“Apple Computer’s third-quarter report was sweet and sour for investors. The company blew through analysts earnings expectations and its own forecasts. But it offered a somewhat disappointing outlook for its fiscal fourth quarter,” Troy Wolverton writes for TheStreet.com.
“Apple projected it would earn 32 cents a share in the current quarter on $3.5 billion in sales,” Wolverton writes. “That’s slightly lower than Wall Street’s estimates. Sell-siders had previously predicted that Apple will earn 33 cents a share on $3.58 billion in sales in its fourth quarter… the report had some potentially troubling signs. For at least the second quarter in a row, the average sales price of Apple’s iPod fell in the third quarter. Apple saw about $179 for each of the digital music players it sold in the quarter, down from about $191 in the second quarter and nearly $290 in the year-ago period.”
Full article here.
MacDailyNews Take: Apple delivers the highest revenue and earnings in the company’s history and Wolverton sees it as “a mixed bag.” Does this guy want into the Enderle, Dvorak, and Thurrott weekly bridge game or what? Yes, this is the same Troy Wolverton who wrote last week that iPod demand “has slowed in recent months” because SigmaTel, which makes flash-memory for low-end music players, cut its second quarter revenue estimates and Creative Technology cut its own revenue outlook due to a shortfall on weaker-than-expected demand. For the record, Apple sold 6.155 million iPods; the highest Wall Street analyst had pegged iPod shipments at 5.5 million. Now, Wolverton wants to make Apple’s prudent Q4 2005 forecast ($3.5 billion) an issue, but he neglects to mention that Apple’s revenue forecast is a 50% increase year-over-year, the bulk of Tiger revenue has already been reaped, and the projection is based on a conservative outlook as Apple undertakes the transition to Intel-based Macs.
Related MacDailyNews articles:
The Street: the time may be ripe for Apple to get back to the Mac – July 13, 2005
TheStreet.com dubiously concludes that iPod demand has slowed, could impact Apple earnings – July 06, 2005
Apple shares surge in after hours trading on stellar earnings report – July 13, 2005
MacDailyNews’ live coverage of Apple Q3 2005 earnings conference call – July 13, 2005
Apple smashes street with record revenue, earnings; shipped 6.155 million iPods – July 13, 2005
Apple Q3 2005 Macintosh and iPod unit results – July 13, 2005
are all analysts this pessimistic about everything? Or does Apple just attract them
This guy’s another idiot feeding at the trough of Bill Gates. From the looks of him BG is probably his hero, alas the glass half empty approach to AAPL.
What is that phrase– even a broken clock is right twice a day.
I predict something more positive. Apple, because it has factored in a potential drop in Mac sales this first quarter after the chip switch announcement, will introduce more insanely great products for us to consume. I predict: iPod socks odor eaters, a tv top media box, or an Apple-branded line of massage oils. It’s gotta’ be one of these.
Really. I mean it. Hey…where are you going?
MDN word: “point” as in there is no point to my ramblings.
“are all analysts this pessimistic about everything? Or does Apple just attract them”
Apple attracts them. Most of these analysts are ignorant when it comes to Apple.
You just have to understand that analysts are just like weather forcasters. It doesn’t matter how mwny times they are wrong, they don’t get fired and ther is absolutly no consequences on any statement thay make. People just go back for more until eventually, you just realise that if you want to know if the sun is shining, you just have to stick your head out the door and see what’s going on.
But, since there always will be large portion of the population that will refuse to think for themselves, there will always be pundits willing to step into that role for them. “More pablum please…”
The problem with these analysts (strongly resisting the urge to make anal comment here!) is that they often seem to believe their own hyperbole and appear delusional in their thoughts: they say it, therefore it must be true, and then when enough ignorant fools that can’t think for themselves follow, it becomes true.. The proverbial tail wagging the dog…
MW: forces: Use the Force, Steve!
The usual, the glass is half empty look at things. Can’t see how much Apple has gained but only what he thinks might be the dark side in the future which no one can predict anyways!
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Don’t give this bozo’s site hits!!
And recall:
Tiger actually made it out “earlier” than expected. Jobs had initially pegged its release for “by the end of the first half of this year.” The Apple developers were over two months early. A later release date for Tiger would have bumped some of that revenue to Q3. Perhaps Apple’s earlier estimates for the year anticipated such a time line.
what an idiot……he believes decreasing unit cost is a troubling sign ? Is he so ignorant that he doesn’t understand that technology component costs tend to decrease over time ? This guy obviously has a bias here….too bad, i thought The Street.com was better than this.
The guy has a problem with how much Apple is making per iPod and says it’s a troubling sign that it’s lower than a year ago.
Yeah, that’s true, it’s lower. But Apple also sold how many more iPods than a year ago? They are more than making up for lower profit as the things become more competitive in price because they’re selling so many.
I don’t know if this is a troubling sign or not. Apple couldn’t keep their profits high on the iPods forever. At some point, Apple will introduce a new iPod – or another device entirely – and the process begins again. High profit as early adopters pick it up, etc….
analysts are like movie or book critics: they can’t run a company, make a movie, or write a book; yet, they feel qualified to criticise those who do. they’re just a bunch of wankers; pay no attention!
“it offered a somewhat disappointing outlook for its fiscal fourth quarter”
Wha? Almost word for word this is the same complaint analysts had about last quarter’s forecast!
Don’t these guys learn? Apple are conservative in estimating their next quarter.
(Does someone have Apple’s estimates from last quarter and the associated pooh-poohing by analysts? And probably every quarter previous)
We all know never believe Apple. How many times did we get told that PPC were better than Pentium? Didn’t Steve at one stage say that flash-based MP3 players were pointless? We could make a great list of things Apple said they wouldn’t do, and then did.
And quartley estimates are one of those little white lies. Gets the analysts everytime. Stock prices fall, smart investors call Apple’s bluff and live happily ever after.
Dumb analysts meanwhile continue to look like…well… dumb analysts
re: “analysts … feel qualified to criticise those who do. “
U seen qualified to criticize analists:)
Research has shown you can make a lot of money selling when analysts say buy and buying when analysts say sell. Why anyone pays them is what puzzles me.
I’m am an analyst, if by analyst you mean analist?
I slipped on a glob of goo on the floor, and my banjo done fell into my pooper hole.
Good thing that ‘The Street’ that I work at – is right next door to the Appalachian Emergency Room.
Here is an email I sent to Connie Guglielmo from Bloomberg concerning her article this morning entitled “…IPod Shipments Fell in 3rd-Qtr”:
Connie,
It really made me angry when I read your article this morning. Your method for ascertaining Apple’s performance was based not on “primary” information or research but on averaging other analyst’s predictions. You then make your pronouncements with a finality and self righteousness that all but tells the reader that these are established results. This is very misleading to investors.
This statement of your astounds me:
“The drop in iPod shipments reflects a lack of new models and disappointing appetite for the shuffle player, a low-cost model unveiled by Chief Executive Officer Steve Jobs in January. … Concern that the momentum may have stalled has driven shares down 6.5 percent since late May”
There is so much wrong with what you say here. This is nothing more than a fact-empty rationalization for an assumption that that you have taken for truth, i.e. that iPod shipments have dropped. And it is you and your colleagues’ slipshod analysis that has generated the “concern that the momentum may have stalled”. YOU collectively suggested this scenario and it is YOU who have driven the shares down.
You and many of the analysts upon whose work you rely seem to have no real view of Apple’s overall direction. You seem not to see the remarkable, quarter to quarter spiraling success of this company. You and your cohorts have done some real monetary damage to me (and I am sure a multitude of other investors) by constantly conjecturing fault in Apple’s outlook when there is no evidence to indicate it.
What really pisses me off is that one poorly researched negative story is picked up by another write, then another until the report is deemed true, but which is, in reality, an extreme exaggeration. Look how far you were off; you predicted iPod sales of 5.29 million units. You were off by more than 15%! On what hard evidence was this figure based? If Apple missed their estimates by that amount, they would be punished severely by you and yours. In fact, Apple was already being punished with predictions that this was the beginning of the end of their music initiative.
Sadly, even with today’s great Apple financial report, fellow irresponsible analysts like Troy Wolverton immediately begin beating the “Apple’s in Trouble” drum by leading with the headline, “Apple Delivers Mixed Bag”! Bullshit! How could any analyst criticize the incredibly positive performance of Apple this past quarter.
So eat your words and start doing some real research. Quit writing authoritatively about companies for which you do not an adequate depth of understanding and are too lazy to personally and objectively research.
Wolverton is right about one thing. The margin for iPod may be going down and probably will continue to go down with time. I’m sure Apple expect this. What he neglected to talked about is iTMS revenue, which is the line below iPod hardware revenue. It is growning. I believe it is growing faster than iPod margin going down. This is where the future is in MP4 market (why continue to kid ourselves by calling it MP3 market. It is rapidly becoming MP4 market or may be we should call it M4P market). iPod helped Apple dominate the music download business and now Apple can lose few points on iPod margin and continue to dominate both MP4 player and download music business. Hopefully with in few years, the numbers in these two lines change places.
BTW, I don’ts like the har cut you maczealots gave me.
Isn’t the idea in America to make money?
Is Apple making money?
Then why are the AppleHaters upset?
… so, do we see a pattern here or what? This is his second attempt this week to write AAPL stock down. I had a strong feeling about this the first time, but this one is outright proof that something is very fishy…
let’s keep a close eye on this guy…
A 33% drop in Gross Margin % for the iPod line is a significant issue that could indicate future weakness in sales. Even though there was growth in revenue and gross profit (along with gross margin dollars), the decrease in the GM % can mean that profits could drop substantially over the next few quarters.
The reason is that it costs less (not product cost but G&A, R&D and other line items that subtract from the net profit) to sell fewer items at a higher gross margin %. Think of it this way. The effort to sell one item at $1,000 is much less than selling 1,000 items at $1.
If the iPod gross margin % drops consistently from quarter to quarter (and it appears it has), probably as a result of price drops that aren’t being matched by cost of goods decreases, then one could draw a line that brings the net profit from this product line to a point that drags down the performance of the total company.
Usually, one should sell stock in companies where the predicted Gross Margin % shows long term problems.
The problem with selling this stock is that Jobs probably has something up his sleeve that will boost the gross margin (iPod video for example), then will decline over time again, to be replace with something else.
But, if you don’t believe in that future possibility, then strictly speaking this income statement is not very healthy.
You know what is worth??? That dope Joe Conason
on television all morning saying he doesnt understand IPODS because
he has a SONY WALKMAN and it does everything blah blah blah—-
How can this phony pass for a stock guy? Aent these guys supposed to make it a point to understand things like IPODS? Maybe he is happy with his horse and horses are nice of course but to suggest that horse is a porsche is of course MORE NONSENSE FROM PEOPLE ON THE TAKE
FROM MISTER BILL—–
OnlyMacs wrote: “Usually, one should sell stock in companies where the predicted Gross Margin % shows long term problems.”
The gross margin for iPods may have dipped a bit, but …
BUT that’s more than made up by the halo effect iPods will have on Mac sales. Think of each ten or so iPods as leading to the sale of one Mac to a Windows user, who then evangelizes more Mac sales (for there’s no more a Mac fanatic than the recently converted).
I’d take a smaller margin on iPods to get more of them out there and hence increase sales of the far more profitable computers.
Besides, as you note, Steve definitely has something big up his black sleeves. I feel it in his body language in CNBC interviews.
Bob C wrote: “Steve definitely has something big up his black sleeves. I feel it in his body language in CNBC interviews.”
I picked that up too. Add to that his statement in today’s press release… Something’s big is coming… (the iTunes Video Store of course)
btw, very intersting points made there by Zilla. Made we wonder, could one actually sew these people for those damages? Any legal people here?