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Turfscape (44.88)

Apple After Hours

Recs

6

October 18, 2010 – Comments (7) | RELATED TICKERS: AAPL

Down 8%! Aaagh!

Recovering...recovering...AACK! Still down 6%!

Recovering...recovering...Bleagh! Down 5% still! BUT THEY BLEW PAST EXPECTATIONS! What the h-e-l-l is the problem, Wall Street? $20 billion in revenue not enough for ya?

Well, let's be rational for a moment: At this stage in Apple's corporate life, they can't actually exceed earnings expectations. The expectation has become that they will exceed expectations. Therefore, they have to not only exceed, but exceed by such a ridiculous amount that positive news in any one sector of its business can cause minor panic if it isn't the super-best-most-awesomest-news-ever.

It has to be expected that speculation will be strong in the run-up to the quarterly announcements, and that traders will take their profits on Apple's earnings...and that's exactly what happened. So, a noticeable after-hours dip was wholly unavoidable.

The facts stand that Apple had an amazing quarter (several of them, to be sure). Sales of iPhones and Macs are strong, and growing. Sales of iPads appear soft versus some estimates, but the total numbers are strong...and growing. A few questions remain about supply issues with iPad and what, exactly, Apple intends to do with $50 billion in cash (seriously, Steve, buy something...a company, land, patents, outstanding AAPL shares, an NFL franchise...$30 billion cash hoard, I was still defending you, but $50 billion? Getting a little ridiculous).

Given those facts, I'm not going to sweat a 5% or 8% dip on profit-taking. This company remains on my long list.

7 Comments – Post Your Own

#1) On October 19, 2010 at 1:08 AM, ayaghsizian (96.77) wrote:

I for one think exactly like you and will take this chance to add a few shares.  Thanks for Blog.

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#2) On October 19, 2010 at 1:08 AM, ayaghsizian (96.77) wrote:

I for one think exactly like you and will take this chance to add a few shares.  Thanks for Blog.

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#3) On October 19, 2010 at 2:05 AM, ikkyu2 (99.23) wrote:

Beat quarterly revenue estimates by $2 billion, or approximately 11%; and so the share price takes a short-term haircut.

Here's a real clue: unless you actually need that money that you've chosen to invest in AAPL, the true value of the share is the same today as it was yesterday.  Only the market ask, bid and last prices have changed.  In this case, unless you're selling, who cares?

If you are "speculating for a pop," on the other hand, this is just another lesson about how you won't be able to predict what happens on earnings day.  That lesson got taught to me a long time ago.

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#4) On October 19, 2010 at 8:05 AM, Turfscape (44.88) wrote:

ikkyu2 wrote:
"the true value of the share is the same today as it was yesterday."

Precisely! The post-earnings announcement activity in Apple is the most clear example of the difference between trading and investing.

I really do want to know, though, what Jobs has in mind for his $50 billion cash hoard...

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#5) On October 19, 2010 at 8:12 PM, ikkyu2 (99.23) wrote:

I wish I knew too.  Ultralong has thumbed-up some of the iPhone component suppliers; Steve was quite clear on the conference call that inhousing the A4 chip from design to fab has been a big win for the company, so I wouldn't be surprised if he..

..made a few moves on the street.. a few mill here.. a few there.. now that's serious money.

Er, excuse me, where was I?  Not watching "Scarface" again - that was the 80's.  Ah, yeah, he might buy a few component manufacturers.  I'm sure he'd like to be the guy who owned the Retina Display, from design to fab to implementation to hardware to software driver.

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#6) On October 19, 2010 at 11:36 PM, Turfscape (44.88) wrote:

ikkyu2 wrote: "I'm sure he'd like to be the guy who owned the Retina Display, from design to fab to implementation to hardware to software driver."

I'd like to see what that would do for margins...there truly is quite a bit of upside left in AAPL.

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#7) On October 20, 2010 at 12:43 PM, ikkyu2 (99.23) wrote:

Check out UltraLong's last blog post but 2 or so - it was this month - he has some good ideas along those lines.

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