23 January 2008

AAPL: Great News! (Stock Tanks)

I'll never understand the market. Apple posted their results for the fourth quarter of 2007, their best quarter ever, it announced today.

Revenue was uo 35% over 4Q 2006
Earnings were up 58% over 4Q 2006; net margin was 22%
Earnings crushed Wall Street estimates of $1.61/share, coming in at $1.76/share
2.3 million iPhones were sold, for a total over 4 million in 200 days
22 million iPods were sold, bringing the total number of iPod sales over 100 million
Apple computer sales overall up 44%
Apple desktop computer sales were up 53%; laptops up 38%
Apple projected sales for 1Q 2008 at $6.8 B, up 29% from 1Q 2007

The results?

AAPL dropped 10.6% on the day, to close at 139, its lowest close in 6 months, 30% off the 2007 high-water mark of 199.

I know the market's tanking and all, but is it too much to ask that it make a little sense?


  1. It's an odd thing but the "good news" was already accounted for in the stock price. In light of the actual announcement, the short-term speculators start selling off. "Buy on the rumor, sell on the news" or something like that.

    Personally, I think it's all ridiculous and better left to the pros. My philosophy is to invest in companies you believe have long term potential and avoid all the get-rich-quick schemes.

  2. Sounds like it's time to buy more then, hmmm?

  3. Perhaps stocks tanking=investor fear of fewer ipod and expensive Mac computer purchases.

  4. I thought it was because Apple announced revised, less-than-projected earnings in 1Q08 compared to figures they were touting before the holidays. While this quarter will still be more than 1Q07 as you said, right now stock market folk seem to be at the "dogs and cats, living together" point of freakoutdom. (I, having no money whatsoever, just read the figures like they were sports scores)

  5. I think it makes perfect sense. So many people bought into the Apple hype, the stock price was bound to face reality at some point.

    Apple makes fantastic products, but the premium price you pay for the "ooh aah" factor (oh, and to be the center of attention down at the local coffee house) is ridiculous. Especially now that credit is tightening, jobs are becoming more scarce, more homes are going into foreclosure, and we're entering a recession.

    Apple will face some lean times. Maybe the Apple disciples and fanatics will finally learn some humility.

  6. A Bear Stearns analyst explained it was' as good as Apple did, we really don't think they can do better than this'.

    I'm sure Apple will prove him...and all the other naysayers wrong.

  7. The thing to keep in mind is that the price people pay when they buy a stock now (which is what sets today's price) is based not on what the stock did in the past, but what people believe it will do in the future. The announced earnings for this quarter or year justify the price people paid three or twelve months ago.

  8. Don't you know Apple is going to go out of business and die, any day now? I've been hearing that from the analysts/Microsoft people since 1986, I'm sure it'll happen soon.


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