Why Apple’s stock price rollercoastered during the conference call – and is heading up

“Apple released Q4 FY 2013 earnings last evening, beating EPS expectations by $0.32, surpassing revenue expectations and delivering at the high end of revenue guidance,” Darcy Travlos reports for Forbes. “The stock closed at $529 before earnings and traded up to over $540 with the impressive EPS headlines. Then, gross margin guidance for the next quarter came in below expectations. The stock reversed and declined to $503. As key points were made on the call, the stock retreated to the closing price.”

“Apple is deferring a greater percentage of revenue on each device sold,” Travlos reports. “Specifically, Apple will defer $5 more for each device sold and $20 more for each Mac sold, resulting in an additional $900 Million in deferred revenue next quarter over this quarter just reported. By increasing deferred revenue, revenue and gross margin will be lower ‘dollar for dollar’ from how they have been reported this current quarter and previous quarters. So, when the company provided revenue and gross margin guidance on this new basis, investors did not realize yet the basis was different. When management explained this on the call, the stock reversed its downward trend.”

Travlos reports, “Tim Cook, Apple CEO, signaled new products on the horizon when asked why the iPhone needed a 64-bit processor or the advanced M7 motion sensor. He stated that Apple is ‘at the front end of a long road map.’ He reiterated a commitment to ‘exciting new products in the fall and across 2014’ which leaves Apple followers to assume he is forecasting a watch, or some other mobile product that can take advantage of motion sensor and high-level processing. It may also provide insight as to Apple’s recent and extraordinary strategy shift to give away its software. Tim Cook wants all customers to have the same experience at any product price point… Tim Cook is more effusive regarding new products, margins remain healthy, and Apple is growing in the stagnant PC and China markets. Taken together, Apple investors may want to consider this a revival for Apple.”

Much more in the full article – recommendedhere.

Related articles:
Apple’s $37.5 billion Q413: What the analysts are saying – October 29, 2013
MacDailyNews presents live notes from Apple’s Q413 Conference Call – October 28, 2013
Apple beats street with revenue of $37.5 billion on quarterly record sales of 33.8 million iPhones – October 28, 2013


  1. Google runs up over $100 on earnings. Apple goes down $3. Sad. I’m satisfied it wasn’t much worse. Apple thinks they can forever hold onto that $146 billion as a security blanket. Good luck with that dream. It’s either expand the business or die. Amazon and Google seem to understand that much. Apple doesn’t.

    1. Well its easier to grow a company when there is no immediate large scale competitor. Apple was in a similar position when the iPhone launched and the iPad too. Fact is that position could not be maintained forever in the business Apple is in which is probably why Google and Amazon can retain more investor confidence. Apple has to be fleet of foot to keep ahead on the other hand. The only way Apple can return to the days of great growth is to create a new product/service or go into areas more akin to those 2 other companies. Actually if there is a criticism I think it is the fact that Apple has failed other than iTunes to push more into such possibilities but thats another story. Back in the realtime world as and when they do launch a new platform product it needs to be right or the downside could easily destroy the company as we know it with the attitude of the analysts/investors towards it. Until then the best thing is to create a stable mature and still growing business based on what it presently does best.

      Personally I think that the aim is to produce that new product as and when it has the ability to directly or indirectly take Apple into those areas that Google and Amazon are strong online using its iTunes power as the basis and in such a way that they can make a big impact without giving the true game away. That probably means patience is required. Be it Tv or the iWatch both would be pretty pointless unless they are linked to services that make them far more than the dumb box in the corner or the junk jewellery that Samsung have produce and called a watch.

  2. the factor that totally turned the tide was the mention of the deferred cash . I have no idea that that was a secret! under serb/oxley the sale of the phone or device can not be counted as sold until the contract is fufilled Apple has always had a bundle in 2 year limbo. why is this suddenly an AHA moment?

    1. Because Apple substantially increased the amount of the deferral:

      “Specifically, Apple will defer $5 more for each device sold and $20 more for each Mac sold, resulting in an additional $900 Million in deferred revenue next quarter over this quarter just reported.”

  3. laughing boy you are too young to remember the day jobs had to beg gates for help. Apple wants to make sure it is safe from gordon gekko and his ilk. that cash pile prevents mitt Romney and Bain capital from one of those hostile takeover thingies

    1. taojones: Jobs did NOT beg Gates for help. The money Gates put in was the behind-the-scenes settlement for a lawsuit Apple had filed against Micro$oft relating to stolen Quicktime code. Apple dropped the suit in return for a relatively small amount of money upfront but more importantly a commitment from Gates to produce Office for Mac and IE for Mac. Getting the promise of this continuing software was important because there were no other viable browsers or office suites available for Mac at the time.

        1. It was not even that. It was part of three interlocking agreements including patent and copyright agreements the Steve Jobs negotiated to end a Multi BILLION DOLLAR lawsuit that Microsoft was going to LOSE (there was smoking gun evidence against Microsoft!) that included ongoing payments to Apple for five years for the remaining life of Apple’s Patents plus longer on copyrights (where do you think the revenue came from for R&D in the next few years) while Apple was GIVEN for FREE licenses to specific crown jewel Microsoft patents and copyrights in perpetuity. . .AND Microsoft agreed to re-open publication of MS Office for Mac and keep it on the market for a minimum five years, AND buy the $150 million in non-voting preferred stock. In exchange, Apple had to print a stock certificate (cost $1), license to Microsoft the stuff MS had stolen anyway and get PAID scads of money to do so (the $150 million plus on going royalties), and agree to include MS Explorer as an alternate browser along with Netscape Navigator with every Mac sold for five years. . . and sign a five year non-disclosure agreement about the settlement.

          The three interlocking agreements have now been made public and are available on the Internet to read. I’ve read them. None of them go into force until Microsoft paid the $150 million settlement. One year later, Microsoft started spreading the FUD that their “investment” had been made to rescue a “foundering” Apple. Apple could not counter that FUD with the truth because they were under the Non-disclosure Agreement.

  4. The trading rules need to be revised. Submit to a 10 min delay in order execution or a 30% tax on gains from the transaction, no offsetting of trades for a loss allowed. These guys are like gunslingers in a Wild West saloon.

    1. All of the activity they are talking about, such as “up to 540”, “down to 503” is in after hours trading between private parties, off the board, often between friends and family members. Small quantities, volatile in nature, basically meaningless numbers. . . not true open market bidding and selling between willing sellers and large numbers of willing buyers. These after market numbers are easily manipulated. Say you and I are buddies. I own 10,000 shares of a stock that bears the name of a succulent fruit. It’s after hours and I want the stock to appear to go down. I agree to sell it to you at 503, way below its market close. We report this. I take a loss on paper of 30 per share. . . but you sell me 100,000 XYZ corp stock you own at 3 over market close. Both are duly reported. Maybe nobody else traded either stock, but WOW, there’s price movement.

      Gee, it’s a wash for both of us but the fruit stock has a sudden drop that looks real bad and the Analcysts have a field day. The real effect can’t be known until the market reopened to large numbers of buyers and sellers. . . but our shenanigans have had their effect. The news is out! The fruit company’s stock dropped like a stone in after hours trading. Those “in the know” must “know something” so the “know nothings” will jump on that bandwagon and SELL! Meanwhile, we sit back and grin because we bought derivatives that WILL now hit their strike price! We bet the price of the fruit company would go down. Manipulate stocks? Who? Us? Nah. . . We’re just traders. . .

  5. No it didn’t head up, it went down like usual. Apple is the only company that can beat the street and end up with there stock declining because the biggest losers in the market have there heads up there asses 99.9% of the time and shouldn’t be in the market at all.

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