APPLE CRUSHES ESTIMATES, ANALYSTS CONFOUNDED
Apple continues to toy with the analyst community as they reported an absolutely blockbuster quarter after the bell. Analysts were looking for EPS of $1.42 (we were looking for $1.66) on revenues of 9.2B. Apple reported $1.82 on revenues of $9.87B. This was Apple’s most profitable quarter ever as Mac and iPhone sales set records. Steve Jobs was obviously pleased with the quarter:
“We are thrilled to have sold more Macs and iPhones than in any previous quarter,” said Steve Jobs, Apple’s CEO. “We’ve got a very strong lineup for the holiday season and some really great new products in the pipeline for 2010.”
Apple sets the bar low for the upcoming quarter. Guidance is well shy of expectations, but that is the norm here.
“We are delighted with our September quarter and fiscal 2009 results,” said Peter Oppenheimer, Apple’s CFO. “For the full year, we grew revenue by 12 percent and net income by 18 percent in extraordinarily challenging times. Looking ahead to the first fiscal quarter of 2010, we expect revenue in the range of about $11.3 billion to $11.6 billion and we expect diluted earnings per share in the range of about $1.70 to $1.78.”
The “better than expected” parade continues. Expect another big move tomorrow in the markets. There is just no two ways around this – as we’ve been saying for weeks, the analysts are just absurdly pessimistic about this earnings season.
Hey TPC, just wanted to say nice call on the earnings again. Your indicators and analysis with regards to earnings over the last few quarters has been absolutely spot on. Keep up the good work!
Thanks Hank. What is amazing, is not my ability to forecast the earnings, but the INABILITY of the analyst community to forecast it. These guys & gals get paid hundreds of thousands of dollars to read the same balance sheets and income statements that I don’t get paid to read….
I think this says more about Apple than the rest of earnings. TXN wasn’t especially impressive. Neither was INTC. Both benefitted from re-stocking after demand fell off a cliff temporarily. What I think this says about Apple is that a) the iPhone and Mac are doing extremely well and b) the consumer, debt-binge culture is unlikely to die very quickly. This is the equivalent to seeing the BMW parked outside trailors at the trailor park. Everybody loves BMWs (and iPhones, Macs, iPods) and there’s no reason to deny oneself just because the economy is in the dumps and there aren’t any jobs. The more interesting numbers are those that suggest that in the US the savings rate increased temporarily but has already started to fall back again. Happy days are here again. I’m guessing this will last another 18 months. Then we’ll all suddenly realize everyone has been utterly had.
I don’t disagree at all. It’s not so much a sign that things are back to normal, but more a sign that the analysts are all useless. It’s simply staggering how impactful the banks and their analysts are on the markets.
I agree. They do have tremendous influence. Professional traders rarely do any analysis on their own any more. They all chase price action. Price action is stimulated by earnings and upgrades (or downgrades). The minute I realized all traders a) think alike and b) are pretty dumb, was the minute I figured out how make money. On a separate note: Watch EWZ. That will be tomorrow’s tell for the EM trade. A sudden (sensible) change of policy is the only thing that will cool off the market. Naturally there will be no sensible policies in our country so we’re free to chase AAPL up to 250.
It’s a chess game. How many moves forward can you think without screwing yourself?
I think the earnings estimates are purposely and FRAUDULENTLY estimated low so the stock ramp jobs can occur.
Finally a true statement – analysts are not stupid at all. They are rigging the market into thinking it’s a surprise – don’t we all love a good surprise!
That argument doesn’t really work though because they were as wrong on the other side in 2008 as they have been in 2009.
Their models are no different than the models the banks used to create and account for all the toxic assets – worthless predictors of absolutely nothing.
TPC,
How do you explain the price of a company like CAT? forward p/e 29. debt 33 billion. cash 1.6 billion. peg 4.3. yoy earnings growth -66%. price/book 4.6. Media analyst opinion 47. Current price 57. Is there just so much cash out there that a company like CAT cannot trade any where near a normal valuation of like $40?
How can anyone trust PE ratios? I talk about this a lot here at TPC. They are the most worthless and overhyped stock market metric around. Just look at what the forward PE is based on: 25 estimates that range from $1 – $3.25. WHAT? How can you have such a wide range there? The average is $1.95 so thats what it’s based on, but what if the averages prove to be totally wrong (as we always see with analysts) and the $3.25 estimate is actually the closest? Then you have a firm that trades at just 18 X earnings.
It’s total bull shit if you ask me. Using PE ratios is like using a Ouija board.