Wednesday, October 19, 2011

Apple misses earnings shares are crushed

     Wall Street's golden child AAPL missed earnings for the first time in four years yesterday!  Profits were 7.05/share which came in below analysts expectations of 7.39/share.   The stock is down 4% in early trading after being down as much as 8% in after hours trading yesterday.

     Now AAPL is notorious for low balling guidance so analysts are always trying to figure out how much more they have to up their targets from AAPL's guidance.  Last quarter AAPL predicted they would make 6.40/share.  Analysts had raised their targets all the way up to 7.39 before earnings.

     AAPL disappointed on iPhone sales selling 17.1 million iPhones while analysts were expecting 18-20 million.  Sales were especially disappointing in September as consumers awaited the new iPhone 4S.

     iPad sales were 11.1 million which was disappointing to analysts as well.  iTunes had revenue of 1.5 billion in the quarter.  The company sold 4.89 million Macs in the quarter.  Revenue from the AAPL stores was 3.6 billion.  iPhone 4S sales were 4 million in their first three days!

    Wall Street was disappointed in the past quarter but I don't think it's anything to get scared about.  After all that was LAST quarter's results...what is more important was their guidance which they raised to 9.30/share for this upcoming quarter.  To me, the stock was unfairly beaten up.  AAPL is not one of those high flying momo stocks with a 50 PE.  AAPL is still growing, raised it's guidance and isn't that expensive to boot.  This pullback is a good buying opportunity.



Market Recap
     Well today was shaping up to be a pretty blah day in the markets until the Fed's Beige Book report.  The Fed's Beige Book report is a report on the economic conditions across the country according to the Fed's analysis and it can give an insight into the Fed's thinking regarding the economy.  Traders sold stocks after the report painted a gloomy picture of our current economic circumstances.  We finished lower by 72 points on the DOW after being higher by as much earlier in the day.

     SPY once again fell back from resistance and is having real trouble getting past this resistance area between 1220-1230.  My little red line is like a brick wall for stocks...




     After disappointing investors yesterday with their meager earnings, AAPL traded down over 5%.  Once more, the little red line was like a brick wall.
    I believe whatever AAPL's earnings were, it would have sold off.  It seems like the stocks that have done well this year like IBM and AAPL have sold off after earnings and the stocks that have gotten really beaten up this year like BAC and MS rallied after earnings.  I am holding AAPL now but should probably sell.

     One more thing I have my eye on is gold.  Gold went into bubble territory in August, then sold off massively in September but was still able to hold it's trendline which I identify as the 150 day moving average.  Gold is still in a bullish configuration and I am looking to add to it now that everyone has forgotten about it.  The trendline is at 15.62 and I have placed a limit order at 15.80 to purchase some gold.  I think gold's bullish fundamentals remain intact(money printing, race to the bottom for currencies, higher than normal inflation around the globe) so gold should be bought on this dip.




Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

23 comments:

  1. Ouch, I wonder if Jobs is spinning in his grave right now.

    ReplyDelete
  2. AAPL is still a good company, it seems like a good place to wait and see however.

    ReplyDelete
  3. Well.. damn. Also, what the anon said. It's true.

    ReplyDelete
  4. I dont see how 11 million iPads being sold is a disappointment

    ReplyDelete
  5. They'll do good again when the iPhone 5 gets out.

    ReplyDelete
  6. Your last paragraph in the Apple related part of your blog is incredibly true. They're still making a huge turnover and should continue to do well (in all honesty I reckon it was September's sales that really done them in.) They'll bounce back however, it's nothing to worry about at all.

    ReplyDelete
  7. "To me, the stock was unfairly beaten up. AAPL is not one of those high flying momo stocks with a 50 PE. AAPL is still growing, raised it's guidance and isn't that expensive to boot. This pullback is a good buying opportunity." This sums up the whole thing pretty clearly. Nothing to panic about.

    ReplyDelete
  8. I just read someone's blog that showed the shitty shitty work conditions of Apple manufacturing plants in China, so, like, I can't help but be gleeful that they're not doing as well as they hoped.

    ReplyDelete
  9. @heddin

    they don't just make apple products in that factory. They make parts for every single computer on the market today.

    ReplyDelete
  10. I didn't know that...
    What could we expect for the future?

    ReplyDelete
  11. They should never assume people will by anything.

    ReplyDelete
  12. I think apple has reached their peak. They will still remain a good seller, but everything can reach it's limit in sales anyways

    ReplyDelete
  13. @J. Antonio

    I think Apple's future is bright, they have sold 4 million iPhone 4s's in 3 days. Next quarter should be rocking.

    ReplyDelete
  14. And now I feel bad about everything. :(

    ReplyDelete
  15. "I dont see how 11 million iPads being sold is a disappointment"

    When your production depends on certains ranges because of costs, it is.

    ReplyDelete
  16. It seems that Jobs' fake death did not work... :P

    ReplyDelete
  17. Whatever earning they missed today are just spare change when compared to the profits they'll rake in the future.

    ReplyDelete
  18. i'm new on this and i'm glad to found your blog.

    ReplyDelete
  19. aapl looks weak, it's time to bail!!

    ReplyDelete