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Guidance
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Just finished reading the recent installment in Jim Goldman’s CNBC blog - http://www.cnbc.com/id/24203065
About Google & the ComScore reporting debacle.
In the article Goldman notes:
“Seems to me that far too much emphasis is paid to a single market-researcher that is apparently having issues tracking this company. Google doesn’t help matters by not offering guidance. Makes it that much more difficult for investors to make some money from all this.”This just got me wondering again if Apple will/won’t offer guidance next week. Recent comments on the AFB seem to indicate a leaning towards no guidance.
I’m not really sure what is best for Apple & us investors. Reasonable guidance, as opposed to underwhelming guidance, seems the best case but from my limited experirence tracking these figures, Apple doesn’t seem to have a track record of this.
Your thoughts?
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Mully
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danthemason
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I think that our current crop of cramer wanna be analysts have shown that the serious work is done elsewhere. This board has shown a superior grasp of Apple the enterprise. This board knows that AAPL guidance is conservative and will remain so. Those who ignore this fundamental fact while predicting doom and gloom are selling soap, not financial advice. If/when Apple pulls back, buy the leaps at a lower price. Every pullback is an opportunity. Just let those without experience in these matters sell on the pullback, it is your duty to help them by being a willing buyer. Guidance is for sissys. Buck up man, and get on with it. Your grandchildren will thank you for it.
And for all you cinema types “21” is a good flick.
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Re: Guidance
[quote author=“mbmullin”]I’m not really sure what is best for Apple & us investors. Reasonable guidance, as opposed to underwhelming guidance, seems the best case but from my limited experirence tracking these figures, Apple doesn’t seem to have a track record of this.
Your thoughts?
I’ve said this before, I’ll say it again.
Apple should do one of two things.
1) Give accurate, realistic guidance without artificially low-balling it. Now when they give guidance, it is not believed, nor is it credible. A guessing game ensues as to how much they are low-balling it, creating a raft of automatic guesses to varying degrees to the upside.
This is stupid and irresponsible and worst, wholly unnecessary.
Since no one believes what they say, and since everyone has their own independent sources for different kinds of earnings estimates, or a compilation of several analysts’ forecasts, Apple’s is (or should be) completely dismissed.
So, they should alternatively strive for excellence and do their best to hit the number, or either side, by as few cents as possible even if it means missing it and any consequences that come with that. They are hurting investors with this game ... just look at the idiotically low guidance again during the last earnings call. Missing it by 10s of percentages on the downside is intentional and trying to play a psychological game with the market.
Of course, they have option ....
2) Give no guidance at all. No one will blame them except some journalist asshats. Lots of company have stopped the practice, including Nokia. Why even bother when investors will look to independent sources anyway?
This is a farcical, unprofessional exercise Apple’s Investor Relations pulls on us quarter after quarter after quarter.
Apple .... STOP IT! Come clean or quit it.
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danthemason
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We as small shareholders have no standing in making suggestions on how management goes about their job. We do not make hiring suggestions, product run rates, ad agency selection or any of the myriad decisions made at the top levels of OUR company. I like the results of the conservative guidance. Who is harmed? Aren’t they harmed more by no China deal yet? Draw all the distinctions you wish but both are legitimate management functions and who has the standing to complain? It adds a level of complexity to long term investing. In the end it is the earnings.
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Option 1- realistic guidance is not now an option IMO. If they did that then half the street would think .’’ O my god they always under shoot by 40 percent their earnings so this quarter is going to be incredible’’ when in actual fact it could be right on the money. Talk about confusion. course Oppenheimer could preface his guidance with ‘’ We realize that we have given way below our own internal estimates so beginning today we are going to give what we believe to be accurate earnings and profit forecasts’’ That seems unlikely.
Option 2 no guidance at all is possible and perhaps most practical..
Or option 3 is to keep doing what they are doing and maybe the morons out there can do there own homework and realize that Apple will never again disappoint the street and suffer a 50% haircut in one day as happened a few years ago.
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danthemason
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Or option 3 is to keep doing what they are doing and maybe the morons out there can do there own homework and realize that Apple will never again disappoint the street and suffer a 50% haircut in one day as happened a few years ago.
Saving the shareholders from that type of price fluctuation could reasonably be a priority management function.
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DawnTreader
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I don’t think we will see a repeat of January’s guidance fiasco.
I like SG’s idea of providing guidance with reasonable justification and advising analysts the company has revised its metrics for determining the guidance numbers.
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danthemason
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Apples lowered guidance is a shot at the analysts. As many on this board have done, Apple is showing scorn for these leeches. We here only complain and rail against these willows in the wind with their wavering forecasts. Apple has, and continues to hand these fellows the rope with which to hang themselves. Like the analysts, AAPL guidance means very little.
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I know Jan is fresh on everyone’s mind, but it was the guidance in Oct that propelled us to 200 in a hurry. I am not expecting blockbuster guidance this time, just better. For Apple to guide that low in Jan, I think they were worried about a downturn in the economy. This time i am hoping for 15-18 % increase. :apple:
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Adversity does not just build character, it reveals it.
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I had published this analysis back in January and I observed that Apple’s revenues guidance tends to be quite accurate compared to EPS. Investor’s should give each figure it’s due weight.
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Tightwad.
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[quote author=“awcabot”]I had published this analysis back in January and I observed that Apple’s revenues guidance tends to be quite accurate compared to EPS. Investor’s should give each figure it’s due weight.
Thanks - that’s really helpful!
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An AAPL a day keeps the doctor away
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[quote author=“awcabot”]I had published this analysis back in January and I observed that Apple’s revenues guidance tends to be quite accurate compared to EPS. Investor’s should give each figure it’s due weight.
Excellent work awcabot. It appears that margins are the culprit to get the blame/credit for the huge eps misses by Apple. As the iPhone is expected to be a big earnings driver over the next few years and the straight line accounting system Apple is employing then these eps estimates should be smoothed out and reflect a more accurate estimate by the CFO and his dept.
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Apple should stop giving guidance altogether and just let Deagol do it :D
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“Knowledge speaks, but wisdom listens.”
- Jimi Hendrix -
DawnTreader
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The June quarter is huge for education sales and should be much easier to metric. iPhone sales will remain immaterial to earnings and component prices remain low. MBAir sales will only pad already strong margins. There’s no reason to offer guidance below the Street’s estimates and every reason to provide accurate guidance based on reasonable expectations. AAPL is one of the world’s largest cap companies with a large and expanding shareholder base. Guidance isn’t intended to be a measure of virtually guaranteed results, but a measure of reasonable expectations based on management’s view of sales and earnings prospects.
IMHO either offer accurate guidance or stop providing it.
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“IMHO either offer accurate guidance or stop providing it.”
WORD!
Though I do like the idea of Deagol too…perhaps we can propose this at the next shareholder meeting. An AFB takeover of the Board w/ a spot for DT & MT Doc too.:wink:
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Mully
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danthemason
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Apple management has their own definition of,
Guidance
Reasonable expectations
Unreasonable reaction to results lower than reasonable expectations.
They have earned that right.
Apple management is minting money, changing the very nature of human behavior and interaction, and people want to know how fast they will do this next quarter??? Y’all need to graciously accept the tremendous good fortune that has fallen into your lap and quit asking “Have we got there yet?’
I remain a happy camper with the rapidly changing status quo.
