Filed under: Apple Financial
Wall Street to AAPL: Get bent
OK, I get it. Equity investments are bets on the future, not rewards for the past, and a stock like Apple's with such stratospheric growth over the past 12 months is vulnerable to gloomy outlooks in a way that more plodding investments might not be. Still and all: another record quarter. Best sales, best revenue in Apple's history. More than 2.3 million Macs sold, and nearly as many iPhones (!). Over twenty-two million freakin' iPods. Year over year, the December quarter gained almost 2.5 billion dollars in revenue -- my goodness, it was a 9.6B quarter, which would have been a spectacular entire year for the Apple of recent memory. Apple beat the internal guidance by $0.34 a share... there's no way to describe this financial performance except "stunningly good" -- unless you're Doug Krizner of Marketplace Morning Report, who characterized the results today as "less than stellar." Man, I am so happy they made that guy stop signing off with "Make it a good day," because the way he said it made me want to get back in bed and hide my money under a mattress.But I digress. With these results in mind, why would after-hours traders respond with the fiscal equivalent of "Go crawl in a hole and die, you hippie freaks?" Granted, Apple's CFO is anticipating earnings per share for next quarter around a dollar, which is less than analysts were hoping for and may point to some drag on the business from deteriorating economic conditions. It still seems to me that with iPhone revenue growing (remember, it takes two years to extract all the profit from those iPhone sales, so there's an upslope out there as the sales and new markets accumulate) and new streams coming in from iTunes rentals and the so-hot-it's-untouchable retail operation, we've gone from irrational exuberance to a gang initiation beatdown.
Oh well. If I wanted peace and quiet I probably should have bought Dell stock.
Disclaimer: I hold shares in AAPL. Bought them at a split-adjusted $13. Not selling, either.
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Reader Comments (Page 1 of 2)
cinaed said 10:24AM on 1-23-2008
This is just re-enforcing my belief that the stock market no longer has any real relationship to actual business performance. Its really just driven by dreamed up hype and publicity seeking analysts.
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mentalsticks said 11:43AM on 1-23-2008
@christian:
"Unless you're one of the idiots that declared during a December pullback, "AAPL for only $195? That's a bargain!"
If you'd have said that in November, I'd have thought you knew you were talking about. Now it sounds a bit pathetic.
Bill Safsel said 10:30AM on 1-23-2008
Smart people will be buying AAPL at these levels.
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Quix said 10:31AM on 1-23-2008
Owning Apple stock takes an iron stomach. Which I don't have, but I own AAPL anyway. It's not fun to be down 35% over the last couple of weeks.
Haven't investors learned yet that Apple ALWAYS guides conservatively? Idiots.
If I had cash on hand, I'd buy more right now.
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Chad said 10:40AM on 1-23-2008
We are in a recession. Not even Apple can overcome that. I don't expect AAPL to go anywhere but down for quite some time.
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Frank Furter said 10:45AM on 1-23-2008
I bought in a $79. Doesn't bother me a bit - I buy stocks to hold long-term, not make a few bucks overnight.
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Will Royall said 10:46AM on 1-23-2008
Better thank your lucky stars that you are not in Garmin (GRMN) like I am. It has dropped 50% in like a month and is a freaking bloodbath right now! Luckily, I don't have THAT much in it but it is hurting none the less.
Let's face it, we have all warped and hyped up capitalism to the point that it's ALL a funny money game. How much of that iPhone revenue that AAPL is racking up is not paid for out of pocket but is instead added to the credit card debt of the consumer? A lot I bet...
On a national and personal level, the great American way of buy it now pay for it later is about to rise up and bite us all on the butts. Someone is going to have to pay for the party sooner or later people, and when the bills come due it ain't going to be pretty.
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Christian said 10:50AM on 1-23-2008
I'll tell you the same thing everybody over at the Google Finance boards needs to hear: "Calm the F down."
In no particular order, since January 1, several major banks have announced losses and sold minority stakes to foreign investors, the Federal Reserve Bank made a drastic three-quarters point cut in the federal funds rate, and the United States presidential primaries haven't yet produced a clear front-runner (e.g. no forward-looking economic policy suggestions). Those three things, amidst a multitude of other factors, make for a jittery market. You can claim it's irrational, hype-based, or whatever, but that's how the market is. That's how the market has always been.
As for AAPL, there's legitimate cause for a slight pushback. AAPL was up more than 100% in a 12-month period, which is stratospheric growth that's almost never sustainable long-term without a pullback. (RIMM, I'm looking in your direction.) Furthermore, unit sales of iPods were up only 5% versus Q1 2007. Even though, as Gruber pointed out this morning, revenue is up similarly to Q1 2007, indicating higher price point unit sales, the fact remains that iPods are no longer a massive growth bubble for Apple. Furthermore, the jury is still out on whether the MacBook Air will be a big seller or not; you and I might know that it will be, but the market doesn't.
So roll all of that up, and investor confidence in AAPL is not "Buy buy buy more more more now now now!!!" after yesterday's report. So what? AAPL is still up more than 50% from January 2007. Unless you're one of the idiots that declared during a December pullback, "AAPL for only $195? That's a bargain!" you're still sitting on a good profit. I bought in a measly 10 shares at $120 in June, so even if AAPL closes at, say, $135 today, I've still banked $150, or slightly better than 10%. Not bad.
As for the future, AAPL will climb again, because Apple's other two core markets (Macs and iPhones) are prime for big growth. However, if you want to see the high stock prices again, be prepared to sit for awhile. You've got three months again before another earnings call, and all the major product announcements for the quarter already happened at MWSF, so no bubble expansions from those either. If in three months Apple significantly outpaces its Q2 forecast and forecasts a strong Q3, you'll see a climb back up again. If Q2 is on par and Q3 is a slow forecast (e.g. if the national economy does become semi-recessive) then don't expect big jumps there either.
If you're planning on holding for another year or three, all signs point to your investment growing nice and plump, so stop the head-spinning insanity, take your broker off speed dial, and let it ride.
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DJCarbon43 said 2:46AM on 2-05-2008
Lol...
You know, they should be paying you for this sort of stuff ;)
blockage said 10:52AM on 1-23-2008
The stock hit $200 dollars last month. You could have sold then. You didn't? Maybe you're being too greedy?
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Sean said 11:17AM on 1-23-2008
We are *not* in a recession!! The economy is still growing - just a lot more slowly. A recession is negative growth for 2 consecutive quarters. Geez. Get a grip, people!
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LuminousNerd said 11:58AM on 1-23-2008
No, the economy is NOT growing. It is dropping, and fast. It has dropped for 6 consecutive days, and before that it was barely growing. This is the first time that has happened in many years. Analysts have predicted a recession, anyone who wanted to knew it was coming. It shouldn't be a surprise, and it is definitely happening.
Chad said 1:12PM on 1-23-2008
The economy isn't growing. The ONLY thing that is up right now is Oil and other oil-related products (food: corn, sugar). Why wait until the Bureau of Economic Analysis gives it two months and then declares a recession? That's just plain silly. Feel free to live the next few weeks with your head in the sand.
Sean said 3:42PM on 1-23-2008
The GDP appears to be growing each quarter (although the data isn't on there for the final quarter of 2007 yet): http://www.bea.gov/newsreleases/glance.htm
How is that a recession?
Chad said 5:42PM on 1-23-2008
"(although the data isn't on there for the final quarter of 2007 yet)"
Bingo. Aside from that, you cannot simply take the GDP value from one quarter to another as your only indicator. The GDP can be easily skewed by significant gov spending, which we have seen for the past year now.
Spending is down, housing is down, stocks are down...EVERYTHING is down aside from oil and food. How can you not see this? There are very few that have any reputability (aside from the Fed, but since when are they reputable) that thinks we aren't in a recession. Some even speculate a depression is looming if something isn't done.
Sean said 6:59PM on 1-23-2008
Chad: You don't think the Fed is a reputable source of economic information? If they aren't, then who is?
(Most definitions of a recession that I've seen are actually defined in terms of quarterly GDP so I don't know how you can just dismiss the GDP as you do.)
I went to Google Finance and looked at the charts for Nasdaq, S&P, and Dow and clicked on the 10yr view. There's a lot of ups and downs in there - including some pretty significant drops for a period of time. (Check out the period around October 2002 and compare with the drop after 9/11 in 2001 almost one year prior. ZOMG! Oh wait.. it went back up after awhile and we all survived. Also, technically speaking, that time period wasn't a recession as the economy shrank only a couple times in non-consecutive quarters. Verify with wikipedia or any other source if you like.)
Somehow we didn't collapse into a depression during all those other brief slowdowns - and yet I can guarantee that for every major drop there was a huge outcry in the financial media about the end of modern civilization as we know it. Can you (or anyone) prove that this time it is significantly different from all the others?
alf said 11:39AM on 1-23-2008
I appreciate all the comments (esp Christian's) and the article - gives you a good idea of (albeit a little "sided" from TUAW users) perspective.
I read this article after buying another $10,000 in shares this morning.
Also a week after buying myself an MacBook Air (just showing off now)..... with SSD (really showing off now !).
The bottom line, if you enjoy this company - feel good about its growth, invest in its stock.
Was 200 "high" for the stock? Maybe. Is the market going down overall? Yes.
But I am not a short term investor - the market always picks up. Apple, as others have pointed out, has enough cash on hand to ride some of the worst of it. Hopefully we will get this economy pointed in a stronger direction, and keep growing. 1 year from now, you think Apple will not have some really excited next gen stuff? No way. This company is on a roll.
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manish said 11:55AM on 1-23-2008
Welcome to Wall Street...where there is no real correlation between company performance and stock performance.
Get back to the technology side, if i wanted financial stuff I'd hit seekingalpha.com.
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LuminousNerd said 12:01PM on 1-23-2008
I for one came to TUAW this morning looking specifically for an article about the extreme AAPL drop. I may only own 2 stocks, but losing $100 hurts when it's all I've got. This is the Unofficial Apple Weblog, and I expect information on all things Apple. Stock is a HUGE part of Apple. This is ONE ARTICLE. Calm the f*** down.
ecobore said 12:32PM on 1-23-2008
This has nothing to do with apple and everything to do with the US economy - ALL stocks are down - people just overreact a lot to news when they are nervous. They will go lower still I think.
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