After Hours Traders Send $AAPL Down $43.50 on Guidance & iPhone Sales

| Apple Stock Watch

OopsShares of Apple Inc. fell sharply in after-hours trading Tuesday as traders reacted negatively to Apple's guidance for the March quarter and iPhone sales that were less than expected. Shares of $AAPL dipped to US$507.00, down $43.50 (-7.90 percent), in the wake of Apple's earnings report in the after-hours session.

After-hours session typically have an exaggerated effect on Apple's stock in either direction compared to regular session trading the next day. It's doubtful that $AAPL will open as low as Tuesday's after-hours low, but investors definitely have things to be tense about despite record revenues and record earnings per share for the quarter.

"The real problem is the revenue guidance," JMP Securities analyst Alex Gauna told Marketwatch. "The mid-point of the guidance has them back to a no-growth story. People were hoping for more, and they essentially guided flat year-over-year growth."

In particular, Apple began selling iPhones with China Mobile, the world's largest carrier, in January. The company also added Japan's DoCoMo, but despite the two high-profile deals, Apple's only guided for revenues between $42 billion and $44 billion.

At the mid-point, Apple would turn in flat revenue growth, and that's not what investors were expecting as they pushed Apple's stock higher in the weeks leading to Tuesday's earnings report.

In addition, Apple's record iPhone sales for the quarter—51 million units—were below consensus estimates of 55 million to 56 million units. That's a significant miss, and it played a big role in initial investor disappointment.

"The iPhone number was much less than expected," Mike Walkley of Canaccord Genuity told Marketwatch. " And the seasonality is off despite China Mobile., even though the overall gross margins were strong."

Apple ended the regular session on Tuesday at $550.50, up $4.43 (+0.81 percent), on heavy volume of 17.45 million shares trading hands.

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4 Comments

Lee Dronick

Another thing to consider is how long do iPhone owners hold and keep using their model. Do they upgrade as often as the users of other phones?

dumbPS4owners

Lee- I think Apple users hold their phones a little longer, which impacts the “traditional” upgrade cycle, particularly now that we’re in a mostly iterative phase of the iPhone (and indeed, smartphone) market. That said, I DO believe that Apple HOLDS CUSTOMERS LONGER, which, in the long-game, is a more significant metric. iPhone users, it’s my belief, and anecdotal vantage point, keep their phones for one or two generations before upgrading, and when they DO upgrade, they (by and large) upgrade to a new iPhone.

That was the longest run-on sentence I’ve ever written.

dumbPS4owners

Another key thing to keep in mind- a LOT of people aren’t paying attention to iBeacon- which, if given the current trends, could build toward something pretty sizable and influential. If that is to be the case, Apple has a head start, even over Google Wallet (which has, so far, failed to penetrate the market to the extent Google wished it to).

I think Apple is playing the long game here, and actually ... let me avoid conspiracy theory for a moment, downplaying their long-game. I think they’re going to leverage the fingerprint sensor, the iBeacon, the iTunes store (how many millions with credit card accounts?) and the like, until they build a new payment market. IF that happens, you’ll see the stock soar.

nolatransplant

Let’s face it. The stock market is not about investing anymore. Its a global open-air casino.

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