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Apple shares fall in after hours trading

Apple today reported revenue of $28.27B for the fourth quarter and $6.62B in net profit ($7.05 per diluted share). These numbers compare quite favorably to $20.34B and $4.31B ($4.64 per diluted share) for the same quarter last year.
 
Gross margins for Apple during Q4 were 40.3 percent.
 
During the quarter, Apple sold 17.07 million iPhones (21 percent growth year-over-year), 11.12 million iPads (166 percent growth), 4.89 million Mac computers (26 percent growth), and 6.62 million iPods (27 percent decline).

 
“We are thrilled with the very strong finish of an outstanding fiscal 2011, growing annual revenue to $108 billion and growing earnings to $26 billion,” said Tim Cook, Apple’s CEO. “Customer response to iPhone 4S has been fantastic, we have strong momentum going into the holiday season, and we remain really enthusiastic about our product pipeline.”
 
Speaking of the iPhone 4S, Apple announced yesterday that it sold over four million of the smartphones during its first weekend of availability -- this was over twice the number for the iPhone 4's initial rollout in 2010.
 
Despite the good news coming out Cupertino today, investors weren't too terribly impressed. Analysts were expecting revenue of $29.69B and earnings per share of $7.39. They also expected quarterly iPhones sales to be in the 18 million to 20 million range.

Apple shares are down over $26 in after hours trading.

Sources: Apple, CNBC



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Problem with stock market
By Dug on 10/18/2011 10:39:50 PM , Rating: 5
Doesn't matter how much money you make, its all on expectations and not realistic.

If a private company made 3 bil profit year after year and every employee is well paid then life is good.

If a company on the stock market made 3 bil year after year they would be in trouble because they aren't constantly making more.




RE: Problem with stock market
By Shig on 10/19/2011 3:14:40 AM , Rating: 2
You are exactly right, 'expectations' have become an utter joke. I mean, you break a record and that's below 'expectations', what the fuck is that?!

Apple provides the world community with an innovative product, what the fuck does Wallstreet provide the world besides massive income inequality and impossible expectations?

Almost everything about the US system is so broken I almost don't even want to think about it, I'm 25 years old and I have very little hope for my country that I love so much :(


RE: Problem with stock market
By mcnabney on 10/19/2011 9:38:00 AM , Rating: 1
What's innovative about 4S?

Besides 'inventing' a number of Android features and stuffing the guts of the iPad2 inside?


RE: Problem with stock market
By seamonkey79 on 10/19/2011 10:49:09 AM , Rating: 2
They're the only ones that still put a physical button on the face of the phone? That's innovative!


RE: Problem with stock market
By Apone on 10/19/2011 12:35:28 PM , Rating: 3
@ Shig

- Income inequality? Broken system? Would you be saying this if you generously profited from investing? Bottom line, this is the essence of Capitalism and anyone who pushes themselves in learning the opportunities and understanding how to exploit and capitalize it can generate solid wealth. It sounds as if you're asking to be spoon-fed the financial success which I'm sorry to say, just ain't gonna' happen unless you hit the lottery.


RE: Problem with stock market
By nafhan on 10/19/2011 9:38:22 AM , Rating: 2
Even more frustrating (from my point of view, at least), is when a company makes a bunch of money on their products, but rather than show a huge profit for the year, they reinvest the money into R&D, etc. THEN Wall Street punishes them for not showing a huge profit.

I guess the moral of the story is that watching Wall Street is a good way to keep track of the stock market, but you've got to be careful trying to get anything else from those numbers.


RE: Problem with stock market
By Da W on 10/19/2011 11:30:41 AM , Rating: 2
Wall Street IS an irrationnal beast. Learn the concepts, do your homework and profit from it.

Apple had the tendency of doing conservative forecasts and then beating them. Over time people get used to that and expect more of the same. When one day the forecast are not beaten, speculators and day traders, that bet the house during the day that Apple would still beat its forecast, they become disapointed and sell off in a frenzy in after hours. Apple actually traded down on at least its 3 past quarterly earning results that i recall. THATS WHEN YOU BUY!

In the long term sound economics always have the upper hand over Wall Street irrational exuberance and CNBC'S fanboyism. Apple is a good company with record results and despite Job's death you can still expect growth from its iPad/iPhone/Mac and itune music/App store for a couple of years, then its still a good stock to buy at 400$ which is almost only 10 times forward earnings. On average stocks trade at 20 times earnings and in normal condition a growth stock like apple would trade up to 30 times earnings.
Oups, 408$, already went back up. See?


RE: Problem with stock market
By TSS on 10/19/2011 12:09:45 PM , Rating: 2
Blame skynet for taking over the world.

For once i'm not kidding. The name is High Frquency Trading though, rather then skynet. From wikipedia:
quote:
In high-frequency trading, programs analyze market data to capture trading opportunities that may open up for only a fraction of a second to several hours

quote:
By 2010 high-frequency trading accounted for over 70% of equity trades taking place in the US and was rapidly growing in popularity in Europe and Asia


So why did shares go down? Because the machines where programmed with the analysts expectations (since you can't program them with data from the future). You don't live up to them -> computer says no and sells. You could program the machines with lower expectations, and they'd buy....

But since the "market" is group behaviour and the status quo is "high expectations", everybody programs their machines that way because everybody else is doing it and theres no sense holding on to a falling stock, atleast for high frequency trading. It's really a logical conclusion, since the share holders want profit -> profit = more money so companies strive to gain more profit so analysts expect more profit thus the machines sell if that profit doesn't materialize.


By inperfectdarkness on 10/21/2011 8:10:17 AM , Rating: 2
this is why the USA is going down the tubes. record profits aren't sufficient for speculators.


Markets are irrational
By BrgMx5 on 10/18/2011 11:02:51 PM , Rating: 3
Apple's own guidance for Q4 was 25b, eps of $5.50, and a gross margin of 38%.

It made 28.27b, eps of $7.03, and a gross margin of 40.3%.

Apple is known for a conservative guidance, and investors are always missing the mark with them, this was bound to happen.

They were getting more aggressive predictons by the quarter, and forgot to factor in the anticipation for what was thought to be the iPhone 5 (people held back purchase).

What everybody should be talking is 40.3 f**king percent!!!!! in a company that makes consumer electronics.

These guys are still a good bet, and will continue to outperform the market.




RE: Markets are irrational
By mcnabney on 10/19/2011 9:40:31 AM , Rating: 2
October is 4Q - so iPhone 4S sales had NOTHING to do with these numbers.


RE: Markets are irrational
By bah12 on 10/19/2011 10:00:44 AM , Rating: 2
quote:
What everybody should be talking is 40.3 f**king percent!!!!!
From an investor's point of view.. YIPEE! But as a consumer I'd be a bit pissed. This means that almost 1/2 of the cost of any apple product is profit.

If you knew that a dealership had 40% margin on a car, would you still pay sticker? Every business is out to make money, but as a consumer how do the iSheep continue to justify handing them such a huge margin.

As a businessman I admire what they are able to pull off, as a human I weep for our species.


Or maybe...
By espaghetti on 10/18/2011 8:03:09 PM , Rating: 3
not being able to delete photo stream photos on icloud without dumping them all...watch what you take pictures of if you've link multiple machines to icloud or you could turn it off before you take pics...lol




Life is like a box of chocolates
By jemix on 10/18/2011 5:10:10 PM , Rating: 2
When I think about Apple's stock price, I think about this: http://www.youtube.com/watch?v=SNa4EMUWnAc




Maybe they had trouble with..
By espaghetti on 10/18/2011 7:59:57 PM , Rating: 2
"high speed scrubbing" not responding while watching a video.
ARGHHH!! Drag a finger to fast forward 4 times to get it to respond. Not good for getting through the boring parts.




Well if Steve Jobs was here...
By DoctorBeer on 10/19/2011 8:43:04 AM , Rating: 2
Said the investors to the CEO.




Utter Rubbish
By DrD! on 10/18/11, Rating: -1
RE: Utter Rubbish
By someguy123 on 10/18/2011 6:52:21 PM , Rating: 3
It clearly says "after hours trading".

From the google link in the article:

After Hours: 395.61 -26.63 (-6.31%)


RE: Utter Rubbish
By DrD! on 10/18/2011 7:46:57 PM , Rating: 1
So it does, apologies. I missed that !


RE: Utter Rubbish
By Samus on 10/19/2011 2:01:13 AM , Rating: 2
Does anybody realize Apple makes twice as much quarterly as Intel? That's ridiculous.


RE: Utter Rubbish
By robinthakur on 10/19/2011 5:10:17 AM , Rating: 2
Why is that ridiculous? It's surprising and certainly smart, but clearly intel has a lower profit margin.


RE: Utter Rubbish
By TakinYourPoints on 10/19/2011 6:17:54 AM , Rating: 2
Well, Intel also has much lower gross revenue as well. Going from hardware into software, Microsoft has roughly double the profit margin as Apple, which is why it took so long for Apple to make more net profit even though they had been exceeding their net revenue for over a year.

Component makers definitely get lower profit margins compared to the two as they basically sell commodities.


RE: Utter Rubbish
By TakinYourPoints on 10/19/2011 6:19:55 AM , Rating: 2
Whoops, messed up word there.

It should say "why it took so long for Apple to make more net profit even though they had been exceeding their gross revenue for over a year"


seems high
By AssBall on 10/18/11, Rating: -1
RE: seems high
By Mathos on 10/18/2011 5:21:55 PM , Rating: 3
That was referring to the 17.07m total for the year I think. But this article also clearly points out some of the major issues that are causing our economy to be screwed. Namely the shareholders QQing about their ungodly high expectations not being met.


RE: seems high
By ClownPuncher on 10/18/2011 5:22:35 PM , Rating: 2
And so much weight being given to predictions made by market analysts.


RE: seems high
By BrgMx5 on 10/18/2011 5:37:48 PM , Rating: 4
That's 17.07m for the quarter only


RE: seems high
By Reclaimer77 on 10/18/2011 7:23:09 PM , Rating: 2
I can't blame them. Apple is a terribly overvalued company currently, just look at their market cap. The bubble will burst, but you can't blame them for wanting to keep it as high as possible as long as possible.

Not sure how this "screws" the economy though because in good times the "QQ" is there too. But that's fine, everyone has their own scapegoat lately for why things are bad.


RE: seems high
By yomamafor1 on 10/18/2011 8:04:46 PM , Rating: 2
Exactly. People especially like to take their gauntlet to the administration, and blame everything on it, even though it is pretty obvious the blames lie somewhere else....


RE: seems high
By TakinYourPoints on 10/19/2011 6:31:23 AM , Rating: 2
It isn't overvalued based on any technical or fundamental metric. It is surprisingly lowly valued for a tech. It's PE and PEG ratios are below other major techs like Google, Amazon, and Oracle, and growth continues to accelerate at a fast rate. The stock price is actually conservatively justified by its gross revenue and net profit.

Investor sentiment is not running it up irrationally, it is actually holding the price down based on fear that it is running ahead of itself. This is why you see consolidations for long periods of time like bouncing around the $300 level for almost a year before another leg up, even though its profits have long justified the price that it is at now.

The same actually applies to IBM. It has had a similar run up in stock price over the last three years, but it is still conservatively priced and justified by their balance sheet.


RE: seems high
By TakinYourPoints on 10/18/2011 6:42:01 PM , Rating: 3
From a pure technical trading standpoint the move makes sense.

You have to think that if there is a run in price in either direction in anticipation of news, that the market is already pricing the news in ahead of time. In the last two weeks there was a run from $370 to $420 in anticipation of earnings.

The market already priced the earnings into the stock ahead of time.

A dip after good news following a big run, even if it is positive, is very common in any stock. You know how people are bewildered by a stock dropping after good news or shooting up after "bad"? Same reasoning, the market has already priced the news in far ahead of time and it's already moved up a considerable amount. You have to look at the move prior to the event to get the whole story.

You can also see the same happen the opposite way. It has happened many times where AAPL or other stocks have dropped before earnings news, and then even when the news was to be expected it shot up afterwards.

Moves like this serve to take money away from amateur day-traders or extreme risk takers. Anyone else who has been holding for a long time or over the last month is fine. It's why trading on earnings or product announcements is as close as you can get to betting at the track. :)


RE: seems high
By nicholas1 on 10/18/2011 8:54:22 PM , Rating: 1
Well, After exceeding the market's expectations for so long, now Apple stumbled. And It blames it on rumors. Who's fault is that? Apple's? or Market's?

There is something interesting here..
http://theforbittenfruit.ndnlfn.com/is-apple-becom...


Doomed!
By Shadowself on 10/18/11, Rating: -1
"Game reviewers fought each other to write the most glowing coverage possible for the powerhouse Sony, MS systems. Reviewers flipped coins to see who would review the Nintendo Wii. The losers got stuck with the job." -- Andy Marken














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