
Apple Inc said on Monday its current-quarter earnings would be well below Wall Street targets, sending shares of the iPhone, iPod and Macintosh maker down 10 percent.
Apple has a reputation for conservative financial forecasts, and it posted third-quarter earnings on Monday that swept by its own target and those of Wall Street, leaving some analysts including Pacific Crest Securities' Andrew Hargreaves sure that the company was playing an old game.
I trust no one is shocked by this. Apple and Starbucks are really in the same boat: they make a luxury product and, when recession comes, their sales suffer.
But their sales aren't suffering. They just posted their largest quarter ever, which was over 40% higher than the same quarter last year.
The headline is misleading. Apple *always* forecasts conservatively. Wall Street puts out a higher forecast, and when Apple releases their official forecast on the earnings report for the prior quarter, Wall Street responds negatively because the Apple forecast is lower. Fast forward 3 months, and Apple routinely beats both their own conservative estimate and the higher Wall Street estimate.
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