Wall Street got ahead of itself on Apple; shares plummet in after-hours trading

“Wall Street got ahead of itself with overheated expectations for sales of Apple Inc.’s iPhone, especially in light of the fact that a new model was highly anticipated,” Therese Poletti reports for MarketWatch.

“Apple said late Tuesday that it saw sales of older iPhone models reach a respectable 17.07 million units in the quarter, below the Street’s average estimates of about 20 million devices sold, as customers held off purchasing while waiting for the new iPhone in October,” Poletti reports. “The lower iPhone unit sales led to an unexpected quarterly earnings miss for Apple, coming in the same month that its co-founder Steve Jobs died at age 56. Its shares tumbled more than 5% in after-hours trading.”

Poletti reports, “Investors, however, should be heartened by the company’s forecast and what has been perceived as “barn-burning” sales of the new iPhone 4S. Apple’s outlook for the fiscal first quarter is for revenue to come in at $37 billion for the December quarter, slightly above the consensus of $36.1 billion, according to Thomson Reuters.”

Read more in the full article here.

MacDailyNews Take: Apple only banked $6.62 billion profit on revenue of $28.27 billion in the three months ended September 24, 2011 while many were waiting for the next-gen iPhone. Quick, somebody set up the bread lines for Apple employees. We have no idea how they’ll survive!

Related articles:
MacDailyNews presents live notes from Apple’s Q411 Conference Call – October 18, 2011
Apple posts record revenue of $28.27 billion, misses Street expectations for first time since 2004 – October 18, 2011

31 Comments

  1. The whole game of over and under estimating without a whit of common Apple cycle sense is like watching children at play. Or like the Captain in the Simpsons admitting “Argh, we don’t know what we’s doin'”. One thing for sure, the Apple surely rises and ripens again (and again, etc.).

    1. Who was expecting that?

      I’m not an analyst (thank god) but here’s how I see it: According to the theory that apple failed to meet “expectations”, apple’s stock price prior to the announcement implicitly took into account this expected profit. They didn’t meet it, falling short by 9B-6.62B = 2.38B. Apple has 927.09M outstanding shares, 2.38B divided by 927.09M = $2.56 per diluted share, meaning that they should’ve fallen by this amount as a “correction”. Why did apple instead fall by $26.28/share? Their revenue increased, their profit increased, they still have 0 debt, they have a massive pile of cash, and huge growth potential. So wtf?

      Aapl is on sale. I’m going to buy some more tomorrow. Nuts to wall street.

      1. In theory, a share of stock represents the present value of expected future earnings — not its performance in a single quarter or year.

        Thus, the flaw in your logic is in assuming that the decline in profit is a one-time event rather than a permanent decrease in the company’s ability to earn profits quarter after quarter. Those who sold the stock so aggressively believe that Apple’s ability to grow profits in future years has been permanently impaired.

        That notwithstanding, I do think the company’s problems were a one-time event resulting from the later-than-intended introduction of the new iPhone 4S.

    2. And I was expecting $30B! So WHAT? What makes YOUR estimation (or anyone else’s for that matter) more worthy or accurate than mine?

      This “disappointment” because of anal-yst’s projected expectations is ridiculous and almost criminal in my opinion. But that’s worth spit too.

  2. In the article they implied the recession was catching up with Apple.

    Didn’t they post a 40% gain year over?

    Can anyone name me a company as large as Apple who showed a 40% YOY gain!

  3. Wow. $28 BILLION revenue in a QUARTER. That’s mind-blowing.

    When I went to my first WWDC, Sculley was proud to announce that Apple was on track to sell $2 billion in the YEAR.

  4. Yet if Apple had launched the iPhone 4S two weeks earlier and added 4 million more to the sales the street would be happy. All they’ve done is moved sales to the next quarter which will be a blow out. At the end of the year it’ll make no difference (yes I know Apple calls this Q4 results).

    All Apple has done is make the “analysts” look stupid. Apple guided $5.50 EPS due to a major product transition and still beat that by a healthy margin.

    iPad up 166%
    Mac up 26%
    iPhone up 21% (without launch of new phone)

    4M iPhone 4S sold already.

  5. Wall Street analysist are a bunch of idiots that don’t know want they don’t know. If they truly knew anything about business they would be running their own business.

  6. “Apple’s sales rose 39% to $28.3 billion. The company’s sales for its full fiscal year, which ended Sept. 24, were $108.2 billion — a giant leap ahead of the $65.2 billion Apple raked in last year. Apple again edged out Exxon Mobil to be the stock market’s most valuable company in the world.”

    “Apple sold more than 17 million iPhones. The iPad and Mac both set sales records during the quarter. IPad sales rose to 11.1 million, and Mac sales soared 4.89 million — the first time Apple has even sold more than 4 million Macs in a quarter.”

    That’s some AMAZING news, yet Wall Street Analysts are setting the stage for how this plays out. Wall Street Analysts EXPECTATIONS (& possible manipulations) are what’s driving the price of the stock and NOT REALITY. What does that tell you?? #OWS

  7. This is the thing, it doesn’t matter. Sure, they didn’t beat the street, so what. The iPhone 4S is an insanely good phone, Siri is getting stellar reviews, iOS 5, Lion, and iCloud are out and about, and you can only expect good thing this coming quarter. Just look a the numbers of Mac sold! The fundamentals are there, the sock will go up. If anything, this is a good buy opportunity.

  8. I remember being amazed when Microsoft was banking $1 billion a month at a time when Apple barely seemed to have that much in revenue. Now Apple is banking more than $2 billion per month!

  9. Oh, is this the same Wall Street that tok the country to the brink of bankrupcy, have never ever built a single product in their life and continue to think is relevant?

    Screw Wall Street and their expectations. If they don’t like the price, they can drop dead, for all that I’m concern. They bring nothing to the table. They create no value, they create no jobs.

    And good for Apple to stay the course despite of what Wall Street say. Look at HP now. They listened to Wall Street, they fired all of their thinking people (engineers and product designers) to keep the stock up (I know it first hand) and now they are nothing, they are reduced to a pimple in the tech industry, absolutely irrelevant.

    I don’t care about the stock as much as I care about the products and the quality.

    Real Artists Ship. ‘Nuff Said!

    1. Preach it. Cannot stand those lying, cheating, elite, sewerscummy bastards.

      Who the eff are they. Just leeches that rob and loot poor people everyday. Don’t give a rats ass what they think.

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