Apple can’t fix its biggest problem

“Last week, there was a ton of concern when Apple (AAPL) reported its quarterly results. While the company beat on the top and bottom line, iPhone unit sales fell way short of estimates. Additionally, Q2 guidance was well below estimates, leading some to wonder how much impact the China Mobile (CHL) deal will really have,” Bill Maurer writes for Seeking Alpha. “Unfortunately, many positive aspects of the report were missed, because with Apple, the company has to be perfect. Anything that is not perfect is a failure in the minds of these doubters, even if there is a reasonable explanation for it. Unfortunately, Apple’s biggest problem may not have anything to do with what Apple does day in and day out.”

“I want to take a look at Apple’s estimates,” Maurer writes. “One analyst sees Apple increasing fiscal Q3 [2014] revenues by more than $10.5 billion? That’s 29.8% year-over-year growth. Does this analyst have Apple launching a ton of new products in the quarter? Even worse, the high EPS estimate has Apple increasing EPS by more than 40% year-over-year! I know that the buyback has helped, but let’s not get ahead of ourselves.”

“This is how Apple ends up issuing guidance that can trail analyst expectations,” Maurer writes. “Analysts set the bar way too high, with quite a number of estimate raises going into Apple’s report, and so the company was unable to meet [Q314 guidance] expectations.”

“There is nothing Apple can do about this problem. Analysts are going to do what they do, even if what they do is just ridiculous. Expecting Apple’s fiscal Q3 revenues to rise nearly 30% year-over-year is a good example of that,” Maurer writes. “Unfortunately for Apple, the company’s biggest problem is not something the company can solve, and that is analyst expectations. The bar has been set too high, and Apple just can’t get to what is usually an unrealistic level.”

Much more in the full article – recommended – here.

MacDailyNews Take: When your local weatherman has more accountability than Wall Street “analysts,” there’s a problem.

How about requiring financial “analysts” to be certified in some fashion? A plumber in the U.S. is required more certification than a Wall Street “analyst,” a (con) job which requires no certification at all (if you can manage to land the job, presto, you’re an “analyst!”

Further, let’s require that these now-certified analysts’ estimates fall within a realistic range of accuracy lest their certification be revoked at which time they’ll be free to return to peddling used cars.


  1. Apple fumbled worse than the Denver Broncos with the iPhone 5C. They thought they had a winning offense but the wide receivers kept dropping the ball. Android is mashing them up with cheaper phones and larger screens. The offense drew a blank and Cook has to go back to the drawing board. Coach, you failed.

  2. What’s telling here is the specificity of what was missed. Rather than getting away with “Apple missed estimates” it has to be specified “Apple missed FY14Q3 guidance” — It’s tantamount to saying that Neil Armstrong failed expectations on his moon landing because he landed facing the Lander rather than looking outward at the camera.

    Apple didn’t miss on their own guidance. Analysts missed on their estimates, period.

    1. Not really… conservatives would generally advocate certification by a private organization that would stand behind their members with a financial backing, sort of like an underwriter’s laboratory, or a willingness to pay a monetary damage for failure to perform such as an insurance company does. We never fall back on government for such things. Those are the prevue of liberal tinkering.

  3. Analysts seem like the action arm of stock brokerages to engage in disinformation warfare to generate momentum based on whisper campaigns. This in turn allows them to manipulate stock price for their profit. Their data and methodologies used by so called analysts more often than not are flawed, like obviously flawed. Yet the media laps it up because, well, Apple and bad news go together to mesmerize the public.

  4. Analysts have to pass a series of tests to be legally permitted to publish reports and estimates on a company. “Presto” doesn’t come into play in the process at all. Many of them are CFAs, which is no small accomplishment — the course requires hundreds of hours of study to pass. The bar has been set high because Apple has historically under-promised and over-delivered … so now they’re expected to repeat that. If anyone is to blame for analyst expectations, it’s Apple’s previously blistering performance. The fact is, they can’t keep it up. Don’t fool yourself and blame analysts for the stock funk. Those analyst expectations fueled a lot of the stock rise, too — its not like they just magically appeared when the stock got to $700. They helped the stock get there in the first place.

  5. Blah blah blah blah revolving around “Unfortunately for Apple, the company’s biggest problem is not something the company can solve, and that is analyst expectations.”

    Gosh what arrogance, analyst expectations is by far not the company’s biggest problem. Now a super inflated ego and a totally distorted view of reality mixed with delusions of grandeur on the part of analysts is a big problem, but it’s not Apple’s problem.

  6. Apple shouldn’t forecast next quarter like Google and the rest.
    Only the Anal-ists to blame here not Apple. Google missed this quarter and does not forecast for the next quarter and there stock rose $46 a share for what? Sorry your lame story here doesn’t jive like all the Anal-ists. Apple did the 5th largest quarter in history of all companies and the stock got cut by 10%. That’s WRONG!!!!!!

  7. Simple solution, Apple could buy itself private, and then the analysts could think whatever the fsck they like.

    Incidentally, if analysts think that Apple’s not a ‘growth’ stock, how many quarters of growth (in terms of profit, cash etc) does it take before the analysts realise that they were wrong?

  8. Apple fans passing off the blame to clueless analysts rings hollow when Apple is providing poor guidance to those analysts. Apple needs product updates across the board, and it needs to dramatically improve its corporate communications.

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