CNBC’s Jim Goldman: Wall Street’s analysis of Apple needs some perspective and balance

“It’s a matter of perspective and balance and true analysis. And that’s where Wall Street might not be measuring up when it comes to studying not just Apple, but indeed so many other companies and their fundamentals. Take, for example, the study released by RBC and ChangeWave, purporting to show a slowdown in Apple’s business, and therefore the reason behind the firm’s downgrade,” Jim Goldman writes for CNBC.

“But rather than just offering up the results of the survey, they beg for some deeper perspective. RBC determined that 17 percent of respondents are likely to buy a Mac laptop in the next 90 days, down from 19 percent a month earlier. And 23 percent say they were likely to buy a Mac desktop, down from 24 percent a month earlier. I don’t know about you, and I hardly want to be the one trying to accentuate the positive, but it seems those declines are very, VERY slight, and in an economy like this one, a miniscule decline for expensive products in the consumer electronics space might actually be good news,” Goldman writes.

“I understand that Apple’s slowdown, if there even is one, isn’t great. But if the slowdown–again, if there even IS one–is occurring at a far slower pace than the rest of the sector, isn’t that good? Also, it seems none of these analysts is worried about the current quarter, but what may happen some time next year. If at all. If this macro-economic slowdown continues, or deepens. Which Apple has already shown it can withstand better than most,” Goldman writes.

“More galling to me is the underlying concern that Apple won’t be able to meet gross margins expectations,” Goldman writes. “Why galling? Apple expected margins of 30 percent and said so. The Street then ratcheted up its expectations to 33 percent. Apple says 30 percent. Maintains 30 percent. Now, there’s concern on the Street that Apple won’t meet expectations. Not its own, but the Street’s! And analysts slam the company over worries that it will come up short. Come on. What kind of bizarre game is that?”

“I know Wall Street has a job to do. So does Apple. Apple routinely sandbags numbers, I believe, to lower expectations so it can ‘beat the Street’ when it releases earnings. They need to do better offering realistic guidance,” Goldman writes. “But the Street also needs to do a better job managing its own expectations, and offering meaningful analysis of the data, not just the data itself. Both sides of the story.”

Full article – recommended – here.

From what we can tell after years of doing this, Wall Street analysts can, without consequence, pretty much make up whatever they want – and do. You have to spend some serious time and look into the analysts’ individual records to find the rare good ones. Ignore the rest; they’re either incompetent or intent on trying to move share prices up or down for reasons unrelated to the actual performance and future prospects of the companies they’re supposed to be analyzing.

11 Comments

  1. The shorts got their way and pounded the stock. Over pounded the stock. It is going to be a tough road ahead just to repair the FUD damage alone. The latest one was kinda funny though – The Mac gives off a toxic odor. Yeah right.

  2. Everyone should take what these analysts say with a grain of salt. It is a bizzare game, with really no accountabilty on the analysts part. They write some reports based on their biased opinions and what they see when they gaze into their cracked crystal balls.

    Fundementals are what matters.. Apple makes great products that are in demand. Apple makes product that satisfy their users. Buy the stock now while its cheap.. thats my 2 cents..

  3. Get Real, and not talking about the Media Player

    Wall Street’s “analysis” of anything and everything

    Including, apparently, how to take a dump and not hit the floor

    Needs a LOT of “perspective and balance”

    Just @¿@ at, the finally come to light, recent events

    Sheez, is what all of us have known, laughed, and cried about in here for years about Apple and Wall Street

    So the Big Picture™ should not come as a surprise to any regular reader of MDN

    We should all be able to see the Bad Guys in the next room and know the Bubble Head Blonde will go through the door anyway

    Thanks
    BC Kelly
    Tally Fla

  4. Apple offers conservative estimates, not to sandbag the street but rather : To play it safe. If they were not to do that and missed expectations, they would get slaughtered. In addition if you look at the statistics and facts, Apple has been growing in all areas for the past 8 years…While the entire sector has been shrinking.

    Apple has experienced steady, albeit unpredictable growth with it’s products catching on and gaining unprecedented appeal and fanfare during this period. It is not unreasonable and should be totally understandable to educated analysts, that it is not possible to accurately forecast realistically this kind of growth and temperamental consumer reaction. It’s still being debated whether or not the Halo effect is real and what exactly it is …so, how can one issue guidance that is not conservative (responsibly) when we are talking about new frontiers and unknown factors beyond Apple’s control – such as Microsoft deserters?

    I would rather err on the side of caution and I think so would Jobs and Co.

    Something is warped when we condemn cautious business practices, humility and responsible forecasting over hype and hubris, particularly when we are talking about ; “guidance” “estimates” and “expectations” which by nature and definition are imprecise and somewhat vague terms.

    Educated responsible and professional journalists and counselors should know better than to condemn this and should step up to the plate and do a better job of explaining, education and reasonably setting expectations of their audiences,

    The dumbed down press and news sources today are abysmal and disgraceful, let alone the rational.

  5. How often , in the last 3 years, did some “rocket scientist ” stock analyst predict Apple’s demise, even as sales and profits beat all expectations ?

    My brother’s broker, when Apple was at $50, suggested that the stock had peaked and that he should buy Citi, which he did. The Citi stock now is worth the same value as toilet paper.

    Thank God I shrugged off the broker’s recommendations and bought more Apple at that price.

  6. I suspect that most of what is termed ‘analysis’ does not deserve that label.

    Analysis – detailed examination of the elements or structure of something, typically as a basis for discussion or interpretation

  7. I like Goldman’s view and the fact that he can see a certain amount of prejudice against Apple for even a minute lowering of any numbers. That 20 point down turn was a total FARCE and UNFAIR!!
    Apple is doing better than any other manufacturer and yet ONLY APPLE’S stock his hit badly. I find this to be very disturbing.

  8. Here is what I know.

    Most people are stupid.
    Windows completely sucks in pretty much every way.
    OSX is rock solid, fun, safe, awesome, functional, does everything I want and more………

  9. Most analysts are just lemming herders.

    If you want to make real gains, observe the analysts as an indicator of where the market might in fact follow — just to follow your own path if you actually know better.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.