“Investors are waiting to see just how much the global economic slowdown has hurt Apple Inc. when it reports quarterly results on Tuesday, as the company works to prove that it can sell high-end products even in lean times,” Gabriel Madway reports for Reuters.
“Apple’s once high-flying share price has fallen around 50 percent since the start of the year,” Madway reports.
MacDailyNews Take: Through no fault of their own. All that Apple’s done is establish a habit of setting new all-time earnings records:
• Apple smashes Street; reports record third quarter results, all-time high Mac sales – July 21, 2008
• Apple smashes Street, reports record second quarter results – April 23, 2008
• Apple beats Street; reports best quarterly revenue and earnings in company history – January 22, 2008
• Apple bulldozes the Street; reports revenue of $6.22 billion, record 2.2 million Macs shipped – October 22, 2007
• Apple smashes Street; posts record Q3 revenue and profit – July 25, 2007
• Apple reports second quarter results; most profitable Q2 quarter in Apple’s history – April 25, 2007
• Apple smashes Street, posts revenue of $7.1 billion and record net quarterly profit of $1 billion – January 17, 2007
Madway continues, “Many wonder whether nervous consumers will continue laying out hard-earned cash on leisure items, especially during the holidays.”
MacDailyNews Take: Define “many.” Something tells us that those “wondering” the most are those who have a financial stake in seeing Apple’s share price decrease. While you’re thumbing through the dictionary, Gabe, you might want to look up “self-fulfilling prophecy,” too.
Madway continues, “Another question mark is the new iPhone which was launched in July. While almost everyone expects the device to rack up strong sales, will it be enough to drive growth, especially if Mac computer sales suffer?”
MacDailyNews Take: There’s no evidence that Mac sales are in any way, shape or form “suffering,” Gabe.
Madway continues, “Mac sales, which make up nearly half the company’s revenue, are premium products so some fear Apple is more vulnerable than competitors in a weak economy.”
MacDailyNews Take: Perhaps cash-conscious consumers will actually think before they buy (for once) and come to the logical conclusion that Apple’s Mac offers them access to the world’s largest software library, last longer, and have lower Total Cost of Ownership than Windows PCs and therefore will buy more Macs? Hey, as long as we’re just speculating and making up theories; there are two sides to that game. Also, don’t forget, Apple’s Mac customers are better educated and make more money than your average Wal-Mart WIndows PC shopper. They’ll be the last ones affected, if they’re affected. Better worry about Dell, HP and other schlockbox PC assemblers first, Gabe. If you think Mac users are going to downgrade to a Windows PC in order to “save” themselves a few dollars upfront, then you don’t understand Mac users at all.
Madway continues, “What may be of more interest than fourth-quarter results will be the company’s forecast for the December quarter. Although Apple is notoriously conservative in its outlook, many expect it to be even more cautious in the current environment.”
MacDailyNews Take: Apple ought to take advantage of the current uncertainty to provide an excuse to stop giving hard guidance. And then never resume the practice. Problem solved.
Madawy continues, “The company is expected to earn $1.11 a share in its fiscal fourth quarter, according to a poll of analysts by Reuters Estimates. Revenue is expected to come in at $8.04 billion, which would represent growth of nearly 30 percent… Apple generates a lot of cash and has no debt. Last quarter, the company reported more than $20 billion in cash and short-term investments.”
Full article here.