Apple’s results aren’t the total disaster implied by the market meltdown

“At first glance, Apple disappointed Wall Street with its fiscal first-quarter results published late Wednesday. This was the first full quarter in which the iPhone 5 was available. In particular, at 47.8 million, the number of iPhones the company sold came in at the low end of analysts’ expectations. iPad unit sales of 22.9 million were also short of some forecasts,” Rolfe Winkler reports for The Wall Street Journal. “As a result, Apple shares dived nearly 10% after the market closed, leaving the company with a market capitalization of about $437 billion. Backing out Apple’s cash pile of $137 billion, that implies a valuation of less than eight times 2013 expected earnings.”

Winkler reports, “But were the results really that bad? At 13 weeks, this year’s fiscal first quarter was a week shorter than last year’s, making comparisons difficult. IPhone unit sales were up 29% in the quarter versus the prior year’s 14-week quarter, while iPad sales were up 48%. Unit sales per day, however, showed bigger jumps: 39% for the iPhone and 60% for iPads. Overall, revenue was up 18%, but on a fairer per-day basis, it jumped 27%. Meanwhile, despite the shorter quarter, earnings per share of $13.81 were actually better than the consensus estimate of $13.48… Clearly, Apple didn’t provide the kind of blowout quarter many have grown accustomed to. But the results aren’t the total disaster implied by the market meltdown.”

Read more in the full article here.

Related articles:
Apple stock drops 12%, trips short-sale circuit breaker – January 24, 2013
Apple CEO Tim Cook: ‘No technology company has ever reported these kinds of results’ – January 24, 2013
Apple’s all-time record earnings drag down NASDAQ futures – January 24, 2013
Gundlach: Apple ‘a broken company’ – January 24, 2013
Apple’s all-time record quarterly earnings disappoint – January 23, 2013
Jim Cramer: ‘Without Steve Jobs, Apple is just another stock, it’s not magical anymore’ – January 23, 2013
After posting new all-time record revenue, Apple shares collapse in after-hours trading – January 23, 2013
MacDailyNews presents live notes from Apple’s Q113 Conference Call – January 23, 2013
Apple reports record results: $54.5 billion revenue, $13.1 billion profit, $13.81 EPS – January 23, 2013


    1. As far as I am concerned financial anal-ists are people that couldn’t get engineering or accounting degrees. These idiots have no idea how a business works and hence, always over estimate every companies’ ability to sell their products. These are the guys we need to get rid of if we want the economy to bounce back. They are clueless.

      just my $0.02

  1. When Wall Street priced Apple stock at $700 a share it seemed that no one doubted the brilliance of the market, but as soon as Apple’s stock falls there is no end to the conspiracy theories and denegration of Wall Street. If you don’t like it, get the hell out.

    1. I’ve always thought the stock went too high too fast. I think it is now in the downward side before stabilizing upward to a more realistic value. I also think the downswing is an unspoken disappointment that Jobs’ god like tv device hasn’t appeared yet.

      1. Apple stock did not go high. I’m guessing you say that because $700 seems like a big number. If AAPL were priced at the same P/E ratio as Amazon the price would be far more than $6,000. At $460 AAPL is cheap. Oh by the way. Apple pays a dividend now yielding 2.3% which is better than T-bills pay a and they can’t grow.

        Berkshire Hathaway shares now go for $146,563 each. Does that seem too high?

        1. the guy who started IBD said that most growth stocks have PE’s in the 50-70 range. revenue/eps growth is high and investors pay the premium.

          once the stock falls to say the teens the time to exit was long ago. the stock is now in the value, slow grower, whatever you want to call it.

        2. “…most growth stocks have PE’s in the 50-70 range. revenue/eps growth is high and investors pay the premium.”

          OK, where does 18% (but really 29%) growth rate as far as growth stocks go? If AAPL had a P/E of 40 where would the price be? About $2000 per share.

  2. There are probably 2 main drivers of the pessimism.

    1. Profit was somewhat flat. Maybe it’s a 10% increase from last year factoring in the extra week.

    2. No EPS guidance for the future, which shows low confidence in growth of earnings per share.

    I’m most concerned about Apple’s profit share. Did it go up or down? As long as it remains stable or better, there’s no reason to worry about Apple vis-a-vis it’s competitors. They can keep thei high-end models but also introduce something on the medium/low-end that will lure in aspirational buyers. In the medium/long term, Apple will have to enter new markets.

    They will need to hire more linguists (if they haven’t already) to improve Siri and make their way into AI. I’ll wait to see their progress on that front as well as in search. If they truly went thermonuclear on Google, they need to produce.

    1. Apple gave a net profit projection. Given that the number of outstanding Apple shares in the market is a known quantity, deriving EPS is only a matter of using your iCalculator, no?

      Apple is just testing your smarts to see if you’re qualified to use their products.

  3. The problem is that Apple has a midrange, tiny screened phone posing as a high end device. Once they release the 4.8 inch iPhone Max with a new version of iOS (taking better advantage of all that new screen real estate), they’ll be back at the top of the mountain. Apple needs to re-take the high end of the smartphone market and go back to leading the industry. They’ve fallen too far behind. The problem isn’t the amount of iPhones sold, it’s the perception that Apple is no longer at the forefront of smartphone trends.

    1. I do agree that they need a bigger size for older people that have a tough time using the current size…just back off the default size we have now on the 5, as it’s almost perfect except having to flip it a little to use it with one hand.

  4. Making more money for a tech company than any time in history. Stock crashes. Totally insane. Just have to wait for the panic stampede to get over. Then there will be a panic stampede the other way up!

    1. In the world of tech, volume has its own attraction. This is usually termed the network effect where if you want to entrench your product as the market standard you need to push out the volume.

      As you know, most of the time volume is contradictory to profit as you need to lower the price of something to sell more of it.

      It’s like the 99¢ app in the App Store. If you don’t have that and price most of your apps at $9.99, the App Store would be a ghost town.

    2. “apple is peddling harder to make the same money”

      If that is true, it’s still doing WAY better than anyone else.
      Analcysts — Sickening, sociopathic jerks. Just play the big monopoly game. Make money. Doesn’t matter what it does to anyone’s lives, to the company, or to the overall economy. Makes me sick.

  5. There are many on Wall Street who are expert at perverting the common good for their own personal gain. This is one of those moments. When the big hedge funds pulled out in November and the WSJ article a couple of weeks ago hit, the options markets went crazy and still are. I have written to Apple, told them their stock is as much a product as iPhones and iPads and they now need to invent a firewall to protect individual shareholders from speculative creeps in New York. Personally, I’d love it if they de-listed and sold stock through an App that they run themselves. Screw the markets.

  6. Apple has the most saught after products for higher end users. They rule music and video, and users are tied into future products through vertical integration by icloud. Investment in APPLE should be a long term thing. I see another buying opportunity.

  7. The Economist reported that in a recent survey nearly every economist said it was not possible to predict share price, and roughly 60% of the general public thought it was possible. Apparently, economists know that share price isn’t tied to reality.

  8. Apple should have trading in the stock suspended in after andpre maket after earnings so there is an overnight to absorb results. Machines were controlling the trading as it would have been impossible for humans to execute the “dumpex” that was occurring during the Conf Call.

  9. “In particular, at 47.8 million, the number of iPhones the company sold. . .” This was in 13 weeks.

    This averages out to 525,275 iPhones per day, every day. That’s A LOT of stuff. Can you imagine the physical volume of material that leave the plants every day?

    I agree with Jeff – I wish my finances were as terrible as Apple’s.

Reader Feedback

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