Best of the Week
Most Popular
1.Trump Delirium Triggers Stock Market Brexit Upwards Crash Towards Dow 20,000! - Nadeem_Walayat
2.The Future Price Of Gold Will Drop Below $1000 In 2017 -InvestingHaven
3.May Never Get Another Opportunity to Buy Gold at this Level Again - Chris_Vermeulen
4.Delirium - The Real Reason Why Donald Trump Won the US Presidential Election - Nadeem_Walayat
5.Why Nate Silver / Fivethirtyeight is one of the Most Reliable Election Forecasting Indicator? - Nadeem_Walayat
6.Gold Price Forecast: Nasty Naughty November Gold Price Trend - I_M_Vronsky
7.Gold Mining Stocks Screaming Buy! Q3’16 Fundamentals - Zeal_LLC
8.Delirium of Trump Mania Win's Mr BrExit US Presidential Election 2016 - Nadeem_Walayat
9.The War On Cash Goes Nuclear In India, Australia and Across The World - Jeff_Berwick
10.Hidden Signs for Gold and Silver - P_Radomski_CFA
Last 7 days
Trump Sets The Stage For A Huge Gold Rally In 2017 - 6th Dec 16
BrExit Tsunami Claims Emperor Renzi's Scalp, Counting Down to End of the EU, Next? - 6th Dec 16
Failed EU - Means an Expanded Dictatorship - 6th Dec 16
Crude Oil Prices: "Random"? Hardly - 5th Dec 16
The Coming Stock Market Crash and WWIII - 5th Dec 16
This Past Week in Gold Market - 5th Dec 16
Stock Market Short-Term Correction Underway - 5th Dec 16
If Trump Doesn’t Do This, We Will Have the Great Depression 2.0 - 5th Dec 16
India’s Demonetization Could Be the First Cash Domino to Fall - 5th Dec 16
Our Future Economy, Jobs, Banking, And Governance - 5th Dec 16
Gold and Silver Bullion Buying Opportunity for 2017? - 4th Dec 16
First UK BrExit then Trump, Next BrExit Tsunami Wave to Hit Italy HARD Sunday! - 3rd Dec 16
The 10YR Yield and SPX Stocks Bull Markets - 3rd Dec 16
Gold And Silver – Do Not Expect Much Difference With Trump Compared To Obama - 3rd Dec 16
Gold, Currencies and Markets Critical 61.8% Retracements - 2nd Dec 16
Gold Junior Stocks Q3’16 Fundamentals - 2nd Dec 16
Adventures in Castro’s Cuba - 2nd Dec 16
We Are Putting Off the Inevitable - 2nd Dec 16
Macroeconomic Cycles & Demographics - A Fuse, An Explosive and The Igniting Catalyst - 2nd Dec 16
How Moving Averages Can Identify a Trade - 1st Dec 16
Silver Prices and Interest Rates - 1st Dec 16
America, is it Finally time for us to say Goodbye? - 1st Dec 16
Blockchain Technology – What Is It and How Will It Change Your Life? - 1st Dec 16
Burn the Flags, Can Trump Salvage The Sinking US Economic Ship? - 1st Dec 16
Will US Housing Real Estate Market Tank in 2017? - 1st Dec 16
Referendum Puts Italy's Government to the Test - 30th Nov 16
Why We Haven’t Seen Gold Price Rally after Trump Victory - 30th Nov 16
Breakdown and Slide in Crude Oil Price - 30th Nov 16
A 'Wicked Rally' in Gold Price Predicted - 30th Nov 16
Silver Market Sentiment Looks Golden - 30th Nov 16
Indian Demonetization Denotes Severe Stress in the Global Gold Market - 30th Nov 16
Owning Gold and Silver in Troubling Times - 29th Nov 16
Trump's Presidency - Stock Market Crash or Start of New Mega-Trends - 29th Nov 16
Prime Minister Modi's War Against Corruption, Black Money and Fake Currency Notes in India - 29th Nov 16
Can President Trump Really Drain the Swamp? - 29th Nov 16
President Trump’s Economic Plan Isn’t Going to Work - 29th Nov 16
The US Bond Bear Market Has Begun! - 29th Nov 16
Simple Yet Powerful Technical Trading Tools - 28th Nov 16
Public Infrastructure – Welcome to the World of Waste, Fraud, and Abuse - 28th Nov 16
Fifty Years Later, Moore's Computing Law Holds - 28th Nov 16
An Elusive Stock Market Top - 28th Nov 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

$10000 Gold

Why This Week's Apple Earnings Matter So Much More than Usual

Companies / Tech Stocks Jan 23, 2013 - 03:30 PM GMT

By: Money_Morning

Companies

David Zeiler writes: Monster Apple earnings in the December quarter would do wonders for Apple stock - but don't count on that happening.

Apple Inc. (Nasdaq: AAPL) earnings for Q1 2013 are due out Wednesday after market close, and Wall Street estimates range from a 14% decline to a 12% gain. Apple's own guidance is for earnings of just $11.75 per share, while the consensus on Wall Street is for earnings of $13.41 per share.


Even if Apple earnings match Wall Street expectations, $13.41 per share would actually be a decline of more than 3% year-over-year, a far cry from the stunning 118% gain the company reported last year. The psychological impact of declining year-over-year profits for the first time in nine years could ding the stock.

An actual earnings miss - even by just a few pennies - would be more dangerous for Apple stock, meaning the likelihood that Apple stock will fall after earnings is higher than usual.

Here's how Apple got in this vulnerable position.

Why Some Investors Have Soured on Apple
AAPL has been under pressure for the past four months, losing 28.4% on its way down to sub-$500 levels after peaking at $702.10 in mid-September.

Bad publicity, worries about stiffer competition among mobile devices, and negative reports hinting at slowing demand have soured many investors on Apple.

"Sentiment could not be worse," Peter Karazeris, an analyst at Thrivent Financial for Lutherans, told Bloomberg News. "It does take something fundamental to turn that, and we'll see if they can deliver."

Some reports indicate that Apple is struggling to keep up with iPhone 5 demand; others indicate that the iPhone 5 is not selling as robustly as earlier models.

But sales of the iPhone 5 - the product responsible for more than half of the company's profits -
are the linchpin of Apple's Q1 earnings. Strong sales would be reflected in good earnings and bode well for the rest of the year.

If the iPhone 5 numbers don't impress, though, it could means months of trouble for Apple stock.

"If iPhone 5 sales really are disappointing so soon in the product's refresh, then it seems fair to worry about likely sales volumes in the next few quarters before the iPhone is next refreshed," Nomura Equity Research analyst Stuart Jeffrey wrote in a note when he lowered his rating on Apple.

The heavily negative sentiment has placed more importance than most other quarters on a strong Apple earnings report, which could reverse the slide in Apple stock and send it heading back up toward $600.

"If you have a 10% to 15% beat on estimates, it will be enough to have people say, 'Oh, my gosh, Apple has its game back,'" Chris Bertelsen, chief investment officer of Global Financial Private Capital, told Reuters.

Apple Earnings: What Wall Street Will Be Watching
Apple's earnings will be even more closely scrutinized than usual as analysts look for clues on which direction the tech giant's business is headed.

Of course, Wall Street will also be watching closely to see if Apple sells the number of iPads it expects (23 million-25 million) and particularly whether the iPad Mini is cannibalizing sales of its larger sibling. If Apple sells a lot of Minis, that may still disappoint analysts because the smaller iPad has a lower profit margin.

Indeed, since Apple launched so many new products going into the December quarter, analysts expect lower margins all the way around. Overall, Wall Street expects a drop in margins from 45% last year to 38%.

Higher sales of iPad Minis and older models of the iPhone (which Apple sells at a lower cost and lower profit margin) could easily drop that number below analyst expectations, delivering another blow to Apple stock.

While there are more chances for Apple earnings to go wrong than right, optimists can take comfort in the fact that the company often defies expectations.

And despite all the gloom surrounding Apple stock lately, 48 of 58 analysts covering it still rate it a "Buy" or "Strong Buy."

The median price target remains a lofty $745. Most everyone also agrees the company is sound fundamentally.

"Three things influence a stock price: growth, value and momentum. The growth and value are there, but you've completely lost your momentum," Mark Mulholland, manager of the Matthew 25 fund, told Reuters.

Some bullish analysts remain hopeful that Apple earnings will somehow manage to surprise to the upside.

"We still expect iPhone growth. They are still pointing to a strong December quarter and, if you think there's any momentum left, that they can grow on the high end [of the smart phone market] or find growth in other sectors, this is a buying opportunity," Morningstar analyst Brian Colello told Reuters.

Source :http://moneymorning.com/2013/01/22/why-this-weeks-apple-earnings-matter-so-much-more-than-usual/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife