I don't think Apple (AAPL) had a bad earnings report yesterday. They soundly beat their guidance for the quarter so I'm happy. Personally I always base my judgments on their guidance because I've found that it is usually very conservative.
They had an explanation that made sense to me for why IPhone sales were down during the quarter (people delayed purchases during the quarter because they thought the IPhone 5 was coming out).
The initial sales of the IPhone 4S were "Amazing".
Their growth in China is "Amazing". They had a lot of specific numbers to go with the description.
They guided sales for the fourth quarter to be up almost 40%.
When I plug their numbers into my equations, I come out with a price that makes me more than comfortable keeping their stock.
So, the biggest problem seems to me to be that they didn't meet analysts "expectations".
I wonder. If there truly was widespread opinion that Apple would meet those, why wasn't the stock price even higher? The rates of growth that would be needed to support them would seem to support a higher P/E multiple than Apple has been trading at.
Any other Apple owners out there? What do you think? Am I crazy?
-- Laurie Frederiksen Invest with your friends! www.bivio.com
Interesting that you mentioned this Laurie, I *just* had this same conversation *twice* yesterday. In my opinion, you are absolutely correct; Apple's earnings call was anything but bad. The problem, as I see it, is that analysts wanted Apple to do better than Apple said they were going to do, and we give analysts way more credit and power than they deserve. If a company is right on track with where they said they were going to be, have a solid plan for the future, and a track record of being right, then analysts are just extra noise in the whole thing.
-chris.
On Wed, Oct 19, 2011 at 9:28 AM, Laurie Frederiksen <laurie@bivio.biz> wrote:
But.....
I don't think Apple (AAPL) had a bad earnings report yesterday. They soundly beat their guidance for the quarter so I'm happy. Personally I always base my judgments on their guidance because I've found that it is usually very conservative.
They had an explanation that made sense to me for why IPhone sales were down during the quarter (people delayed purchases during the quarter because they thought the IPhone 5 was coming out).
The initial sales of the IPhone 4S were "Amazing".
Their growth in China is "Amazing". They had a lot of specific numbers to go with the description.
They guided sales for the fourth quarter to be up almost 40%.
When I plug their numbers into my equations, I come out with a price that makes me more than comfortable keeping their stock.
So, the biggest problem seems to me to be that they didn't meet analysts "expectations".
I wonder. If there truly was widespread opinion that Apple would meet those, why wasn't the stock price even higher? The rates of growth that would be needed to support them would seem to support a higher P/E multiple than Apple has been trading at.
Any other Apple owners out there? What do you think? Am I crazy?
-- Laurie Frederiksen Invest with your friends! www.bivio.com
Thanks Chris. I'm glad to hear others are "crazy" also. <g>
We're taking a poll on our FB page about whether clubs are going to buy, sell, hold or ignore AAPL. If everyone has a minute, it would be it would be interesting to all to get some sense of the "club" sentiment out there. You can find it at:
Laurie, As you know, I own AAPL and 2 Mac computers. With that disclosure, here goes:
I don't give more credence or weight to guidance (forecasts) than I do results. I base my judgments on the marriage of the two - with all the foibles inherent in that analogy.
But, as you, I agree that I thought yesterday's AAPL earnings report was not bad (indeed good). The guidance certainly was upbeat. If I heard everything correctly, Sales were up & beat expectations for iMacs and iPads. But, given expectations of the market professionals, I understand the feeling that AAPL missed the mark - I just disagree with those expectations. Unlike the "professionals" I would have been extremely surprised if iPhone 4 sales continued when iPhone 5 was expected just around the
corner. Sales had to drop off! Those expectations were unrealistic and makes me question how they come up with some of these expectations. (Did anybody "think"?) Those expectations certainly show are how AAPL's past results have spoiled these analysts.
I am one of those that caused the dip in iPhone sales. Rather than upgrade when I could, I waited for the next generation iPhone. (I also waited for I waited for Verizon to sell the iPhone, but that is a different story.) Initially, I was disappointed when the iPhone 5 was not announced, just like the idiotic headlines. Then, when I actually saw the presentation I realized how amazing the 4S is. I am now trudging behind a huge line of buyers to get one. So, next quarter's sales should be through the roof!
With the P/E @ 16 (forward about 12), AAPL still seems to be a bargain
and I am solidly a HOLD. (I wished I had caught more @ 10:03 PT, when it dipped below $400. Always looking for the bargain.) As for my club - we'll know in 2 weeks. ;-)
Roy Chastain
"Good judgment comes from experience, and a lot of that comes from bad judgment."
Will Rogers
--- On Wed, 10/19/11, Laurie Frederiksen <laurie@bivio.biz> wrote:
But.....
I don't think Apple (AAPL) had a bad earnings report yesterday. They soundly beat their guidance for the quarter so I'm happy. Personally I always base my judgments on their guidance because I've found that it is usually very conservative.
They had an explanation that made sense to me for why IPhone sales were down during the quarter (people delayed purchases during the quarter because they thought the IPhone 5 was coming out).
The initial sales of the IPhone 4S were "Amazing".
Their growth in China is "Amazing". They had a lot of specific numbers to go with the description.
They guided sales for the fourth quarter to be up almost 40%.
When I plug their numbers into my equations, I come out with a price that makes me more than comfortable keeping their stock.
So, the biggest problem seems to me to be that they didn't meet analysts "expectations".
I wonder. If there truly was widespread opinion that Apple would meet those, why wasn't the stock price even higher? The rates of growth that would be needed to support them would seem to support a higher P/E multiple than Apple has been trading at.
Any other Apple owners out there? What do you think? Am I crazy?
-- Laurie Frederiksen Invest with your friends! www.bivio.com
I own Apple stock and I am definately not selling because some "expert" says that Apple didn't live up to his expectations. Who are these "experts" anyway? Sometimes I feel that these guys unrealisticly set high figures so that they can go and buy puts on the same company. I think that they should all be fired and let the market decide when the company release their earnings report whether it is worth it to keep the stock, buy more or sell on the actual earnings.
John Rice
ABODI Investment Club
From: Chris Kiklas <ckiklas@gmail.com> To: club_cafe@bivio.com Sent: Wed, October 19, 2011 7:46:03 AM Subject: Re: [club_cafe] Maybe I'm Crazy
Interesting that you mentioned this Laurie, I *just* had this same conversation *twice* yesterday. In my opinion, you are absolutely correct; Apple's earnings call was anything but bad. The problem, as I see it, is that analysts wanted Apple to do better than Apple said they were going to do, and we give analysts way more credit and power than they deserve. If a company is right on track with where they said they were going to be, have a solid plan for the future, and a track record of being right, then analysts are just extra noise in the whole thing.
-chris.
On Wed, Oct 19, 2011 at 9:28 AM, Laurie Frederiksen <laurie@bivio.biz> wrote:
But.....
I don't think Apple (AAPL) had a bad earnings report yesterday. They soundly beat their guidance for the quarter so I'm happy. Personally I always base my judgments on their guidance because I've found that it is usually very conservative.
They had an explanation that made sense to me for why IPhone sales were down during the quarter (people delayed purchases during the quarter because they thought the IPhone 5 was coming out).
The initial sales of the IPhone 4S were "Amazing".
Their growth in China is "Amazing". They had a lot of specific numbers to go with the description.
They guided sales for the fourth quarter to be up almost 40%.
When I plug their numbers into my equations, I come out with a price that makes me more than comfortable keeping their stock.
So,
the biggest problem seems to me to be that they didn't meet analysts "expectations".
I wonder. If there truly was widespread opinion that Apple would meet those, why wasn't the stock price even higher? The rates of growth that would be needed to support them would seem to support a higher P/E multiple than Apple has been trading at.
Any other Apple owners out there? What do you think? Am I crazy?
-- Laurie Frederiksen Invest with your friends! www.bivio.com
John Rice writes:
> Who are these "experts" anyway?
They are the same ones who said to buy during the last bubble. ;-)
My personal concern is AAPL's size: at what point will the company be
"too large" for the FTC/DOJ or consumers.
Consumers: Apple sells a "life style" product. Part of Apple's appeal
is that it has been outside the mainstream. When will people become
fickle and switch to the next "life style" company. There has to be
some serious VC money chasing the iPhone and iPad. When did RIM's or
Palm's fortunes change? Why? Everybody carried a Palm Pilot back in
the day. It was a very cool device unlike the Newton (which you
*couldn't* carry). Apple continues to innovate, but their designers
aren't as hungry as a startup's designers.
FTC/DOJ: If AAPL continues to rise at the rate it has for the last two
years, it will be worth $1.6T in 2013. XOM is still larger, but just
barely, and it's hardly a growth company. The FTC/DOJ will be forced
to step in. It will be difficult to predict if/when that will happen
and what the effect on the stock will be. Apple has been fairly
successful at blocking clones (Psystar, for example), but at some
point (viz Microsoft), the DOJ will step in and force them to allow
people to make clones and/or compatible software.
There are numerous other factors which may come into play. I'm always
looking for the Black Swan, and I become even more alert for them when
no one else is. :-) I also heed Buffet's advice: Be Fearful When
Others Are Greedy and Greedy When Others Are Fearful.
Cheers,
Rob
Disclosure: I don't own AAPL directly, just as a part of SPY. I own
more Apple devices than you do. ;-)
Laurie Frederiksen on
I think you make good points Rob. It seems to me that the question with Apple is not If?, but When?
When, is hard to see. It certainly doesn't appear to be in the near future.
It's not a Buy and Forget stock. At the least it requires close monitoring of its results and making sure it doesn't become overweighted in a portfolio. Some might even want to explore Stop Loss Orders or Options strategies to protect themselves on the downside.
Disclosure: I don't own AAPL directly, just as a part of SPY. I own
more Apple devices than you do. ;-)
So far my Apple stock has helped me feed my son's Apple device requirements. I get to play with them when he's home from college. Perhaps that's the parameter I should use to decide "when" to start worrying big time about Apple. The Noodle Kidoodle toy store went out of business about the time he and his generation grew out of the age where they wanted childrens toys. Once they finish college and have to purchase the pricey Apple products for themselves, perhaps they will become a bit less enamored with them.
-- Laurie Frederiksen Invest with your friends! www.bivio.com
Maybe this is a good time to mention one of the methods my club uses when choosing stocks.
Yes, we look to see what sectors have a poor showing in our portfolio.
Yes, we look to see who other people are buying.
Yes, we look at news reports to see what's going on.
Yes, we have evaluation criteria we run every stock through.
But the one questing we always ask and always seems to carry the most weight goes something like this (modified depending on the industry):
"Do you buy from them?"
I think if you apply this criteria to APPL, you will have a great indicator of when to sell the stock. The day you say, "Oh, I ditched my iPhone for this Nokia Windows Mobile phone" is probably a good day to start thinking about selling.
Just my opinion, but this methodology has helped us picked some incredible growth stocks in the past and continues to guide us past what all of the analysts want us to buy and have helped us have some phenomenal luck.
-chris.
On Thu, Oct 20, 2011 at 8:58 AM, Laurie Frederiksen <laurie@bivio.biz> wrote:
I think you make good points Rob. It seems to me that the question with Apple is not If?, but When?
When, is hard to see. It certainly doesn't appear to be in the near future.
It's not a Buy and Forget stock. At the least it requires close monitoring of its results and making sure it doesn't become overweighted in a portfolio. Some might even want to explore Stop Loss Orders or Options strategies to protect themselves on the downside.
Disclosure: I don't own AAPL directly, just as a part of SPY. I own
more Apple devices than you do. ;-)
So far my Apple stock has helped me feed my son's Apple device requirements. I get to play with them when he's home from college. Perhaps that's the parameter I should use to decide "when" to start worrying big time about Apple. The Noodle Kidoodle toy store went out of business about the time he and his generation grew out of the age where they wanted childrens toys. Once they finish college and have to purchase the pricey Apple products for themselves, perhaps they will become a bit less enamored with them.
-- Laurie Frederiksen Invest with your friends! www.bivio.com
Disclosure: Owner of Apple products & just purchased some more AAPL under $400. So, I guess "I'm all in."
It is true that a business' fortune swing with its popularity and perceived need (ex. Sony). But, because of the areas where Apple is focused, I have trouble seeing much of a downfall, at least not for quite awhile. (Those darn rose-colored glasses.)
While missing an "expectation" or two, Apple sales are up, probably because of the seamless interaction between the various Apple products, and various Apps. My family use PCs @ work/school, but Macs @ home. My wife finds the Mac much easier to use, and I find this same feeling with new converts in my user group. My daughter and I both rail against Windows machines (is "detest" too strong a word?). I yet
have to hear of anyone voluntarily giving up their iMac and returning to Wintel.
There was a fear that the iPad would cannibalize sales of the iMac & MacBook, but it seems they have placed the hurt more on PC laptop sales. Also, uses for it expand almost daily; in the past week I heard that several companies, especially hospitals, have purchased iPads for employees to use in their work, and for use in training.
On the downside, with an iPhone, there is no longer a "need" for the iPod. (My daughter no longer uses her iPod, and I presume I too will shift when I buy my 4S.) But, they are still great for kids and for use @ the gym. While the Android is a great challenge, in my experience the results are mixed: One person shifted from an iPhone 3 with AT&T to an Android, while another had problems with her Android and bought an iPhone
4.
So, while the popularity and sales of individual Apple products will shift, I still see a steady stream of buyers. With those sales, I see this current retrenchment to be short-lived. AAPL sank on occasion ever so slightly in the past with news of Steve Jobs' illness, and then came roaring back. When stock pickers realize how foolish the "experts" were in not seeing that iPhone sales would drag pending the issuance of the new model, I expect the price to again soar. (Those rose-colored glasses again.)
Roy Chastain
"Good judgment comes from experience, and a lot of that comes from bad judgment."
Will Rogers
--- On Thu, 10/20/11, Laurie Frederiksen <laurie@bivio.biz> wrote:
I think you make good points
Rob. It seems to me that the question with Apple is not If?, but When?
When, is hard to see. It certainly doesn't appear to be in the near future.
It's not a Buy and Forget stock. At the least it requires close monitoring of its results and making sure it doesn't become overweighted in a portfolio. Some might even want to explore Stop Loss Orders or Options strategies to protect themselves on the downside.
Disclosure: I don't own AAPL directly, just as a part of SPY. I own
more Apple devices than you do. ;-)
So far my Apple stock has helped me feed my son's Apple device requirements. I get to play with them when he's home from college. Perhaps that's the parameter I should use to decide "when" to start worrying big time about Apple. The Noodle Kidoodle toy store went out of business about the time he and his generation grew out of the age where they wanted childrens toys. Once they finish college and have to purchase the pricey Apple products for themselves, perhaps they will become a bit less enamored with them.