The AAPL-Files
Reading all these posts, all I can say is that many of you are bordering on paranoid.
I realize that a lot of you have mucho dinero devoted to AAPL stock or options.
However, suddenly suggesting that analysts should be leading indicators for AAPL, not trailing, is rather humorous.
Analysts currently predict a 48 cent profit. We think it is much higher. Does this sound familiar? It's called Q1, Q2, and Q3. What is more likely--that analysts go from being HORRIBLY wrong about a stock three quarters in a row to being perfectly right, or for them to get this quarter wrong as well (although probably not QUITE as wrong as before).
They were off by 83.33% in Q1, 137.5% in Q2, and 52% in Q3.
My .67 estimate for this quarter means a lessened 39% error--indicating a relative improvement over previous estimates.
Analysts are notorious for being trailing indicators for stocks. An old Wall Street saying suggests that the moment all analysts recommend a stock, get the hell out. They are slow responding to a company who is staging a turnaround. And they are slow to downgrade earnings estimates for companies that are falling apart.
Why? Up-turns and down-turns in a company mean wild fluctuations in earnings--and deviating sometimes significantly from the company's own forecasts.
Why do analysts still forecast .48 for this quarter? Because they are listening to what Fred Anderson said months ago. He said to expect very modest Q-Q revenue growth in Q4. He also suggested indirectly that iMacs might lower margins. They also hear about the increased advertising costs and probably guess at slightly higher total costs. Put all this together, and you get earnings about the same as last quarter, which was .50--making their .48 seem suddenly reasonable.
Most companies out there have matured to a sufficient degree that earnings are predictable enough for CFO's to lay out a pretty good picture of the future for analysts. Analysts are trained to listen to this information and value it over spotty "reports" coming in from various sources that may or may not be reliable.
Unfortunately, they carry this tendency over to companies whose earnings picture is fluctuating too wildly for CFO's to predict a year or even a quarter ahead of time. Fred Anderson could not possibly have known three months ago that iMac demand would be so high or that its release would spur demand in the G3's and Powerbooks.
Some industry analysts are in charge of researching a dozen or more stocks, leaving little time for any one individual company. They might have better sources of information, but I can PROMISE you that I spend more time analyzing, reading about, and tracking AAPL than any of its analysts.
Meanwhile, look at Micron Electronics, who just reported today. Analysts predicted .02 earnings. The company came out with 17 cents. Wow.
Andrew |
