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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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Apple Financial

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...
 

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Nassassin

I feel vindicated that someone else was annoyed by that Krizner guy's "Make it a good day". Who does he think he is? Just give me my warmed-over business headlines, then shut the hell up. I'll take my inspirational exhortations from a show with an actually soul, thank you.

What evidence do you have that the Marketplace/APM overlords MADE him stop saying that (personally, I thought it was reason enough to can him, but no such luck) rather than him just realizing he sounds like a schmuck?

January 23 2008 at 10:19 PM Report abuse rate up rate down Reply
1 reply to Nassassin's comment
Michael Rose

Nas: That was hyperbole on my part. I don't know whether he chose to change his signoff or if management suggested it to him, but in either case I'm glad he has.

January 23 2008 at 11:13 PM Report abuse rate up rate down Reply
Greg

I feel like the dumbest MF on earth. Bought AAPL on January 2nd, for $200 each.

get me outta here!

January 23 2008 at 5:08 PM Report abuse rate up rate down Reply
AP

If you are smart you won't listen to anyone offering financial advice here.

January 23 2008 at 4:17 PM Report abuse rate up rate down Reply
1 reply to AP's comment
Stealth43

If you are smart you won't take or give blanket advice like that...

As an econ person I can tell you that Christian's analysis was dead on.

January 24 2008 at 9:54 AM Report abuse rate up rate down Reply
Adam G

Here is what I meant. Basically if I sold the apple stock near the high it would be pretty much all profit, being my low cost of entry. So If I would have wanted to sell at $190/share, my break even price (after paying taxes) assumed APPL would have to drop below $141/share...depending on tax bracket, cost basis and commissions. Sure this has now happened, but the odds of that seemed pretty slim at the time. And for that risk, it was not worth it to me. Plus, I don't think it will stay under $137 for long.

January 23 2008 at 3:52 PM Report abuse rate up rate down Reply
1 reply to Adam G's comment
greenstork

I think you may misunderstand capital gains. If you've owned the stock for over one year, your gains are taxed at 15% -- less than one year and you are taxed at your current income tax rate.

January 23 2008 at 5:31 PM Report abuse rate up rate down Reply
greenstork

An exceptional year no doubt...

Too bad that Wall Street prices in growth in profits and revenue long before the actual earnings report. You've heard the phrase "buy on rumor, sell on news", which is also applicable in this situation. The people who actually move the price of stocks know long before the guy on the street.

I've been active in the stock market for years, got burned by trying to day-trade in the late nineties, although not too badly. I only buy in the intermediate and long term now. My best single piece of advice, and the source of my success ever since -- don't buy stocks that everyone (analysts) is talking about, like Apple. Moreover, focus on growth industries. Seems like alternative energy like wind and solar, LED tech., nano materials stocks, and health care are good industries in which to "cherry pick". A more risk averse investor would just wait and see where this bear market ends and dump some money into indexed mutual funds or ETFs. What you shouldn't do is try to time the market, particularly individual stocks.

I wouldn't buy a stock that I didn't feel comfortable owning for more than 5 years. In that respect, Apple isn't such a bad buy. If you don't like risk and volatility, stop paying attention or move your money to funds instead of individual stocks.

January 23 2008 at 2:32 PM Report abuse rate up rate down Reply
hardmanb

" unit sales of iPods were up only 5%" Yes, but more expensive iPods (Touch) means revenue up 17%. Also, should not iPhone sales (also iPods) be considered in numbers? iPod Market saturated? Remember the 3-year consumer replacement cycle. Apple stores are on fire, opening Flagship stores in Australia and China. Apple is expanding steadily into foreign markets...remember the iPod takeoff in the US?

The Apple guidence was down 27% for first quarter, but Apple for years has issued guidence numbers down 25% for the quarter after the "Christmas" quarter, so this was a massive overreaction due to fear and economic pessimism by the market.

All products in the Apple ecosystem are positioned for strong growth and steady breakout in foreign markets. Hold your stock for long term investment profits.

If this is how the market values Apple's success, imagine the ride for other tech stocks...especially those who are riding now crumbling old business models and changes to their traditional revenue streams. There will be much blood in the water.

January 23 2008 at 2:32 PM Report abuse rate up rate down Reply
Eideard

I can't say what I do with my personal finances because I'm an editor of a tech/politics blog.

I can say that Christian makes a lot of sense.

January 23 2008 at 2:13 PM Report abuse rate up rate down Reply
kiltbear

We HAD lots-o-dollars in Sun stock at one point. We didn't sell either... so we are still working and still paying off the mortgage. Don't get greedy, son. Take your gain and diversify.

January 23 2008 at 1:42 PM Report abuse rate up rate down Reply
Kevin

I sold my AAPL today, took a nice 25% gain since I purchased it. When the market comes out of the crapper I'll probably get back into AAPL. Right now it's just not a good time....

January 23 2008 at 1:29 PM Report abuse rate up rate down Reply
1 reply to Kevin's comment
Sean

Huh? Have you ever heard of buy low/sell high? Seems like you're doing the opposite of that!

January 23 2008 at 2:42 PM Report abuse rate up rate down Reply
nimro

If it's any indicator of the markets, Google is down to around $530.

Remember its heydays at around $700?

It isn't just AAPL that's suffering.

January 23 2008 at 12:57 PM Report abuse rate up rate down Reply
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