Apple shares beaten late on concerns over CEO's health, guidance
Apple handily beat expectations for its fiscal third quarter Monday, but investors used a late trading session to punish shares of the Mac and iPhone maker after the company offered conservative forward-looking guidance and refused to comment on the health of chief executive Steve Jobs.
In a statement following the market's close, Apple said third-quarter profits rose more than 30 percent to $1.07 billion, or $1.19 per diluted share, on revenues of $7.46 billion, driven by record sales of nearly 2.5 million Macs and double-digit iPod growth to more than 11 million units.
However, the Cupertino-based company saw its shares tumble 10.75 percent, or nearly $18, to $148.42, as investors overwhelmingly rejected management's guidance of $1.00 in per share earnings on sales of $8.3 billion for the current fourth quarter. On average, analysts had been forecasting earnings of $1.23 per share on the same amount of revenue.
In a subsequent conference call, Apple chief financial officer Peter Oppenheimer also braced analysts for unwelcome declines in the company's gross margin going froward. He said an ongoing back-to-school promotion and an unspecified product transition during the current quarter will see gross margin fall sequentially by 330 basis points to 31.5 percent.
Oppenheimer told analysts to expect average gross margin for all of fiscal 2009 to come in even lower at 30 percent, as the company moves forward with a strategy that will see it introduce new "state of the art products" that will generate slimmer profits because they'll be offered at price points that can't be matched by rival electronics makers.
Also weighing on Apple shares late Monday were rejuvenated concerns over the health of chief executive Steve Jobs. Shares struggled in the red for most of the day after the New York Post reported that some hedge fund managers on Wall Street are finding it difficult to cope with the increasingly gaunt appearance of the company co-founder.
Jobs's physical health has been an on-again, off-again topic of concern ever since he was diagnosed with a rare form of pancreatic cancer four years ago, for which he underwent successful treatment. However, his overly haggard appearance at last month's Apple developer conference spooked a number of investors and company followers who wondered if his health had begun to relapse.
"Multiple sources who have met with - and in some cases even dined with - Jobs in the weeks surrounding the introduction of the iPhone 3G on July 11, said they came away troubled by his thin appearance," the Post reported.
When asked by an analyst about Jobs's condition on Apple's quarterly conference call Monday, Oppenheimer refused to provide any color, citing his boss's right to privacy.
"Steve loves Apple. He serves at the pleasure of Apple's board," he said. "He has no plans to leave Apple. Steve's health is a private matter."
In a statement following the market's close, Apple said third-quarter profits rose more than 30 percent to $1.07 billion, or $1.19 per diluted share, on revenues of $7.46 billion, driven by record sales of nearly 2.5 million Macs and double-digit iPod growth to more than 11 million units.
However, the Cupertino-based company saw its shares tumble 10.75 percent, or nearly $18, to $148.42, as investors overwhelmingly rejected management's guidance of $1.00 in per share earnings on sales of $8.3 billion for the current fourth quarter. On average, analysts had been forecasting earnings of $1.23 per share on the same amount of revenue.
In a subsequent conference call, Apple chief financial officer Peter Oppenheimer also braced analysts for unwelcome declines in the company's gross margin going froward. He said an ongoing back-to-school promotion and an unspecified product transition during the current quarter will see gross margin fall sequentially by 330 basis points to 31.5 percent.
Oppenheimer told analysts to expect average gross margin for all of fiscal 2009 to come in even lower at 30 percent, as the company moves forward with a strategy that will see it introduce new "state of the art products" that will generate slimmer profits because they'll be offered at price points that can't be matched by rival electronics makers.
Also weighing on Apple shares late Monday were rejuvenated concerns over the health of chief executive Steve Jobs. Shares struggled in the red for most of the day after the New York Post reported that some hedge fund managers on Wall Street are finding it difficult to cope with the increasingly gaunt appearance of the company co-founder.
Jobs's physical health has been an on-again, off-again topic of concern ever since he was diagnosed with a rare form of pancreatic cancer four years ago, for which he underwent successful treatment. However, his overly haggard appearance at last month's Apple developer conference spooked a number of investors and company followers who wondered if his health had begun to relapse.
"Multiple sources who have met with - and in some cases even dined with - Jobs in the weeks surrounding the introduction of the iPhone 3G on July 11, said they came away troubled by his thin appearance," the Post reported.
When asked by an analyst about Jobs's condition on Apple's quarterly conference call Monday, Oppenheimer refused to provide any color, citing his boss's right to privacy.
"Steve loves Apple. He serves at the pleasure of Apple's board," he said. "He has no plans to leave Apple. Steve's health is a private matter."
Comments
Apple quickly release some product photos even if it is FAKE!
And if he is sick, I hope he quits and takes the time he needs to focus on healing.
And if he is sick, I hope he quits and takes the time he needs to focus on healing.
I tip my hat to you, sir.
A sentiment to respect.
I tip my hat to you, sir.
A sentiment to respect.
Same here. Although I hate you as an investor.
If Apple tanks to $100 on this SJ news I'll take out second and third mortgages to add to my aapl.
I bought more shares at $149.
I think the traders are completely over-reacting, and AAPL will come through with fantastic products that will make our heads spin and pull our wallets out.
And they will make LOTS of $$$ in 2009 regardless of whether Steve is still running the Co. or not.
Although stock prices are very forward looking (very high P/E in this case) I think AAPL has a ton of room to grow, even if their aren't any new "genius" designs coming after the next round.
Their OS is the key, and it is ROCK SOLID.
Lets just not have any more MobileMe like transitions with this transition
"Steve loves Apple. He serves at the pleasure of Apple's board," he said. "He has no plans to leave Apple. Steve's health is a private matter."
I couldn't agree more. Sure Steve doesn't need "Apple" for the money, but Apple is his baby. While I hope any ailment that may have befalling Steve is under the care of his doctor but if Steve were to "quit", I feel his health will fail even faster because being "retired" can get old fast and I have witness it on several occasions when people I knew whose job was their life, when it was over, sadly also was their life.
This is out-of-control weird, and seems to be driven by short-term speculation.
Just catch your breath, go fishing, whatever....... the stock will be fine in a couple of days. This is all just noise.
Relax, folks. At the time of posting, the bid on AAPL is $140, the ask is an astounding $166.90. I.e., the market will buy AAPL from you for nearly $27 less than they will sell it to you.
This is out-of-control weird, and seems to be driven by short-term speculation.
Just catch your breath, go fishing, whatever....... the stock will be fine in a couple of days. This is all just noise.
Apple sells off on the news, good or bad, after nearly every event; what else is new?
I wish Steve the very best as he made all of our lives just a little bit better.
But let's face it, the posture of Apple seems to confirm that the man is having major health problems. This would be not only a personal misfortune for Mr. Jobs but also likely a corporate disaster for Apple.
Steve is the spirit of Apple. Apple is nothing without its spirit. They could keep Apple going for another 5 to 10 years, but that's it.
Regardless, maybe Steve has taken his visions as far as they will go. Maybe we can be thankful that he has had the FULL opportunity to bring his amazing ideas to life.
The problem his, Steve continues to make great calls today. Hard philosophical decisions -- of which there are a gazillion in technology -- are Steve's special personal expertise. Without Steve, there is no philosophical center at Apple. They become just another company run by competing small egos, quarterly earnings... Apple today is a product of Steve's singular vision. Most companies have no singular vision and after Steve, Apple would likely be just another Dell, just another Comcast.
Steve, here's to you buddy, supporting you 100%.
Steve, here's to you buddy, supporting you 100%.
Smoking is known to cause cancer.
----
PS: Just kidding, that's all...... I thought your very sober post needed a bit of silliness by way of response......
Maybe the reason Jobs said that over the next year they were going to focus on improving OSX... this could allow Jobs time to take care of himself and his family...
I think the reason for this is steve wants to repeat the success of the iPhone to their new product line. Steve probably had a meeting and said how can phone hardware and software be faster then some apps on a desktop computer? They came to the conclusion a faster more polished experience is much better then x amount of features. I think its crazy to think a company would run its self based on its health of a ceo.
Relax, folks. At the time of posting, the bid on AAPL is $140, the ask is an astounding $166.90. I.e., the market will buy AAPL from you for nearly $27 less than they will sell it to you.
This is out-of-control weird, and seems to be driven by short-term speculation.
Just catch your breath, go fishing, whatever....... the stock will be fine in a couple of days. This is all just noise.
good call.
It looks like some people freaked out and placed market sell orders in the
extended market and some wily vultures had low-ball bids in there.
Everyone is mortal. I think the key for Apple is to plan for succession regardless of Jobs' health. Even if Jobs is healthy as a race horse, there's a lot of ways he could depart Apple or this world. With a company as Jobs-centric as Apple is, that means a huge risk to investors. General Electric will keep going even if whoever the CEO is (who knows? who cares?) leaves, but Apple would lose a significant part of what makes Apple Apple if Jobs departs.
And if he is sick, I hope he quits and takes the time he needs to focus on healing.
I think if he is sick he should do what he wants to do. If he wants to keep drving Apple for as long as he can, he should. Everyone should be given the opportunity to go out with their boots on. However as a big fan of Apple products, I would feel a little better who the #2 guy is and know he is there to help keep the company going. I would bet that the person or persons who would be filling in after him are already working with SJ.
If Apple tanks to $100 on this SJ news I'll take out second and third mortgages to add to my aapl.
Exactly. If that's the case I'll buy an additional 600 shares.
With apologies to Klingons everywhere.
I think if he is sick he should do what he wants to do. If he wants to keep drving Apple for as long as he can, he should. Everyone should be given the opportunity to go out with their boots on. However as a big fan of Apple products, I would feel a little better who the #2 guy is and know he is there to help keep the company going. I would bet that the person or persons who would be filling in after him are already working with SJ.
If the man is sick he is doing and will continue to do the right thing. If he needs to step back in order to heal, then that's what he'll do. He may be a driven individual, but he is also a very smart guy, and lets not forget, a family man. Whatever happens, one day SJ will step down or step back and when that happens I think it unlikely one single person will take his place. What will happen then is anybody's guess but it will be a very different Apple than we now know. Apple today is very different from the Apple we knew 10 or 20 years ago and whether Steve stays strong at the helm for another 20 years or not Apple will change dramatically. Most of us would like to see Apple become the dominant computing force on the planet. (Yeah yeah, I know... in terms of numbers of units sold, I mean.) Will Apple still be cool and cutting edge then? I'd like to think so but it seems impossible. I can't help but feel that we are living the Apple dream, right now. This is the 'hey day' and it will never be this good again. Long may it last.