The day the market lost faith in Apple

  • Posted: 12 January 2011 01:09 AM #16

    adamthompson3232 - 12 January 2011 04:59 AM

    Personally, I think Apple’s consistently PATHETICALLY low guidance is a big part of the reason Apple gets no respect (and thus a low P/E). It implies that management doesn’t believe the company can continue to grow at previously realized rates and if management doesn’t believe it, why should anyone else? It makes it very easy for analysts to come up with ridiculously low estimates. To me, it’s that simple.

    I should probably stop harping on this and chalk it up to an issue on which there can’t be agreement but…, the key word above is consistently.  Apple has been doing this from day 1 and every single person in the room knows it.  There have been numerous people here and elsewhere that have a simple multiple they use with Apples guidance to get the real number.  This, the consistently good projections here, the size of the opportunity, the deep management bench, the singular retail experience, the consumer satisfaction ratings are all KNOWNS.  We have to look elsewhere.

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    Posted: 12 January 2011 03:39 AM #17

    Eric Landstrom - 12 January 2011 03:19 AM

    ... I can tell you why: markets hate companies that don’t disclose everything. Apple doesn’t explain its internal accounting well which leaves everybody to guess and when we guess, we’re really conservative. As far as I’m concerned AAPL deserves to lowest multiple in the industry for this reason alone.

    I always like to know your view because I realize you’re Wall Street LOL.

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  • Posted: 12 January 2011 05:10 AM #18

    What about the innovation factor that is Apple. Where is the premium for that bit of magic? All in one Macs, iPods, iTunes, iPhones, iPads…..... Anyone who has been paying attention was pleased by all these technical wonders. Are the cynics to win again with the belief that Apple and company have fired their last salvo? Maybe the market is just that disconnected.

         
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    Posted: 12 January 2011 07:04 AM #19

    Steve Jobs’ health.

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    Posted: 12 January 2011 08:04 AM #20

    rezonate - 12 January 2011 02:32 AM

    I might be reading it wrong, but the byline is today (Jan 12, 2011), but the article says this: “The day of disillusionment was almost exactly two years ago: January 14th, 2008.”. That was about 3 years ago.  Like I said I’m probably missing something.

    Thanks for pointing it out. Makes the point even better.

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    Posted: 12 January 2011 08:13 AM #21

    mbeauch - 12 January 2011 04:16 AM

    Bill, when AAPL hit 202.96 in Dec of 2007 it had a P/E over 50. That was suppose to be the earnings call to financial security. We were all greedy and lost a fortune. Hind sight is 20/20 and there really was nowhere for it to go but down. the overall market was already showing signs weakness.

    Apple sold off by 40% more than once in the last few years, but I’m shining a light on that particular selloff because it took the P/E down to “average” and it has been there or below ever since.

    Growth for the company has been anything but average however. At the time when the P/E was 50, the company enjoyed as much if not less growth than it does now. The charts on my post speak to this.

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    Posted: 12 January 2011 08:33 AM #22

    adamthompson3232 - 12 January 2011 04:59 AM

    Personally, I think Apple’s consistently PATHETICALLY low guidance is a big part of the reason Apple gets no respect (and thus a low P/E). It implies that management doesn’t believe the company can continue to grow at previously realized rates and if management doesn’t believe it, why should anyone else? It makes it very easy for analysts to come up with ridiculously low estimates. To me, it’s that simple.


    AMEN TO THAT BROTHER!!

    I’ve been harping all along that OPPIE-the-DOPIE is solely, personally, individually, categorically, historically, and stupidly, RESPONSIBLE for the low valuation that WS gives to AAPL. { I’m entitled to that OPINION, right? }

    Immediately, AFTER announcing RECORD SALES, Oppie-the-Dopie comes in with his personal estimate that NEXT QUARTER, Apple will be LUCKY TO SELL 25 iPhones, 5 Macs, and MIGHT even sell 200 iPhones ....maybe, if everything goes right. Yep, the dope takes the burning fires of happy, and quenches them with unmitigated DOOM AND GLOOM, quarter after quarter after quarter.

    Leading me to my YEARS LONG REFRAIN HERE OF….

    FIRE OPPIE, ditch the doomster, dump the doofus, and can the man!

    [ Edited: 12 January 2011 08:36 AM by TanToday ]

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    Posted: 12 January 2011 08:38 AM #23

    asymco - 12 January 2011 12:04 PM

    Thanks for pointing it out. Makes the point even better.

    Absolutely. The article comments (not those here) show people are missing the central point, which is a shift in sentiment around the *average* SP5C. Any particular company should generally maintain their relative position with regard to that average. Apple had a tectonic shift and is still out of whack with history (though increased valuation and interest has probably moved it recently closer to the center.) I’m an intuitive by nature and therefore partial to the long view. A longer perspective is better!

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  • Posted: 12 January 2011 09:43 AM #24

    I am delighted to have made so much money on AAPL shares and options during the period when market has lost faith in Apple.

    The continuation of this money-making trend does not rely on multiple expansion, due to the earnings expansion that continues unabated at this time.  This is a point that DT and others have been making for some time.

    The same TTM multiple range as the past year will work just fine.  I do not see great danger of the multiple being taken down significantly.

         
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    Posted: 12 January 2011 11:08 AM #25

    I’m an optimist.  The problem has to be looked at in a different way - what’s one of the benefits of the disconnect of disrespect?

    A possible answer:  iPhone users, bring up your Stocks app and check out your two-year charts.

    It’s remarkable compared to many techs, isn’t it?  An “advantage” of lower valuation.  For a common investor (12+ mo time horizon), it was literally impossible to go wrong on buying AAPL. And this company is supposed to be as mercurial as Steve Jobs (of 30 years ago).

    Before you call for Oppenheimer’s job (let’s not forget, he does more than issue guidance, and you would have a hard time arguing that he acts alone in this regard)...would you necessarily welcome increased volatility?  Don’t forget what can happen when Apple “disappoints” relative to its guidance.

    I’m OK with things staying more or less the same this year as long as Apple delivers on the earnings side, which it should.  If Android can’t dent Apple’s growth?  We may actually see a reversal of P/E compression, however brief on account of Apple’s ballooning revs and earnings.

    [ Edited: 12 January 2011 11:12 AM by Mav ]

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    Posted: 12 January 2011 12:23 PM #26

    Mav - 12 January 2011 03:08 PM

    Before you call for Oppenheimer’s job (let’s not forget, he does more than issue guidance, and you would have a hard time arguing that he acts alone in this regard)...would you necessarily welcome increased volatility?  Don’t forget what can happen when Apple “disappoints” relative to its guidance.

    But IT DOES, “disappoint” every single solitary time, time after time, by UNREALISTIC known corrupt guidance!

    Management should try to be REALISTIC, TRUTHFUL, and HONEST with the investing community. Give your BEST ESTIMATE, and back it off a few percent. NOT 15-30% as we have seen them do consistently. Shoot, they are in effect LYING to investors, and WS knows that, and reacts accordingly.

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    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition

         
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    Posted: 12 January 2011 12:24 PM #27

    FalKirk - 12 January 2011 04:53 AM
    mbeauch - 12 January 2011 03:31 AM

    Watch it buddy, I am French. tongue laugh (I don’t like em either) LOL

    You’re French? Are you writing from France or just of French heritage?

    The internet is so amazing. I’m talking to all these great people like they live in the next town from me and it turns out that some of them are from around the globe. Think of the wealth of experience and knowledge that is shared here, at Asymco at Apple 2.0 and throughout the web. Before the internet, the chances of me getting to share ideas with someone like you or Horace Dediu were nil. I wouldn’t want to live in any other age.

    Heritage. The family tree goes back into the 1700’s. Of course I am a mutt because my mothers side was German. Woof tongue laugh

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    Posted: 12 January 2011 12:28 PM #28

    My.02 on this, quit giving guidance. Apple sucks at it. LOL

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  • Posted: 12 January 2011 12:30 PM #29

    BillH - 12 January 2011 05:09 AM

    I should probably stop harping on this and chalk it up to an issue on which there can’t be agreement but…, the key word above is consistently.  Apple has been doing this from day 1 and every single person in the room knows it.  There have been numerous people here and elsewhere that have a simple multiple they use with Apples guidance to get the real number.  This, the consistently good projections here, the size of the opportunity, the deep management bench, the singular retail experience, the consumer satisfaction ratings are all KNOWNS.  We have to look elsewhere.

    I too doubt that Apple’s guidance has much to do with any long term downward affect on Apple’s stock price.

    The problem with Horace’s piece, which he acknowledges, is that he’s shown us correlation but no causation. That leaves us free to use ex post facto logic to associate all sorts of unrelated things to Apple’s low stock evaluation. I find these kind of fishing expeditions dangerous, to say the least. Dediu’s piece has given us a clue where to look for the answer, but don’t assume that everything we find while we’re looking must necessarily be the answer.

         
  • Posted: 12 January 2011 12:37 PM #30

    FalKirk - 12 January 2011 04:30 PM
    BillH - 12 January 2011 05:09 AM

    I should probably stop harping on this and chalk it up to an issue on which there can’t be agreement but…, the key word above is consistently.  Apple has been doing this from day 1 and every single person in the room knows it.  There have been numerous people here and elsewhere that have a simple multiple they use with Apples guidance to get the real number.  This, the consistently good projections here, the size of the opportunity, the deep management bench, the singular retail experience, the consumer satisfaction ratings are all KNOWNS.  We have to look elsewhere.

    I too doubt that Apple’s guidance has much to do with any long term downward affect on Apple’s stock price.

    The problem with Horace’s piece, which he acknowledges, is that he’s shown us correlation but no causation. That leaves us free to use ex post facto logic to associate all sorts of unrelated things to Apple’s low stock evaluation. I find these kind of fishing expeditions dangerous, to say the least. Dediu’s piece has given us a clue where to look for the answer, but don’t assume that everything we find while we’re looking must necessarily be the answer.

    Hence my top 10 list.  I thought I’d get a couple of comments re: enterprise adoption being number 10 (down from about 5 two short years ago).  It’s about to fall off.

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    I don’t mind being wrong…,I just hate being wrong so FAST!