Apple Beats iPhone Estimates, Misses iPad

| Apple Stock Watch

Wall StreetOn the good news front, Apple beat iPhone estimates during the September quarter, reporting 26.9 million units. On the bad news front, Apple said it sold 14 million iPads, missing even lowered Wall Street estimates. On the just right side, Mac sales came in at 4.9 million units, very near consensus.

The Bad News First

Consensus for iPad had been in the 17-18 million unit range until comments from Tim Cook led most analysts to lower them. During Tuesday's iPad mini media event, Mr. Cook said that Apple had sold its 100 millionth iPad two weeks prior—doing the math, that meant Apple had sold fewer iPads during the September quarter.

Shaw Wu, for instance, had been at 16.5 million units before those comments, and lowered his own estimates to 15.8 million. Ben Reitzes of Barclays Capital lowered his own estimates to 15.1 million units, down from 17 million. Apple missed even those conservative numbers (consensus was still in the high 15 million unit range), and not by a little.

That's What They Thought

Apple sold 4.9 million Macs during the quarter, very near consensus .The accomplishment marks the first time that Apple has sold more than 4 million Macs during each quarter. As John Martellaro noted, Apple sold 5 million Macs during all of fiscal 2005, just 7 years ago.

The Good News

The company sold 26.9 million iPhones during the quarter, handily beating consensus of 25.3 million. Those consensus numbers had been subject to rejiggering in recent weeks, as supply chain checks indicated constraints during the quarter. Investors were paying special attention to the iPhone 5, which was introduced mid-September.

Turns out that rejiggering probably wasn't necessary.

After Hours

Despite the big iPad miss, or perhaps because of the big iPhone beat, but likely because they largely canceled each other out, shares of AAPL traded flat in the after-hours market.

In that after-hours reaction to Apple's earnings report tend to exaggerate the market's reaction on either side, flat trading strongly suggests that any disappointment in Apple's Q4 results was already firmly baked into the price.

While shares slipped in the minutes following Apple's earnings press release, the stock quickly recovered and traded back and forth across Thursday's regular session close of US$609.538, down $7.292 (-1.18 percent), throughout the rest of the after-hours session.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.

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Perhaps the article should mention that Apple exceeded its own expectations. Who is better to judge how much product is expected to be sold then Apple itself?

Wall Street for the longest time guessed way to low for Apple earnings. Now they are throwing crazy numbers out there.

All Apple missing analysts expectations means is that they did a poor job of evaluating the guidance Apple previously gave them.

Constable Odo

Why do people keep trying to whitewash Apple’s poor results?  Apple and shareholders got clobbered, plain and simple.  Apple has to meet whatever expectations are set, even if they’re unrealistic or the stock is going to get hammered, which it has been.  Apple is sitting close to $600 and may be lower by next week.  Most of the year’s gains have been wiped out.  This isn’t that hard to figure out.  People need to accept that Apple isn’t the powerhouse stock it’s being hyped as.  If a company can’t deliver gains for shareholders then it’s not all that good an investment no matter how much money the company earns.

Bryan Chaffin

Constable, I appreciate the spirit of your post, especially about the role of expectations in determining value.

I must correct you on one point, however: AAPL is still up roughly 50% over in 2012 even with the declines of the last two months.

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