Best of the Week
Most Popular
1.Independent Scotland Will Disintegrate as Unionist Regions Demand Referendum's to Rejoin UK - Nadeem_Walayat
2.Bank of England Panic! Scottish Independence Bank Run Already Underway! - Nadeem_Walayat
3.Scottish Independence Referendum Result NO 55%, YES 45% - Vote Forecast - Nadeem_Walayat
4.Scotland Independence Result NO Win 55% to Yes on 45% - Nadeem_Walayat
5.US Dollar Forecast to Go Much Higher - David_Petch
6.Russian Union Of Engineers Accuses Ukraine Airforce In MH17 Crash - Raul_I_Meijer
7.The Emergence of the US Petro-Dollar - Gary_Dorsch
8.Don't Miss This Gold Buying Opportunity - Brien Lundinr
9.Silver Price: A Collapse and a Rally - DeviantInvesto
10.Silver Buyers Keep Stacking And Demand Higher Despite Falling Prices - 18th Sept 14 - GoldCore
Last 5 days
ASX200 Stock Market Index Set For New Highs - 21st Sept 14
Scottish Referendum Not Avoiding The Future - 21st Sept 14
Five Lessons Learned from the Scottish Referendum - 21st Sept 14
The Problem With UKIP And Other I I P's - 21st Sept 14
Stocks Bull Market Resumes - 20th Sept 14
Gold And Silver - Current Price Is The Story - 20th Sept 14
Can the U.S. Economy Withstand Another Housing Market Breakdown? - 20th Sept 14
Nervous Investors Will Hate the Money You Make With This Strategy - 20th Sept 14
Cheap Gold Stocks Upleg Intact - 20th Sept 14
Monetary Policy Killing The System - 20th Sept 14
Scotland and the Spirit of Our Time - 20th Sept 14
Bitcoin Price Charts In-Depth Analysis - 19th Sept 14
Alibaba is Focused, Will Use Money in Emerging Areas - 19th Sept 14
Bird's Eye View of the Gold Stocks - 19th Sept 14
Scotland Independence Result NO Win 55% to Yes on 45% - 18th Sept 14
Silver Price: A Collapse and a Rally - 18th Sept 14
Here's Why Trendlines are Your New Trading Best Friend - 18th Sept 14
Silver Buyers Keep Stacking And Demand Higher Despite Falling Prices - 18th Sept 14
The "Hidden" Billions in the Alibaba IPO - 18th Sept 14
Russian Union Of Engineers Accuses Ukraine Airforce In MH17 Crash - 18th Sept 14
Monetary Policy Weighs on Gold and Silver - 18th Sept 14
Global Currencies Analysis...The World According to Chartology - 18th Sept 14
Gold Price Hammered by Strong U.S. Dollar - 18th Sept 14
Is Citigroup the Dumbest Bank Ever? - 18th Sept 14
Scotland Must Vote Yes! For All Of Us - 18th Sept 14
Scottish Independence Referendum Result NO 55%, YES 45% - Vote Forecast - 18th Sept 14
A Public Bank Option for and Independent Scotland - 17th Sept 14
The Charade of Independence for Scotland and UKIP - 17th Sept 14
Gold Report - U.S. National Debt Surges $1 Trillion In Just 12 Months - 17th Sept 14
How to Find Trading Opportunities in ANY Market Using Fibonacci Analysis - 17th Sept 14
Why Money Is Worse Than Debt - 17th Sept 14
Can Gold Price Finally Recover? - 17th Sept 14
Scotland Independence - Europe Holds Its Breath - 17th Sept 14
The Energy Prices at Risk with Scottish Independence - 17th Sept 14
Scottish Independence SNP Lies on NHS, Economy, Debt, Oil and Currency - 17th Sept 14
The Truth Behind the Dangerous "Helicopter Money" Delusion - 16th Sept 14
Central Bank Balance Bullying: Investor Implications - 16th Sept 14
U.S. Dollar and Gold Elliott Wave Projection - 16th Sept 14
The Origins and Implications of the Scottish Referendum - 16th Sept 14
The Collapse Of U.S. Silver Stocks As Public Debt Skyrockets - 16th Sept 14
Emerging Markets Are Set Up for a Crisis, What’s on Your Radar Screen? - 16th Sept 14
Scottish Independence Bank Run Already Underway - Video - 16th Sept 14
The Emergence of the US Petro-Dollar - 16th Sept 14
Economic GDP Drives Stock Prices Inestment Myth - 16th Sept 14
Don't Miss This Gold Buying Opportunity - 16th Sept 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

You've never seen this before and may never again

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

© 2005-2014 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

Free Report - Financial Markets 2014