previous margins as unsustainable and driven by favorable component pricing in past quarters. The street also knows that as you gain market share you need to reduce margins slightly – in a bull market this would already be factored in . . . . . Steve Jobs “health” is a non-issue is obviously driven by hedge funds … no new news or appearances drove this “story” – only a hit piece in the New York Post yesterday.

  4. Excuses, excuses, shady investors use similar tactics to manipulate oil.
    Is there any other company in the world, where investors are concerned about CEO’s health?
    OMG, this is going to be end of the world! I guess Mayans were right that it will happen around 2012.

  5. @SK:

    I am disinclined to acquiesce to your comment concerning MDN’s take. Put it another way, why are analysts not worried about Steve Ballmer’s bulging waist line. Every year, it seems like its expanding. Yet, no analysts makes any statement concerning that fact.

    Let’s take it even further. Take any Fortune 500 CEO. When was the last time any analyst said anything about the health of the CEO (Apple not included). No one is saying anything about Rob Glazer. I mean, for god’s sake. He is a poster boy for dunkin donuts.

  6. Love it when MDN goes Warren Buffet on their readers. It’s totally ignorant to dismiss concerns about Jobs’ heath. Might there be some manipulation? Maybe. But, you can be no more certain about that than you are about Jobs’ long term health picture. I agree that Apple has a bright future but just like his health and potential market manipulation, you have no idea of his true impact on products because he wants it that way. I’m not selling my investment in Apple that dates to 1998 but I am concerned about the company’s longer terms prospects without their founder and leader.

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