Apple released financials for Q1 2014 and the market went nuts. Again. I watched the Fox Business Channel and you would have thought President Obama was Apple’s CEO and running the company into the ground.
What happened? Yet another epic fail for Apple’s latest financial numbers. Fail? Yes, there’s a new definition for fail in the media and Apple seems stuck in 2010, refusing to admit the obvious. In Wall Street’s new era, profits don’t matter, posturing and promises are king.
By The Numbers
Financial numbers can always be looked at from multiple perspectives. All Apple did was announce record revenue and profits in Q1 2014. Again.
Let me drop a few numbers on you. Record revenue of $57.6-billion. Record profits of $13.1-billion, at $14.50 per share.
What about iPhone and iPad? Apple sold 51 million iPhones and 26 million iPads. Both record numbers.
As we move further into the post-PC era, while traditional Windows PC sales are stagnant or dropping (depends on who is counting), Mac sales were up nearly a million units from a year ago at 4.8-million.
Apple declared another cash dividend, and generated over $22-billion in cash flow. How did the stock market respond? Negatively. Apple Q1 numbers missed analyst’s expectations for both iPhone and iPad unit sales.
Epic. Fail. Again.
Or, was it? One Fox Business News analyst said Apple’s iPad was hammered in the media by Amazon’s Kindle Fire HDX. Yet, only Apple manages to announce actual sales numbers on their products. What do we hear from Amazon?
Ditto for Google, Motorola, HTC, Samsung, Nokia, and Microsoft. Apple announces actual sales numbers for Mac, iPhone, and iPad, and the market dumps AAPL, while Apple’s competitors announce nothing, and the market pushes their stocks ever higher (check one-trick pony companies Google and Amazon).
What’s going on?
Apple is a victim of the double-edged sword of success. While the company basks in record setting revenue, profits, and unit sales, Wall Street’s
>mavens morons point out that Apple did not meet their inflated expectations for growth and market dominance.
Apple usually beats its own financial guidance, so the company could be accused of being conservative with projections; yet Apple’s numbers are more accurate than Wall Street analysts, so who really misses the mark? It’s not Apple.
Even Apple’s software and services components hit record revenue, despite the fact that OS X Mavericks, iPhoto, iMovie, Garageband, Pages, Numbers, and Keynote are free on all devices.
What’s going on?
I think it’s a confluence of issues. One, Wall Street analysts are not very good at projections. Two, success isn’t rewarded by the market, but hubris and pie-eyed sky high potential opportunity is. Three, P/E means nothing. Nothing. Four, both Wall Street and the financial media prefer negative news to positive news.
Apple is chugging along with every product category generating record or near record sales; units, revenue, and profits. Mac, iPhone, iPad, iTunes Store, Apple Stores. No other technology company puts out numbers similar to Apple.
Therein lies the problem. Success.
Short of another monster product, Apple has nowhere to go but down, so AAPL is being punished by the market.