Why Apple's guidance is still conservative

2

Comments

  • jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by FreeRange View Post


    What? Its not hard to miss by 15 - 20% at all when you are growing like Apple. When your business is pretty steady, yes its easy to forecast. But Apple is not your average company, by far! The target is moving so fast that its hard to keep up, especially on a global basis. Apple is truly a phenomenon the likes of which we have never seen before.



    I've run companies growing faster than Apple. If your people are any good, you have a decent idea of what's going on.



    You can be absolutely sure that Apple has very good numbers internally but has chosen to be conservative with their guidance.
  • cameronjcameronj Posts: 2,357member
    Andy writes like a second grader, and apparently doesn't realize that sandbagging not only can refer to Apple's guidance with respect to analyst estimates, but also apple guidance with respect to its own actual expectations of its performance. I don't know why he feels the need to repeat himself 100 times in this article, but it's quite clear that Apple is considered very conservative in its financial estimates because it itself expects to beat them it has nothing to do with analyst estimates.



    Andy clearly just likes to hear himself talk.
  • cameronjcameronj Posts: 2,357member
    Quote:
    Originally Posted by OllieWallieWhiskers View Post


    where does he get actuals for Q1 2012!?? this quarter hasn't even ended yet... the charts should really state that these are estimates. sloppy reporting.



    It's not sloppy reporting, because it's not reporting. It's a wild eyed opinion piece by someone who clearly has more of his net worth tied up in Apple stock than one person should. It's just sad that Apple insider actually posted as if it was news.
  • irelandireland Posts: 15,290member
    Quote:
    Originally Posted by ash471 View Post


    Duh, there is no conflict. It is ridiculous, idiotic, moronic, and "f'ing" stupid to think that Zacky published this article to cause a price change in Apple stock



    I love you too.



    Quit reading Gruber, you'll begin to think its normal to go around behaving like an asshole.
  • jrobjrob Posts: 49member
    Quote:
    Originally Posted by cameronj View Post


    Andy writes like a second grader, and apparently doesn't realize that sandbagging not only can refer to Apple's guidance with respect to analyst estimates, but also apple guidance with respect to its own actual expectations of its performance. I don't know why he feels the need to repeat himself 100 times in this article, but it's quite clear that Apple is considered very conservative in its financial estimates because it itself expects to beat them it has nothing to do with analyst estimates.



    Andy clearly just likes to hear himself talk.



    I don't understand your point, and it seems to me you are missing his point entirely. He is arguing against an apparently common view from analysts that Apple has gotten more aggressive with their guidance this quarter, as evidenced by Apple's guidance being above the street's guidance. This view that Apple is more aggressive is then used to support excessively low EPS estimates for Q1 2012. Andy is just calling them out on their BS. I am not sure why you think he doesn't realize that Apple sandbags its estimates, as that was a central theme of his last piece.



    And I agree that he could use an editor, but I have appreciated (and benefited from) his very sound analysis over the years. It is head and shoulders above most BS I read from financial writers, much of which is either very simple, or dubious to downright disingenuous, even if the language and grammar is a bit more polished. I will take substance over form any day.



    And if you read closely, you will notice him admitting he was wrong last quarter, along with everyone else, and why. That lesson he learned then applies now - Apple was not overly conservative the last two quarters, and they are not overly aggressive now - they are doing the same thing they always do.
  • quikbmwkidquikbmwkid Posts: 11member
    "Andy M. Zaky is a fund manager at Bullish Cross Capital and the editor of the Bullish Cross Financial Newsletter."



    He is an editor



    Quote:
    Originally Posted by jrob View Post


    And I agree that he could use an editor, but I have appreciated (and benefited from) his very sound analysis over the years. It is head and shoulders above most BS I read from financial writers, much of which is either very simple, or dubious to downright disingenuous, even if the language and grammar is a bit more polished. I will take substance over form any day.



  • sacto joesacto joe Posts: 596member
    Amazing. Andy Zaky hands AI readers a gift, and many of them sneer. Some of you really need to get over yourselves.



    Andy, I'd advise you to keep the pearls to yourself, and let the swine oink away, but for the fact that I've personally benefitted from your analysis. Instead, may I say that I'm grateful for the insights, and that I hope you keep passing out the pearls. Some of us have the wit to recognize them for what they are.
  • deansoleckideansolecki Posts: 256member
    Quote:
    Originally Posted by AppleInsider View Post


    Because there has been so much press over the years about how Apple is comically conservative with its guidance, this concept has become so deeply ingrained in the collective thinking of Wall Street that everyone blindly accepts it as the truth. I mean, it's obvious, right? Apple is very conservative with its guidance. Everyone knows this, right?



    So Apple is not conservative with its guidance. Ok. Not even, say, 12-18% conservative?



    Quote:



    What if I were to tell you that Apple isn't as conservative as everyone might think?




    I would say that you believe apple is 12-18% conservative, which would certainly qualify as conservative.



    Quote:



    Believe it or not, Apple has guided above the Street on revenue in six out of the last eight quarters since it underwent a major accounting change that allowed the company to finally include iPhone revenue as part of its total sales. Ever since Apple shifted away from subscription accounting, the company has guided above the Wall Street consensus in six out of the last eight quarters.




    What does the Street have to do with Apple guiding conservatively? If Apple's guidance is 12% below actuals it doesn't matter if the Street projects Apple to go bankrupt or invade Poland: Apple's guidance would be 12-18% conservative.



    Quote:



    This directly contradicts the assumption that Apple "regularly" sandbags the Street.




    You didn't say Apple "sandbags the Street." You said Apple doesn't guide conservatively, which you obviously agree that they do... to the tune of 12-18% below actuals.



    Quote:



    If you look at the past two years as exhibited in this chart below, Apple has consistently beaten its revenue guidance by 12-18 percent every quarter. That means regardless of whatever Wall Street is doing or thinking, Apple continues to deliver the same type of beat on its guidance. Whether Apple meets or beats Wall Street expectations doesn't really figure into Apple's thought process. The chart below clearly demonstrates this statement.




    There you go, the argument you started with! But wait... this directly contradicts the first quote up there where you say that Apple isn't as conservative as everyone thinks! Damn it man, how does Apple know what they're doing yet consistently miss the target by 12-18% and yet they aren't conservative???? How much pot did you smoke before you wrote this? It's cool, we're all friends here, you can admit it.



    Quote:



    This chart above clearly demonstrates that Apple knew exactly what it was doing when it gave revenue guidance that was $2.7 billion below the street going into fiscal Q4.




    Sigh. So they knew exactly what they were doing when they guided conservatively, but they aren't guiding conservatively? Which is it?????



    Quote:



    The fact that everyone accepted the belief that Apple is always conservative with its guidance also played a massive role in the fiscal Q4 earnings miss. Hopefully this article will help correct that viewpoint with respect to Apple's guidance.




    So everyone knows that Apple is 12-18% conservative with its guidance... but for one quarter everyone forgot about it... or maybe for one quarter everyone suddenly REALLY knew about it... and that is why the Street shot high one quarter? O_o



    This article would have made MUCH more sense if the author had simply said that Apple consistently guides 12-18% conservative when compared to actuals, instead of trying to REFUTE that Apple guides conservatively while at the same time using it as EVIDENCE for other arguments. There are so many simple logical tangles in this thread that it makes the point muddled and senseless.



    Apple guides consistently 12-18% conservatively and the Street is inconsistently above and below Apple's guidance/actuals. Sheesh, one sentence could have said everything.





    Quote:
    Originally Posted by anantksundaram View Post


    I've never understood this, and perhaps you can explain: what's the necessary conflict of interest that arises when you own a stock and recommend others buy it? Especially if you've done the fundamental analysis, believe in that analysis, believe it's undervalued, and put your analysis out there so that investors can judge for themselves?



    A conflict of interest would be saying what is in your interests to say. Whether or not you do it dishonestly doesn't factor into whether or not it is a conflict of interest. You can have a conflict of interest, but not behave dishonestly. Of course, you could also say what is in your interests because you've convinced yourself that it is "right," very conveniently. This is why people generally take note of conflicts of interest.



    [Note: My definition of a "conflict of interest" is case specific and does not apply to all scenarios since "saying" is not necessary in all cases. Just a disclaimer.]
  • timgriff84timgriff84 Posts: 904member
    Quote:
    Originally Posted by anantksundaram View Post


    I've never understood this, and perhaps you can explain: what's the necessary conflict of interest that arises when you own a stock and recommend others buy it? Especially if you've done the fundamental analysis, believe in that analysis, believe it's undervalued, and put your analysis out there so that investors can judge for themselves?



    Because you make your money on stock when you sell it and you want to sell it when the demand is at it's highest. You always want others to think the exact opposite of what you think.



    To illustrate:



    If you don't have any Apple stock and you think there going to do really well in the future, you want everyone else to think there going to do really badly as that will make more people sell, which reduces the price so you can buy more shares for the same amount of money.



    If you have stock and think the future isn't so great then you want everyone else to think things will improve even more and want to buy even more. This pushes the price up for you to sell on a high.





    A lot of people confuse things by thinking high profits should mean a high share price. In reality it doesn't. A company reporting a high profit can make investors think the company might be reaching a peak and is therefore time to sell is right before the announcement, as you don't want to start selling when everyone else does. Again nothings certain, but for sure if you don't own stock then taking advice from someone that does is wrong because you could have opposite hopes for the stock. Particularly if you buy as he sells.
  • cameronjcameronj Posts: 2,357member
    The problem with Andy, really, isn't that he is biased or has a conflict of interest. The problem is that he's clearly in love with Apple stock. So while you have a lot of numbers and the analysis is fine as far as the numbers go, he will selectively ignore any information that doesn't support this point. Because he's not analyzing the stock, he's justifying his love. And that's fine, except for the fact that there're clearly some very novice investors on this messageboard don't understand the danger in that. For an investor who knows what he's doing it takes five seconds to see that Andy is not an analyst, he's a stock fan. But for the amateur investor, that kind of "analysis" is dangerous.



    Is Apple stock undervalued? Yes probably so, by the numbers. But the market is not stupid, despite what Andy would have you believe. Apple stock is held back by investor unease, or nervousness about the future.
  • rtappsrtapps Posts: 63member
    I would be less critical of Andy and more amused that people still give an ounce of credit to what wall street thinks on anything. If they are not busy tanking the economy they are busy predicting things wrong.
  • godzillagodzilla Posts: 156member
    Quote:
    Originally Posted by cameronj View Post


    The problem with Andy, really, isn't that he is biased or has a conflict of interest. The problem is that he's clearly in love with Apple stock. So while you have a lot of numbers and the analysis is fine as far as the numbers go, he will selectively ignore any information that doesn't support this point. Because he's not analyzing the stock, he's justifying his love. And that's fine, except for the fact that there're clearly some very novice investors on this messageboard don't understand the danger in that. For an investor who knows what he's doing it takes five seconds to see that Andy is not an analyst, he's a stock fan. But for the amateur investor, that kind of "analysis" is dangerous.



    Is Apple stock undervalued? Yes probably so, by the numbers. But the market is not stupid, despite what Andy would have you believe. Apple stock is held back by investor unease, or nervousness about the future.



    This is misguided. He's an analyst who believe in AAPL Stock. Plain and simple, and he reports facts to back up his support, not emotional hyperbole (like your entire posts). Right now, AAPL Stock is at such a literal and factual "Sale", while Apple the company is showing nothing but growth and maintenance to their already highly built brand. There isn't much negative to say about AAPL or Apple except for hyperbole or "Spooky Wall Street Ghosts".



    People like you come on Message Boards as armchair cynics, adding nothing of value to a conversation, except for Devils Advocacy to facts stated at hand.



    I understand what you're attempting to say, but it's really of no value here. Wall Street IS VERY STUPID on many occasions. Why did RIMM or NFLX drop like a tank so quickly? Why is AMZN at 100X Earnings? Why do companies all of a sudden surge 50+% in a year? Because WALL STREET DOESN'T KNOW UNTIL THEY'RE TOLD!!!!



    You speak as if Wall Street stays stagnant. AAPL always goes through dips and and surges. They can stay stagnant or even dip for however long it takes, but sooner or later, things can and/or will change. If you believe in AAPL, then analyze it, study the facts, as Zacky is doing. Being Religious about Wall Street doesn't beat being logical about Wall Street, at least in the long run.
  • timgriff84timgriff84 Posts: 904member
    Quote:
    Originally Posted by Godzilla View Post


    This is misguided. He's an analyst who believe in AAPL Stock. Plain and simple, and he reports facts to back up his support, not emotional hyperbole (like your entire posts). Right now, AAPL Stock is at such a literal and factual "Sale", while Apple the company is showing nothing but growth and maintenance to their already highly built brand. There isn't much negative to say about AAPL or Apple except for hyperbole or "Spooky Wall Street Ghosts".



    People like you come on Message Boards as armchair cynics, adding nothing of value to a conversation, except for Devils Advocacy to facts stated at hand.



    I understand what you're attempting to say, but it's really of no value here. Wall Street IS VERY STUPID on many occasions. Why did RIMM or NFLX drop like a tank so quickly? Why is AMZN at 100X Earnings? Why do companies all of a sudden surge 50+% in a year? Because WALL STREET DOESN'T KNOW UNTIL THEY'RE TOLD!!!!



    You speak as if Wall Street stays stagnant. AAPL always goes through dips and and surges. They can stay stagnant or even dip for however long it takes, but sooner or later, things can and/or will change. If you believe in AAPL, then analyze it, study the facts, as Zacky is doing. Being Religious about Wall Street doesn't beat being logical about Wall Street, at least in the long run.



    That's a seriously messed up statement. Believe in AAPL stock? What do you mean believe in it. It's a stock, its going to go up or down. What you really want to know is what it's going to do relative to other stocks so you know when to buy it and when to sell it. e.g. If you reckon it's going to go up 10% in the next 6 months but something else might go up 15% then you want to sell AAPL and buy the other thing. Your predicting how something will change value over a period of time thats all.



    Why does RIMM or NFLX drop like a tank? Well that's what stock prices do. If nobody see any potential growth in the stock then nobodys buying it and if nobodys buying then it drops like a tank. And why is AMZN at 100x earning? Well why not? There's no law that dictates what a share price should be in relations to earnings, and the shares arn't being bought for the profit the company makes, there buying it for the profit they make by selling it.



    Ignoring Wall Street is just dumb. 50% of what the stock price does is down to analysing the companies financials. The rest is what you think everyone else is going to do and what is going on in the world in general. If you invest in AAPL, your not investing in returns you will recieve from the companies profit because Apple don't pay divends so that revnue is 0, your investing in a prediction that the stock price is going to go higher.



    Right now I'd say the biggest thing AAPL investors are thinking are:



    1. If we have another massive recession will people be able to affored new phones and mp3 players or could the whole market decline.

    2. Will an Apple TV revolutionise the market and add another 50% onto Apples profit

    3. Can Apple maintain releasing revolutionary products that capture whole markets or will they soon be out of ideas, in which case time to sell cos that stocks going to start to go flat.
  • irelandireland Posts: 15,290member
    Quote:
    Originally Posted by cameronj View Post


    Is Apple stock undervalued? Yes probably so, by the numbers. But the market is not stupid, despite what Andy would have you believe. Apple stock is held back by investor unease, or nervousness about the future.



    Bingo.
  • irelandireland Posts: 15,290member
    Quote:
    Originally Posted by timgriff84 View Post


    That's a seriously messed up statement. Believe in AAPL stock? What do you mean believe in it. It's a stock, its going to go up or down. What you really want to know is what it's going to do relative to other stocks so you know when to buy it and when to sell it. e.g. If you reckon it's going to go up 10% in the next 6 months but something else might go up 15% then you want to sell AAPL and buy the other thing. Your predicting how something will change value over a period of time thats all.



    Why does RIMM or NFLX drop like a tank? Well that's what stock prices do. If nobody see any potential growth in the stock then nobodys buying it and if nobodys buying then it drops like a tank. And why is AMZN at 100x earning? Well why not? There's no law that dictates what a share price should be in relations to earnings, and the shares arn't being bought for the profit the company makes, there buying it for the profit they make by selling it.



    Ignoring Wall Street is just dumb. 50% of what the stock price does is down to analysing the companies financials. The rest is what you think everyone else is going to do and what is going on in the world in general. If you invest in AAPL, your not investing in returns you will recieve from the companies profit because Apple don't pay divends so that revnue is 0, your investing in a prediction that the stock price is going to go higher.



    Right now I'd say the biggest thing AAPL investors are thinking are:



    1. If we have another massive recession will people be able to affored new phones and mp3 players or could the whole market decline.

    2. Will an Apple TV revolutionise the market and add another 50% onto Apples profit

    3. Can Apple maintain releasing revolutionary products that capture whole markets or will they soon be out of ideas, in which case time to sell cos that stocks going to start to go flat.



    Stupendous post.



    You should be writing for AI.
  • sacto joesacto joe Posts: 596member
    Originally Posted by Godzilla

    "This is misguided. He's an analyst who believe in AAPL Stock. Plain and simple, and he reports facts to back up his support, not emotional hyperbole (like your entire posts)...People like you come on Message Boards as armchair cynics, adding nothing of value to a conversation, except for Devils Advocacy to facts stated at hand."



    Quote:
    Originally Posted by timgriff84 View Post


    That's a seriously messed up statement. Believe in AAPL stock? What do you mean believe in it. It's a stock, its going to go up or down. What you really want to know is what it's going to do relative to other stocks so you know when to buy it and when to sell it. e.g. If you reckon it's going to go up 10% in the next 6 months but something else might go up 15% then you want to sell AAPL and buy the other thing. Your predicting how something will change value over a period of time thats all...Right now I'd say the biggest thing AAPL investors are thinking are:



    1. If we have another massive recession will people be able to affored new phones and mp3 players or could the whole market decline.

    2. Will an Apple TV revolutionise the market and add another 50% onto Apples profit

    3. Can Apple maintain releasing revolutionary products that capture whole markets or will they soon be out of ideas, in which case time to sell cos that stocks going to start to go flat.



    And this is your rebuttal? Three sentences prove that you know more about what moves the market than Andy Zaky? What incredible hubris!



    But just for grins, let's look at your "points" one by one.



    1. Re: if we have another massive recession; (a) it's unlikely, according to what I've been reading (NOT Fox!), and (b) it's bound to effect everyone, not just Apple. Would you rather be on the deck of the Tianic when it sinks or in a lifeboat? I might also add that this same argument was played at the time of the Great Recession, which is what helped sink Apple to a temporary low. Note the word "temporary". Apple stock has appreciated 500% since then.



    2. Who cares? The smartphone is the biggest profit driver for Apple, and it's far from done growing. Smartphones, according to Horace Deidu's latest article - http://www.asymco.com/2011/12/13/glo...tion-below-10/ - have only penetrated 10% of the market. Frankly, this comment alone shows me that you know absolutely nothing about the subject.



    3. And here we have revealed the essence of your anti-Apple bias. You know FOR SURE that "that stocks [sic] going to start to go flat" unless Apple keeps "releasing revolutionary products that capture whole markets". And your reasoned basis for such a bold prediction? Wait, I've got it; You know this because that's the only reason Apple's stock is as high as it is, right? Because it's captured whole markets? Guess what, dumbo; it's still in the process of capturing whole markets! And those markets are far from saturated, as even the tiniest bit of research would have revealed.



    What a maroon...
  • hirohiro Posts: 2,663member
    Quote:
    Originally Posted by Ireland View Post


    This guy owns Apple stock. So do I, I'm just saying it's hard to take serious someone where there's an obvious conflict of interest.



    It would only be a conflict of interest if he didn't disclose his position. he states quite clearly he owns and is long on the stock. That's not a conflict, that's just an analysis by someone you whose motivations you can openly weigh.
  • hirohiro Posts: 2,663member
    Quote:
    Originally Posted by cameronj View Post


    Is Apple stock undervalued? Yes probably so, by the numbers. But the market is not stupid, despite what Andy would have you believe. Apple stock is held back by investor unease, or nervousness about the future.



    But a company like Amazon trades at 50x value, even though it is as much if not more affected by consumer confidence?



    The fact that that isn't an aberration when comparing Apple to other consumer product companies is what raises the specter of WTF is different here? The article proposes a reasonable reason why the market is artificially trading Apple well below the traditional "safe" PE of 20, but not doing the same with other consumer related companies who trade well above that.
  • ash471ash471 Posts: 705member
    Quote:
    Originally Posted by Ireland View Post


    I love you too.



    Quit reading Gruber, you'll begin to think its normal to go around behaving like an asshole.



    What? Your post makes no sense. Who is Gruber? Where you referring to Gruber from Daring Fireball? Why would I think it is normal to behave like an asshole if I stop reading Gruber? Does Gruber tell people they shouldn't behave like assholes? If you think I should quit reading Gruber and Gruber helps people avoid thinking it is normal to behave like an asshole, then you must be telling me that I don't think it is normal to behave like an asshole.



    Or maybe you meant James Gruber, the gay-lesbian-bisexual-transvestite activist. Do you really think that if I quit reading about GLBT activism that I will think it is normal to act like an asshole? Really? You think someone has to read GLBT activism in order to think that it isn't normal to go around behaving like an asshole?



    At first I thought the statement "I love you too" was sarcasm. However, given the illogical statements in the rest of your post and the fact that you think I read about GLBT activism, who knows what you meant. Personally, I don't feel any emotion towards you. It's just a post. I'm sorry, but your analysis of the situation was stupid. If there is one thing about me, I don't hold back on my analysis. If I'm wrong, explain how.
  • ash471ash471 Posts: 705member
    Quote:
    Originally Posted by Hiro View Post


    It would only be a conflict of interest if he didn't disclose his position. he states quite clearly he owns and is long on the stock. That's not a conflict, that's just an analysis by someone you whose motivations you can openly weigh.



    I agree that Andy doesn't have a conflict, but it isn't because Andy disclosed his position. Acknowledging a conflict doesn't mean there isn't a conflict. Consider the following example: Let's say I work at a restaurant and it is my job to hire a dish washer and I decide to hire my brother to wash dishes for 10 million dollars per hour. Telling my boss he is my brother might be an honest thing to do, but it doesn't remove the conflict of interest, it just means my boss knows about it.



    The reason Andy doesn't have a conflict is because there is no conflict with owning Apple stock and promoting it on AppleInsider. A conflict arises if ones personal interests are the motivation for making the statement. That begs the question whether someone like Andy could really believe that posting an article on AppleInsider could change the price of Apple stock. I'm telling you, there is NOOOOOOOOOOOOOOOOOOO way that could happen. Apple is a 361 billion dollar company. Only a fool would think a blog post on AppleInsider could move this stock. It is readily apparent that Andy is not a fool and therefore, it is obvious that his post could not possibly be motivated by his personal interest of increasing share price. Hence, no conflict of interest.
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