"it will be more clear that the "miss" is the fault of the analyst's math, not in Apple's ability to deliver upon performance targets set inaccurately by this analyst."
1- WTF. 2- Shouldn't those analysts that mistakenly predicted Apple's results, causing damage to the stock and company image, be somehow punished for that?
I agree. In fact, people are even saying that Apple is lying when they post their conservative guidance (see below, for example).
Frankly, you don't know what you're talking about. Offering conservative guidance is not a lie, nor is it misleading nor fictitiously low as you claim. Apple was clear what their numbers meant - they gave numbers that were numbers that they felt confident that they could meet. They were not expectations, nor were they meant to be Apple's maximum numbers. As stated, they were essentially the minimum numbers that Apple felt confident of.
Did Apple consistently beat their numbers? Yes. But for a long stretch, Apple was consistently beating the numbers by 10-15% but the analysts were throwing out projections that were 30-40% above guidance.
Not really true. Apple posted its 'conservative numbers' which everyone knew weren't near reality. Analysts would exceed those numbers by a wide marge- but still be outrageously low. Apple would consistently exceed even those numbers and bask in the headlines. Analysts were even getting accused of willingly 'playing along' with Apple by knowingly lowballing so they could make an inside fortune every time Apple posted results.
I don't normally rely on Fox, but Fox business is actually fairly decent. When even an organization as Business friendly and coservative of Fox starts calling a companies estimates fictitious and warning investors- there just might be something to it. Note also the date is well before the current Shenanigans and analysts are getting beat up for giving 'unreasonably low' expectations lol.
So analysts were getting heat for consistently low-balling Apple and being corrupt for taking profits knowing Apple would 'exceed.' They were pretty much forced to up their estimates. That drove Apples valuation through the roof. If you came to this site and pointed that out, you'd get roasted for being an Apple hater. With so many people loving Apple so much, they were more than happy to believe the hype and bought in.
Ultimately its not the analysts that drive stock price. Investors buying and selling the stock drive the price. People have to buy into it.
Thats why I said I like Apples new guidance policy. They are giving a range instead of a point. So their low point can now be their historically low 'coservative estimate' which everyone knows they will beat by a mile. The key is they are now providing an optimistic high point. Its a double edged thing and that's the real test for Apple. If Apple ever exceeds its optimistic high point, its just back to its old shennanigans. If it is a true estimate, Apple should always be below it.
That makes valuation for their stocks a very easy thing.
Using easy numbers and assuming 0%interest and no currency fluctuations for NPV simplicity....
Apples low guidance:
We will sell 50,000,000 devices at $500 per device this quarter at a margin of of 40%.
High guidance:
We will sell 70,000,000 devices at $500 per device at a margin of 50%
That makes Apples valuation pretty straightforward:
Revenue expectations:
50,000,000 x500 = 25,000,000,000 on the low side
70,000,000 x500 = 35,000,000,000 on the high side
Profit expectations:
25,000,000,000 x .4 = 10,000,000,000 on the low side
35,000,000,000 x.5 = 17,500,000,000 on the high side
Prior correct valuation was at 400,000,000,000.
So at the end of this quarter Apple is expected to worth $410,000,000,000 to 417,500,000,000
Assuming apple had 1,000,000,000 shares outstanding....
Current stock price - $400,000,000,000/1,000,000,000 = $400
Price expectation at end of quarter = Between $410 to 417.5
It is nowhere near as sexy or exciting as posting lowball numbers and then being a 'miraculous' company that pulled a financial rabbit out of the hat and exceeded expectations yet again- but its an amazing thing for people that would prefer investing over gambling. As long as they keep selling more devices at higher margins their stock will very coninuously continue to climb along with their performance.
If Apple does what some of the analysts predicted- which is to give their outrageously low low number, and then give a 'high' number that they know they will beat as well.... Well, invest at your own risk.
Apple, thanks for making the reporting change, please continue to surprise us with your great products, not your financials.
…or do what iCon did and steal the best ideas. Major flaws in all the main products… iPhone demand is weakening..especially in the latest model. The computers are priced ridiculously and the OS has been going backwards since Leopard.
Never post this again.
You don't NEED to spend THAT much anymore.
And yet 90% of people are. Huh. How about that.
Tablet is moving to 7" form factor…
BA HA HA HA HA HA HA HA!
None of this is rocket science.
And yet you're still totally wrong.
To give context, my household contains 2 iPhones, an iPod touch and an iPad….none of which we will replace with iOS devices next time. we used to have a ATV, a mac and another iPhone…
Saying "I love Apple, but" or including a laundry list of supposedly owned Apple products neither impresses me, nor is necessary to support a well-reasoned argument.
think about what you post before posting… History says that when iCon isn't at Apple then Apple fails. Even when on sick leave he was still really there as the guiding mind. He's gone now..for good. Recent successes can be attributed to products he had a major hand in, but that pipeline is now wearing out and it's up to TC,JI etc. to come up with new stuff…or do what iCon did and steal the best ideas. Market is saying that they won't/can't. I agree. Major flaws in all the main products plus much better competition is the reason. The VFM in Apple products, which was always on a knife edge has been busted by Nexus 4/7 and Kindle. You don't NEED to spend THAT much anymore. Tablet is moving to 7" form factor which squeezes Apple's margins. iPhone demand is weakening..especially in the latest model. The computers are priced ridiculously and the OS has been going backwards since Leopard. None of this is rocket science. To give context, my household contains 2 iPhones, an iPod touch and an iPad….none of which we will replace with iOS devices next time. we used to have a ATV, a mac and another iPhone but we are moving away from it because there are better products out there for less money.
Thanks for regurgitating all the bullshit on the internet in one concise post. iPhone demand has never been higher, and Apple broke all their records, again. Who gives a crap about the stock price. Not Apple. Why should they let a bunch of neurotic gamblers dictate their next move. They're doing just fine.
Recent successes can be attributed to products [Steve Jobs] had a major hand in...
Thanks for regurgitating all the bullshit on the internet in one concise post. iPhone demand has never been higher, and Apple broke all their records, again. Who gives a crap about the stock price. Not Apple. Why should they let a bunch of neurotic gamblers dictate their next move. They're doing just fine.
I posted in another thread that the next moving of the goalposts will be claiming that the successes at Apple post-Jobs will be attributed to Jobs but any failures will be attributed to Cook. I assumed it would take a little more time to happen but it appears Archipellago is head of his class at Troll U.
Stock is going down on growth decelaration and margins. This is causing a shift in fund ownership from growth to value.
This will provide a chance to pick up the stock at undervalue levels even by value stock metrics. If apple can maintain small eps growth this will play out fine.
But apple is flirthing with yoy declines now, so there is still a risk even at the current price.
Thanks for locking in on the real issue. So many people just look at the last quarter results and cant figure out why the stock dropped another 60 points.
Do you have an opinion on whether the projections, if they are accurate, will carry through for the 3rd and 4th quarters? If they see similar growth and margins as the 2nd I think we're looking at about $40 eps for 2013. Obviously new products and other events could impact that, but if you project a similar product cycle I think 40 is the number. Hopefully it would level off there and start growing again, but further margin compression would, absent other variables, continue to drive that number down. I think $400 is a fairly safe number, but given how the market tends to overshoot would not be surprised to see mid 300s before it moved back up.
As you indicated slowing revenue growth along with margin compression was a real bad combination. Things could get real interesting if 2nd qtr results are just in line, and guidance deteriorates further.
I've been an Apple investor since 2006. I recently got out of the stock entirely, because of their guidance. Like the article says they've always guided conservatively and so low guidance wasn't a great reason to sell. They made it really clear during the conference call that their guidance was a range they'd be pretty sure they'd land within, and they wouldn't sandbag any longer.
Well they if you take the data points they guided for in the quarter ending in March and figure out the range of EPS that they can hit using those parameters, then they've guided very low.
Using their ranges, the upper bound is approximately $10.20 EPS, the lower bound is $8.30 EPS. Compare this with the year ago March quarter that had $12.30 EPS. Basically they guided at best 17% drop in profits, and at worst a 32.5% drop in profits Y/Y.
No one is going to be happy with that. If they're not growing profits, then a P/E in the range of 8-11 is probably pretty fair for a company of their size, and that's exactly the range they're in right now. So the market has done a pretty good job of pricing them accordingly.
I don't think the price drop has anything to do with the holiday quarter, that was a great quarter for them. It's this next one that's not going to be good, especially if they're serious about not low-balling estimates.
Mind sharing how you come up with the bottom of that range? I'm probably missing something, but I keep coming up with roughly $10.30-10.60 which is significantly higher. I agree the main issue is the projection and what the 3rd and 4th quarters will look like if you extend the margins and growth to those quarters.
Stock is going down on growth decelaration and margins. This is causing a shift in fund ownership from growth to value.
This will provide a chance to pick up the stock at undervalue levels even by value stock metrics. If apple can maintain small eps growth this will play out fine.
But apple is flirthing with yoy declines now, so there is still a risk even at the current price.
First, no one's talking about yoy declines except you. Even in the past quarter which is being labeled such a disaster, profits were up almost 8% on a weekly basis - and that was in the face of supply constraints and massive expenses to redesign products.
More importantly, even if Apple's profits are flat for a few years, they're STILL vastly undervalued. They're at about 9 times earnings now - or about 7 times earnings after adjusting for cash. Those are extremely low numbers - even without any growth forecast.
Saying "I love Apple, but" or including a laundry list of supposedly owned Apple products neither impresses me, nor is necessary to support a well-reasoned argument.
It's a common trolling trope. It's called concern trolling. It's more common in politics, but we see this a lot on this forum.
Also:
#5: Claiming (desired) ownership of Apple products renders one resistant to rebuttal. The number of products owned is directly proportional to how safe you are from rebuttal.
Saying "I love Apple, but" or including a laundry list of supposedly owned Apple products neither impresses me, nor is necessary to support a well-reasoned argument.
Unfortunately, in forums where people are often allowed to argue against opposing opinions by calling names (troll, astroturfer, etc), a lot of even oldtime Apple supporters feel the need to prophylactically include their support history. It's really sad that they feel the need in the first place.
Like I've said, it's like the Joe McCarthy hearings in the 1950s, where his best offense was simply to call his opposition out as "Commies", and put the burden of proof that they weren't, on them.
You can always spot a poster without a decent argument point, because they responded with personal attacks instead. Never fails.
<span style="font-size:13px;line-height:1.231;">Unfortunately, in forums where people are often allowed to argue against opposing opinions by calling names (troll, astroturfer, etc), a lot of even oldtime Apple supporters feel the need to prophylactically include their support history. It's really sad that they feel the need in the first place.</span>
Because it means nothing, anyone can say it, and is generally unprovable. Anyone can say "I've been an Apple fan for 30+ years.
Making a litany of statements about how Apple is terrible, some of them poorly thought through, then saying "but I'm on your side" is self-contradictory, and is justifiably called concern trolling. For it to be otherwise is unlikely, I think it's naive to defend it.
<span style="font-size:13px;line-height:1.231;">Like I've said, it's like the Joe McCarthy hearings in the 1950s, where his best offense was simply to call his opposition out as "Commies", and put the burden of proof that they weren't, on them.</span>
I see you Commie-Godwinned.
You can always spot a poster without a decent argument point, because they responded with personal attacks instead. Never fails
How about this, you go to an Android-centered forum and say a few negative things about Google and see what you get. I'm not naive, most web sites are not places to raise negative opinions about the topic of the site, this site's discussions are relatively even-handed compared to most that I've seen on the web.
Comments
Originally Posted by onelungedwonder
I don't short stocks, but if I did, I'd short Amazon.
"Stay thrifty, my friends."
1- WTF.
2- Shouldn't those analysts that mistakenly predicted Apple's results, causing damage to the stock and company image, be somehow punished for that?
Yikes. What a headache-inducing post.
And I don't mean just its rambling content.
Quote:
Originally Posted by jragosta
I agree. In fact, people are even saying that Apple is lying when they post their conservative guidance (see below, for example).
Frankly, you don't know what you're talking about. Offering conservative guidance is not a lie, nor is it misleading nor fictitiously low as you claim. Apple was clear what their numbers meant - they gave numbers that were numbers that they felt confident that they could meet. They were not expectations, nor were they meant to be Apple's maximum numbers. As stated, they were essentially the minimum numbers that Apple felt confident of.
Did Apple consistently beat their numbers? Yes. But for a long stretch, Apple was consistently beating the numbers by 10-15% but the analysts were throwing out projections that were 30-40% above guidance.
Not really true. Apple posted its 'conservative numbers' which everyone knew weren't near reality. Analysts would exceed those numbers by a wide marge- but still be outrageously low. Apple would consistently exceed even those numbers and bask in the headlines. Analysts were even getting accused of willingly 'playing along' with Apple by knowingly lowballing so they could make an inside fortune every time Apple posted results.
I don't normally rely on Fox, but Fox business is actually fairly decent. When even an organization as Business friendly and coservative of Fox starts calling a companies estimates fictitious and warning investors- there just might be something to it. Note also the date is well before the current Shenanigans and analysts are getting beat up for giving 'unreasonably low' expectations lol.
http://www.foxbusiness.com/technology/2011/07/18/why-no-one-should-believe-apples-earnings-guidance/
So analysts were getting heat for consistently low-balling Apple and being corrupt for taking profits knowing Apple would 'exceed.' They were pretty much forced to up their estimates. That drove Apples valuation through the roof. If you came to this site and pointed that out, you'd get roasted for being an Apple hater. With so many people loving Apple so much, they were more than happy to believe the hype and bought in.
Ultimately its not the analysts that drive stock price. Investors buying and selling the stock drive the price. People have to buy into it.
Thats why I said I like Apples new guidance policy. They are giving a range instead of a point. So their low point can now be their historically low 'coservative estimate' which everyone knows they will beat by a mile. The key is they are now providing an optimistic high point. Its a double edged thing and that's the real test for Apple. If Apple ever exceeds its optimistic high point, its just back to its old shennanigans. If it is a true estimate, Apple should always be below it.
That makes valuation for their stocks a very easy thing.
Using easy numbers and assuming 0%interest and no currency fluctuations for NPV simplicity....
Apples low guidance:
We will sell 50,000,000 devices at $500 per device this quarter at a margin of of 40%.
High guidance:
We will sell 70,000,000 devices at $500 per device at a margin of 50%
That makes Apples valuation pretty straightforward:
Revenue expectations:
50,000,000 x500 = 25,000,000,000 on the low side
70,000,000 x500 = 35,000,000,000 on the high side
Profit expectations:
25,000,000,000 x .4 = 10,000,000,000 on the low side
35,000,000,000 x.5 = 17,500,000,000 on the high side
Prior correct valuation was at 400,000,000,000.
So at the end of this quarter Apple is expected to worth $410,000,000,000 to 417,500,000,000
Assuming apple had 1,000,000,000 shares outstanding....
Current stock price - $400,000,000,000/1,000,000,000 = $400
Price expectation at end of quarter = Between $410 to 417.5
It is nowhere near as sexy or exciting as posting lowball numbers and then being a 'miraculous' company that pulled a financial rabbit out of the hat and exceeded expectations yet again- but its an amazing thing for people that would prefer investing over gambling. As long as they keep selling more devices at higher margins their stock will very coninuously continue to climb along with their performance.
If Apple does what some of the analysts predicted- which is to give their outrageously low low number, and then give a 'high' number that they know they will beat as well.... Well, invest at your own risk.
Apple, thanks for making the reporting change, please continue to surprise us with your great products, not your financials.
Originally Posted by Archipellago
think about what you post before posting…
Delicious irony.
…or do what iCon did and steal the best ideas. Major flaws in all the main products… iPhone demand is weakening..especially in the latest model. The computers are priced ridiculously and the OS has been going backwards since Leopard.
Never post this again.
You don't NEED to spend THAT much anymore.
And yet 90% of people are. Huh. How about that.
Tablet is moving to 7" form factor…
BA HA HA HA HA HA HA HA!
None of this is rocket science.
And yet you're still totally wrong.
To give context, my household contains 2 iPhones, an iPod touch and an iPad….none of which we will replace with iOS devices next time. we used to have a ATV, a mac and another iPhone…
Rules #4 & 5. No one cares at all.
Saying "I love Apple, but" or including a laundry list of supposedly owned Apple products neither impresses me, nor is necessary to support a well-reasoned argument.
Quote:
Originally Posted by Archipellago
think about what you post before posting… History says that when iCon isn't at Apple then Apple fails. Even when on sick leave he was still really there as the guiding mind. He's gone now..for good. Recent successes can be attributed to products he had a major hand in, but that pipeline is now wearing out and it's up to TC,JI etc. to come up with new stuff…or do what iCon did and steal the best ideas. Market is saying that they won't/can't. I agree. Major flaws in all the main products plus much better competition is the reason. The VFM in Apple products, which was always on a knife edge has been busted by Nexus 4/7 and Kindle. You don't NEED to spend THAT much anymore. Tablet is moving to 7" form factor which squeezes Apple's margins. iPhone demand is weakening..especially in the latest model. The computers are priced ridiculously and the OS has been going backwards since Leopard. None of this is rocket science. To give context, my household contains 2 iPhones, an iPod touch and an iPad….none of which we will replace with iOS devices next time. we used to have a ATV, a mac and another iPhone but we are moving away from it because there are better products out there for less money.
Thanks for regurgitating all the bullshit on the internet in one concise post. iPhone demand has never been higher, and Apple broke all their records, again. Who gives a crap about the stock price. Not Apple. Why should they let a bunch of neurotic gamblers dictate their next move. They're doing just fine.
I posted in another thread that the next moving of the goalposts will be claiming that the successes at Apple post-Jobs will be attributed to Jobs but any failures will be attributed to Cook. I assumed it would take a little more time to happen but it appears Archipellago is head of his class at Troll U.
Quote:
Originally Posted by herbapou
Stock is going down on growth decelaration and margins. This is causing a shift in fund ownership from growth to value.
This will provide a chance to pick up the stock at undervalue levels even by value stock metrics. If apple can maintain small eps growth this will play out fine.
But apple is flirthing with yoy declines now, so there is still a risk even at the current price.
Thanks for locking in on the real issue. So many people just look at the last quarter results and cant figure out why the stock dropped another 60 points.
Do you have an opinion on whether the projections, if they are accurate, will carry through for the 3rd and 4th quarters? If they see similar growth and margins as the 2nd I think we're looking at about $40 eps for 2013. Obviously new products and other events could impact that, but if you project a similar product cycle I think 40 is the number. Hopefully it would level off there and start growing again, but further margin compression would, absent other variables, continue to drive that number down. I think $400 is a fairly safe number, but given how the market tends to overshoot would not be surprised to see mid 300s before it moved back up.
As you indicated slowing revenue growth along with margin compression was a real bad combination. Things could get real interesting if 2nd qtr results are just in line, and guidance deteriorates further.
Quote:
Originally Posted by onelungedwonder
I've been an Apple investor since 2006. I recently got out of the stock entirely, because of their guidance. Like the article says they've always guided conservatively and so low guidance wasn't a great reason to sell. They made it really clear during the conference call that their guidance was a range they'd be pretty sure they'd land within, and they wouldn't sandbag any longer.
Well they if you take the data points they guided for in the quarter ending in March and figure out the range of EPS that they can hit using those parameters, then they've guided very low.
Using their ranges, the upper bound is approximately $10.20 EPS, the lower bound is $8.30 EPS. Compare this with the year ago March quarter that had $12.30 EPS. Basically they guided at best 17% drop in profits, and at worst a 32.5% drop in profits Y/Y.
No one is going to be happy with that. If they're not growing profits, then a P/E in the range of 8-11 is probably pretty fair for a company of their size, and that's exactly the range they're in right now. So the market has done a pretty good job of pricing them accordingly.
I don't think the price drop has anything to do with the holiday quarter, that was a great quarter for them. It's this next one that's not going to be good, especially if they're serious about not low-balling estimates.
Mind sharing how you come up with the bottom of that range? I'm probably missing something, but I keep coming up with roughly $10.30-10.60 which is significantly higher. I agree the main issue is the projection and what the 3rd and 4th quarters will look like if you extend the margins and growth to those quarters.
First, no one's talking about yoy declines except you. Even in the past quarter which is being labeled such a disaster, profits were up almost 8% on a weekly basis - and that was in the face of supply constraints and massive expenses to redesign products.
More importantly, even if Apple's profits are flat for a few years, they're STILL vastly undervalued. They're at about 9 times earnings now - or about 7 times earnings after adjusting for cash. Those are extremely low numbers - even without any growth forecast.
It's a common trolling trope. It's called concern trolling. It's more common in politics, but we see this a lot on this forum.
Also:
#5: Claiming (desired) ownership of Apple products renders one resistant to rebuttal. The number of products owned is directly proportional to how safe you are from rebuttal.
http://forums.appleinsider.com/t/152839/rules-of-the-troll-wip
Quote:
Originally Posted by Suddenly Newton
Saying "I love Apple, but" or including a laundry list of supposedly owned Apple products neither impresses me, nor is necessary to support a well-reasoned argument.
Unfortunately, in forums where people are often allowed to argue against opposing opinions by calling names (troll, astroturfer, etc), a lot of even oldtime Apple supporters feel the need to prophylactically include their support history. It's really sad that they feel the need in the first place.
Like I've said, it's like the Joe McCarthy hearings in the 1950s, where his best offense was simply to call his opposition out as "Commies", and put the burden of proof that they weren't, on them.
You can always spot a poster without a decent argument point, because they responded with personal attacks instead. Never fails.
Because it means nothing, anyone can say it, and is generally unprovable. Anyone can say "I've been an Apple fan for 30+ years.
Making a litany of statements about how Apple is terrible, some of them poorly thought through, then saying "but I'm on your side" is self-contradictory, and is justifiably called concern trolling. For it to be otherwise is unlikely, I think it's naive to defend it.
I see you Commie-Godwinned.
How about this, you go to an Android-centered forum and say a few negative things about Google and see what you get. I'm not naive, most web sites are not places to raise negative opinions about the topic of the site, this site's discussions are relatively even-handed compared to most that I've seen on the web.