lesson to independent analysts:  don’t believe your own press

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    Posted: 18 October 2011 09:53 PM #16

    DawnTreader - 18 October 2011 11:17 PM

    Clearly, the underlying eco-system is not as developed as I expected and product demand remains heavily dependent on new product introductions.

    Follow that logic to understand how Google continues to positively surprise and Apple couldn’t meet consensus numbers. An open ecosystem with multiple competing players offers choices, spurs innovation, and institutionalizes churn. 16 months for a speed bump iPhone? Cracks easily if you drop it on its face? Seriously????

         
  • Posted: 18 October 2011 09:54 PM #17

    MacOz - 18 October 2011 11:56 PM

    However the models need to be re-calibrated because we are not familiar with the phone market.

    I agree to the extent that our modes did not include any assumptions based on worldwide economic strength.

    I’m personally upset with myself that will all the reports on job creation, economic growth in the US (and elsewhere) Cities going bankrupt (Harrisburg, PA), and the health of the Eurozone, that I did not.

    I posted that I was not comfortable with my estimates, but that had more to do with how large the formulas were projecting Apple’s performance.

    I take heart in the fact that the institutions didn’t do any better than we.  They led this last rally, acquiring almost 1% additional stock in AAPL in a single month (70.16% to 70.93%).

    Last January Goldman Sachs sold off a very large portion of its AAPL holdings, then bought January 2012 Calls in order to buy them back.  I should have taken that move more seriously.

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    Posted: 18 October 2011 09:55 PM #18

    Xtra - 18 October 2011 10:55 PM

    As a relative newcomer to the board—and as a long-term investor who took a paper loss in the six figures after hours—i believe some self-reflection is in order.

    #2:  So you are telling us indirectly that you have 10,000 + shares?  $4 mil + worth of stocks grin.

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    Posted: 18 October 2011 10:01 PM #19

    DawnTreader - 18 October 2011 11:53 PM

    ............

    Tonight’s blog post is in the context of 39% revenue growth. But I will not attempt “to put lipstick on a chicken.”

    it’s “lipstick on a pig” buddy..  smile

    and I’m looking forward to reading what you write…

         
  • Posted: 18 October 2011 10:01 PM #20

    And Apple failed in this. Execution is the key here and it worries me that Apple which is known to execute phenomenally is lacking in some respects

    Apple had previous difficulties with the software side (as many other competitors) see mobile me…. that is not really a failure but results from the nature of software.  getting together with iPhone 4S iOS 5, iCloud and Siri with a almost successful lauch is an extraordinary achievement.

    We did not anticipate the iPhone slow down but Apple did and told us so in its Q3 CC.

    It is not really an Apple failure but rather irrational expectations of analysts and investors

         
  • Posted: 18 October 2011 10:07 PM #21

    blaze biscuits - 19 October 2011 01:01 AM
    DawnTreader - 18 October 2011 11:53 PM

    ............

    Tonight’s blog post is in the context of 39% revenue growth. But I will not attempt “to put lipstick on a chicken.”

    it’s “lipstick on a pig” buddy..  smile

    and I’m looking forward to reading what you write…

    Lipstick on a chicken is also a popular reference. Pigs have snouts and chickens don’t have lips.

    But let’s not “chicken out.” It’s time to regroup and look forward.

         
  • Posted: 18 October 2011 10:10 PM #22

    Brad Hutchings (Bosco) - 19 October 2011 12:53 AM
    DawnTreader - 18 October 2011 11:17 PM

    Clearly, the underlying eco-system is not as developed as I expected and product demand remains heavily dependent on new product introductions.

    Follow that logic to understand how Google continues to positively surprise and Apple couldn’t meet consensus numbers. An open ecosystem with multiple competing players offers choices, spurs innovation, and institutionalizes churn. 16 months for a speed bump iPhone? Cracks easily if you drop it on its face? Seriously????

    Brad:

    I don’t usually agree with what you say, but I appreciate your putting your name on your comments. I’m not really happy with Google’s performance at the moment (remember, I’m long GOOG too).

    Overall, the lack of growth in the underlying eco-system is what concerns me. If you take out of the equation the growth in Mac sales, iOS devices had a languid quarter.

         
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    Posted: 18 October 2011 10:10 PM #23

    DawnTreader - 19 October 2011 01:07 AM
    blaze biscuits - 19 October 2011 01:01 AM
    DawnTreader - 18 October 2011 11:53 PM

    ............

    Tonight’s blog post is in the context of 39% revenue growth. But I will not attempt “to put lipstick on a chicken.”

    it’s “lipstick on a pig” buddy..  smile

    and I’m looking forward to reading what you write…

    Lipstick on a chicken is also a popular reference. Pigs have snouts and chickens don’t have lips.

    But let’s not “chicken out.” It’s time to regroup and look forward.

    yes sir!

         
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    Posted: 18 October 2011 10:12 PM #24

    I am not judging.

    I am raising questions and hypothesizing.

    I think the independent analyst community adds great value to the conversation and is very often very right.  Many of you are very, very smart, and articulate, and very generous with your advice and assistance.  I’ve valued the give and take with all.

    That said, this earnings season was a glaring exception to the “rule” as promulgated by P E Dewitt.

    The Independents were wrong in their conclusions, much wronger than the reviled WS crowd. They were tossing around numbers of $8 and $9 and #10 as if it were a fait accompli. 

    Group think?  Irrational exuberance?  Incorrect assumptions about ecosystems, or consumer behavior? 

    This is an important conversation.

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    Posted: 18 October 2011 10:18 PM #25

    Brad Hutchings (Bosco) - 19 October 2011 12:53 AM
    DawnTreader - 18 October 2011 11:17 PM

    Clearly, the underlying eco-system is not as developed as I expected and product demand remains heavily dependent on new product introductions.

    Follow that logic to understand how Google continues to positively surprise and Apple couldn’t meet consensus numbers. An open ecosystem with multiple competing players offers choices, spurs innovation, and institutionalizes churn. 16 months for a speed bump iPhone? Cracks easily if you drop it on its face? Seriously????

    Brad
    I’m humored by your reading of the facts.  Google increase revenue by 33% and it’s a positive and Apple increases revenue 39% and it is a failure.  Wether DT examines his numbers and his analysis for changes does not change the fact that Apple outgrew Google this qtr.  People cam be disappointed that the numbers are not larger or that they didn’t exceed analyst expectations, but the reality is Apple is still growing at an unreal rate for a large company.

         
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    Posted: 18 October 2011 10:18 PM #26

    Mace - 19 October 2011 12:55 AM
    Xtra - 18 October 2011 10:55 PM

    As a relative newcomer to the board—and as a long-term investor who took a paper loss in the six figures after hours—i believe some self-reflection is in order.

    #2:  So you are telling us indirectly that you have 10,000 + shares?  $4 mil + worth of stocks grin.


    Yep, that is what I am telling you.  some of it margined.  (not enough to get me into serious trouble, i hope,)

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    One trillion or bust

         
  • Posted: 18 October 2011 10:20 PM #27

    that is not really a failure but results from the nature of software.  getting together with iPhone 4S iOS 5, iCloud and Siri with a almost successful launch is an extraordinary achievement.

    We did not anticipate the iPhone slow down but Apple did and told us so in its Q3 CC.

    It is not really an Apple failure but rather irrational expectations of analysts and investors

    Apple Management is supposed to set investor expectations whenever they go out of whack. That is what we expect from a $400 billion company.

    That they released an iCloud, iOS 5 with Siri in October may be the issue. They demoed iOS 5 in April and the street expected a platform supporting the same in July. Synchronized release of software and the hardware in a timely manner is an execution issue. If they had demoed iOS 5 in July and said that it will be release in Fall it would have made a lot of sense.

    The slack of three did them in. Because Apple has a way of maintaining its revenue momentum, investor expectations were raised correctly.

    There is a mismatch between investor expectations, the analyst gyrations (including the independent ones) and the Apple management. Ultimately, it is the product sells and the product has to be produced. So execution is the key.

         
  • Posted: 18 October 2011 10:25 PM #28

    If they had demoed iOS 5 in July and said that it will be release in Fall it would have made a lot of sense.

    That is exactly what Apple said in July when they demoed iOS 5

         
  • Posted: 18 October 2011 10:32 PM #29

    Hamourabi - 19 October 2011 01:01 AM

    It is not really an Apple failure but rather irrational expectations of analysts and investors

    I don’t buy that.  Apple guided $5.03 for FQ3 then reported $7.79.
    It is reasonable to expect that a 10% increase in guidance will result in at least a 10% increase in earnings.  Ergo $7.79 becomes $8.56, which is just pennies short of the AFB consensus.

    I don’t understand why some members insist on beating themselves (or others) up for Apple’s failure to meet expectations.

    This wasn’t about faulty models, it was about a worldwide economic condition that prevented Apple from selling as much as they thought themselves.  It was also about the timing of an important product launch.  Apple may not have had much of a choice, given how much they were trying to accomplish (iCloud, iOS5, SIRI).

    But Apple’s performance certainly was not the analyst’s (amateur and pro alike) fault.

    [ Edited: 18 October 2011 10:46 PM by Gregg Thurman ]

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  • Posted: 18 October 2011 10:37 PM #30

    Xtra - 19 October 2011 01:12 AM

    I am not judging.

    I am raising questions and hypothesizing.

    I think the independent analyst community adds great value to the conversation and is very often very right.  Many of you are very, very smart, and articulate, and very generous with your advice and assistance.  I’ve valued the give and take with all.

    That said, this earnings season was a glaring exception to the “rule” as promulgated by P E Dewitt.

    The Independents were wrong in their conclusions, much wronger than the reviled WS crowd. They were tossing around numbers of $8 and $9 and #10 as if it were a fait accompli. 

    Group think?  Irrational exuberance?  Incorrect assumptions about ecosystems, or consumer behavior? 

    This is an important conversation.

    Where were you when the numbers were being bandied about?  I don’t remember seeing you post contrarian views.

    After the fact is not the time to correct others.

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    You can’t do more, make more, be more, than the next guy, if you think like the next guy. Think different.