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This is not a story about Apple Computer, this is a story about analysts who mis-predicted something. Apple had predicted revenue of $25 billion, and they actua
by jpadvo 15y ago
This is not a story about Apple Computer, this is a story about analysts who mis-predicted something. Apple had predicted revenue of $25 billion, and they actually had revenue of $28.27 billion, their second best quarter ever.
So why did this fall below the expectations of the analysts? The article gives one clue:
"Well, even though Apple’s own guidance for the quarter was $25 billion in revenue, analysts seem to have wised up to Apple’s always-low estimates and were projecting numbers far higher: they were looking for around $29.5 billion. Apple came in at $28.27 billion."
The analysts assumed that Apple would do so insanely well that the only way to accurately predict how well they would do was to wildly overestimate. Turns out, they did overestimate.
Here are a few alternate headlines that could be applied equally well to this story:
"The iPhone 4S launch gives Apple second best quarter ever"
or
"Apple exceeds their expected revenue by $3.27 billion dollars"
I'd rather read about what actually happened and why, then to read about how somebody misestimated what was going to happen.
- swombat 15y agoActually, from the sound of it, the iPhone 4S launch is not even in that quarter.
- jpadvo 15y agoWow, thanks for pointing that out. That completely invalidates one of invalidates one of the alternate headlines. My reading-comprehension-fu must be weak right now.
- bjtitus 15y agoI think this is the key point here. I believe that these estimates would have been met had 4S sales been included in the earnings. Did these analysts assume that 4S sales would be included? Are they simply overlooking those sales for next quarter?
- ajross 15y agoThis is not a story about Apple Computer, this is a story about analysts who mis-predicted something It cuts both ways though. Apple has routinely exceeded (i.e. underestimated) their own revenue numbers for the past few quarters. From Apple's perspective alone, that sounds good because it means their stock shoots up and they get good press. But it means that people who hedged based on the expected numbers got hurt. That annoys people trying to make a living trading (whether those people deserve to make a living trading is entirely a different issue). So the analysts correct, and bake that offset into their estimates. And Apple "missed" based on those estimates. So people who hedged based on the new guesses have to dump the stock, and it drops. That's just the way investment markets work. Apple can't ride the "unexpectedly good news!" waves without getting hurt by the "oops, not as insanely great as expected" quarters.
- chugger 15y agoWhat you have to understand is that most of these artificially high estimates were created by hedge funds with short positions in AAPL. 1) release an artificially high revenue estimate 2) wait for actual results 3) wait for stock to dip when estimate > actual results 4) sell short positions 5) profit These analysts are not actually idiots, they're evil.
- jpadvo 15y agoThat is a fascinating claim, and it certainly sounds possible. Do you have any evidence or sources to back it up?
- chugger 15y agoI posted this on another thread. "Seven Reasons the Shorts Love Apple" is an investor's must-read. Hedge funds: Riding the AAPL slingshot http://tech.fortune.cnn.com/2009/12/20/hedge-funds-riding-the-aapl-slingshot/ http://tech.fortune.cnn.com/2009/12/20/hedge-funds-riding-th... Long nicknamed the “favorite yo-yo” of daytraders and hedge fund managers – Apple’s high beta of 1.43, its prominent position in finance media and its vulnerability to rumors has made it a choice stock in short term profits, both through long and short positions http://www.investorguide.com/article/6809/apples-aapl-mini-crash-reveals-the-stocks-delicate-balancing-act/ http://www.investorguide.com/article/6809/apples-aapl-mini-c... Hedge Funds, Bloggers and the Origin of Apple Rumors http://tech.fortune.cnn.com/2011/03/30/about-that-iphone-5-delay/ http://tech.fortune.cnn.com/2011/03/30/about-that-iphone-5-d... Samsung employee caught leaking information to hedge fund manager before iPad launch http://www.bloomberg.com/news/2011-09-14/ex-samsung-worker-says-he-gave-apple-ipad-data-to-fleishman.html http://www.bloomberg.com/news/2011-09-14/ex-samsung-worker-s...
- wbracken 15y agoIt is for this reason (amongst others) that companies like Warren Buffet's Berkshire Hathaway and Google do not give guidance.
- wiredfool 15y agoI think the real story is "Analysts wrong again, this time the other way". Seriously. The analysts have _never_ been right on Apple.