Apple’s FQ3: The Madness of Capitalism
Apple MISSED Wall Street’s expectations today.
Apple BEAT its own estimates! 
Apple set a record for iPad sales.
Wall Street is often clueless about high tech.
So… what can you say about an economic system that bases REAL wealth upon the idle speculations of Wall Street about a subject with which they are often clueless? Personally, I am just glad that my family’s own personal well-being is no longer as dependent upon such whims. Do you remember those jokers who created the worldwide financial crisis and drove us all into the deepest recession since their forefathers EARLIER brought us the Great Depression? They’re still around.
Pretty good quarter, right?
Wrong! 😉
Wall Street was expecting Apple to bring in earnings of $10.35 a share on revenue of $37.2 billion. Apple’s forecast for the quarter (sure, we all know about “under-forecasting,” but at least Apple has a clue about what goes on inside Apple) was $8.68 per share on revenue of about $34 billion. Peter Openheimer Apple’s CFO, has already told us to expect revenues of $34 billion and earnings per share of $7.76 NEXT quarter.
As though Wall Street is any good at understanding the dynamics of Silicon Valley high tech, in general, or of one of its most secretive companies, in particular….
Apple shares were going for $571.32, down $29.60, or 4.93 percent, in after hours trading.
I recall a particularly bad time in Apple’s history, while I was sitting in my chair in Apple’s Valley Green 6 building as a Netscape employee in Apple’s Internet Services group, that Apple stock price was driven down to around $12 per share in after-hours trading after they missed Wall Street expectations one quarter. Hard to believe, huh? But true….
We have all seen how well highly paid Wall Street analysts have performed their jobs. It makes me wonder how well our nearest relatives, the chimpanzees and bonobos, would do.
Since Apple put in a dividend system earlier this year. Stockholders get $2.65 a share and will be paid August 16, 2012.
“We’re thrilled with record sales of 17 million iPads in the June quarter,” Apple CEO Tim Cook, said in a statement. “We’ve also just updated the entire MacBook line, will release Mountain Lion tomorrow, and will be launching iOS 6 this Fall. We are also really looking forward to the amazing new products we’ve got in the pipeline.”
The iPhone led the way for Apple, again, with 26 million iPhones sold in FQ3, LESS than the 29 million units that Wall Street had predicted, but UP 28%, nevertheless, from the same quarter last year. Last week, Verizon reported that it sold 2.7 million, and AT&T reported earlier today that it sold 3.7 million.
When I worked for Sun Microsystems as a Services Account Manager (SAM), I once had SBC (“the OLD AT&T”) as my sole customer. Without going into specifics, 😉 some of the things I learned caused me to drop SBC/AT&T as my telecommunications carriers, shifting our landline to VoIP with Comcast and our wireless service to Verizon. I have not yet purchased my iPhone, since I have been waiting for hardware that is capable of using Verizon’s LTE network, which should be present in the next iPhone.
How many other knowledgeable users do you think there are who are unwilling to sign a 2-year service contract while purchasing hardware that will be obsolete in 6 months? I know that there are currently very technologically advanced wireless phones out there, but three of the factors that are important to me (besides LTE on Verizon) are: customer satisfaction, security, and a superior user interface (UI).
Nevermind the brilliant innovations that other companies cannot duplicate, only reverse-engineer…!
Is Wall Street so clueless that it does not know the demands of customers like me?
Apple has increasingly relied on sales from large emerging markets such as China, where the Apple name holds even more cachet than it does here.
Sometimes, I think that “the Apple name holds even more cachet than it does here” in China because, frankly, China understands high tech (and maybe even capitalism! ) BETTER than Wall Street does! Wall Street has NEVER liked Apple, even though Apple has made SOME of Wall Street’s inhabitants VERY rich!
On to the iPad…! Apple broke its previous ssales record of 15.43 million iPads by selling 17 million of them in FQ3! This was the first FULL quarter that the third-generation iPad was on sale, because the product launched in mid-March. The iPad sales in FQ3 were UP 84% over the 9.25 million sold during last year’s quaarter!
Wall Street expected Apple to sell 4.1 million Macintoshes during the quarter; Apple sold 4 million units. CNET says:
…Apple’s desktop line was the crux of most of the hit, slipping 18 percent in revenue compared with the last quarter, and 19 percent compared with the same quarter last year. By comparison, Apple’s Mac-portables business, which includes the MacBook Air and MacBook Pro lines, was up 4 percent in revenue compared with last quarter, and 3 percent from the same quarter last year. Apple refreshed its entire notebook lineup during the second week of June, which was just a few weeks from the end of the quarter.
Let’s put it this way…. I am writing this blog on a 5-year-old MacBook Pro (17-inch high-resolution matte screen [I don’t like looking at myself while editing photographs ]) that I packed with the hardware choices to give it a maximally useful lifespan – especially when you consider the superiority of Apple’s hardware (and software). The all-solid-state 15-inch MacBook Pro with Retina Display is intriguing, but what do you bet that Apple will create a 17-inch version when people figure out how to grow the crystal displays that big? Productivity is directly related to screen size (not opinion, just fact), and I can use the turf. How many other Apple customers out there are thinking like me?
Lastly, Apple’s iPod business sold 6.8 million iPods during FQ3, down 10% from last year’s quarter, but ABOVE the 6.38 million units that Wall Street expected.
If I had performed my jobs in high tech as badly as Wall Street analysts do, I would have been fired for cause. 😉
How much longer are we going to allow inept guessing by clueless analysts to determine the financial performance of the U.S. economic system?
‘But I don’t want to go among mad people,’ Alice remarked.
‘Oh, you can’t help that,’ said the Cat: ‘we’re all mad here. I’m mad. You’re mad.’– Lewis Carroll, Alice’s Adventures in Wonderland
-Bill at
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