The Apple doesn’t fall far from the threes

October 19, 2011
What goes up must come down. Right?

Well, maybe. But for those of you who think Apple is going the way of Netflix, or even Google for that matter — the former got severely punished over cavalierly raising prices and for Qwikster, the latter lost its steroidal stock mojo a few years ago — I’d think twice before I follow the herd to the exits.

You want to get wallow in some really bad tech news? Check out Yahoo’s dismal quarter. There’s an Exedrin headache for ya.

Apple has dipped back into the three hundreds and off historical highs. But with a mundane price to earnings ratio of 16:07 the Cupertino company hardly seems a candidate for bursting bubble syndrome. Compare that to Amazon, whose P/E is is a whopping 105.3, and even Google, which also prints money but tips the scales at 20.72.

That said, Apple gave the Street a reason — let’s call it an excuse, shall we? — for supply in its shares to outstrip demand after hours Tuesday when the company reported fiscal fourth quarter earnings. Part of the reason for the investor retreat was a rare miss in the rarified expectations of earnings for the maker of the iPhone and iPad. There was also a dip, relatively speaking, in the sales of iPhones. This is not really a novel effect, since Apple has conditioned us to expect a new model of the world’s most popular handset every year at about this time. CEO Tim Cook, pointing to the section of the park where he will hit a home run, says we should expect record iPhone sales in the December quarter, the holiday period and Apple’s Q1.

OK, we’ve all had a little fun. But it’s time to get serious. Any notion that Apple’s Q4, or iPhone 4 sales, are indicative of anything significant are, to use a highly technical financial term, loopy.

I don’t and can’t own individual shares in Apple, or anything else, and I’m not a qualified financial advisor. But if you think this is a good time to exit Apple, savor the deadpan of this analyst quoted in a Reuters story:

“Investors are going to start to speculate that there is change under way now that Jobs is gone, and that there’s trouble ahead. We don’t share that point,” said Channing Smith, co-manager at Capital Advisors Growth Fund, which holds Apple shares.

Apple is the poster boy for buy the rumor, sell the news. What was interesting yesterday was how much selling there was going on, although at these levels it should surprise nobody that the cowboys who trade in extended hours were looking for the exits a bit after a year in which the company’s shares increased by more than one-third — and more than 100 points since June 20. The ensuing “stunned” investor reaction has set Apple back to a trading range it hadn’t seen in … eight days.

Apple doesn’t disappoint, so when it does it should raise some eyebrows. And it doesn’t help that it disappointed on the first earnings report of the post-Steve Jobs era.

Still, you can’t be too careful. When I get my iPhone 4S on Thursday I will be sure to ask Siri, “What’s up with Apple?” I wouldn’t be the least bit surprised if one of those Wolfram-Alpha Easter eggs replies: “Chill, man.”

Photo by Lars Plougmann/flickr. Used with gratitude via a Creative Commons license


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aapl will recover, slowly but surely, i truly believe that aapl would soon announce something new, or investors will realize that its time to buy this baby

Posted by jahans | Report as abusive

I don’t know a single investor down on Apple. All the selling now is due to greedy newbie traders taking profits, and the remaining holders are long term. Not one LT holder I know has sold, and I know a lot of them.

4Q earnings will be by far the best in Apple history, as 4S sales will blowout the 4Q. Look for AAPL $500/sh by 4Q earnings.

Posted by bobbobwhite | Report as abusive

Am I missing something here: Apple today announced financial results for its fiscal 2011 fourth quarter ended September 24, 2011. The Company posted quarterly revenue of $28.27 billion and quarterly net profit of $6.62 billion, or $7.05 per diluted share. These results compare to revenue of $20.34 billion and net quarterly profit of $4.31 billion, or $4.64 per diluted share, in the year-ago quarter. Gross margin was 40.3 percent compared to 36.9 percent in the year-ago quarter. International sales accounted for 63 percent of the quarter’s revenue. Who projected higher number analysts? I would like to see them perform on this level year in year out quater to quater!!

Posted by Amusedagain | Report as abusive