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Tech Check
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CNBC.com Apple Earnings |
I knew that when I wrote that snap analysis on Apple's earnings that it would raise the ire of so many of you invested in this company, its history, its products, its lore. But you have to balance Apple's earnings and expectations with reality, and while this company blew out fourth fiscal quarter financials, that guidance is a concern, even for a company like Apple [AAPL
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Many of you are taking me to task because Apple itself guided its fourth quarter to $1 a share and came in at $1.26 instead. And that would make sense if anyone put any stock in Apple's own EPS guidance, which they don't. On this front, you have to defer to real expectations, or those that are formed by Wall Street analysts charged with following this company, no matter how you feel about them. It's their game; they make the rules. So it doesn't matter what Apple says, especially since it always tends to sandbag its guidance numbers anyway. You have to look at the Street, and for its fourth quarter, Apple blew past those expectations anyway. And its topline number was extraordinary. It was a blow out. No two ways about it.
Guidance however is another story. You simply cannot ignore how far below Apple's guidance is for its first fiscal quarter. And those numbers, on their face, were scary.
I for one have always relied on Apple's fundamentals to tell its story. Mac sales. iPod sales. iPhone sales. Gross margins. Retail traffic. And I for one place no credence at all in the company's EPS guidance because Apple has always sandbagged. If you believe in the fundamentals, and focus on that surprisingly strong fourth quarter gross margin, and you focus on the ongoing strong sales of its three major product lines even as the economic ground was beginning to shake beneath it, then you realize Apple's fundamentals, at least through last quarter, appear to be strong. But there is simply no denying that such low guidance—essentially flat revenue year over year even though it now has the additional revenue stream from iPhone—is a concern.
But let me be perfectly clear: that concern is a short-term one, and something shorts might seize on. Investors will look at Apple's fundamentals and realize that this company is the same, great, long term play positioned better than any other in the marketplace. Better than Research in Motion, better than Hewlett-Packard, better than any digital music company. Steve Jobs, in the company's earnings release, candidly said: "We don't yet know how this economic downturn will affect Apple. But we're armed with the strongest product line in our history." I couldn't agree more.
I think like so many of you, I was surprised by how soft the holiday shopping guidance was. But it in no way colors my longer term outlook that Apple still remains the company to beat in every product category in which it competes. Put the nooses and pitchforks away. I remain undeterred longer term that Apple is still the dynamo. However, that first fiscal quarter guidance gave me the same feeling I get when I see the blue and red flashing lights in my rear view mirror. You reach for the brake to slow down a little. Now that we know from Apple's conference call that the company is merely being conservative, per CFO Peter Oppenheimer, and not seeing any real signs of a slowdown, I can feel my right foot once again reaching for the accelerator. Questions? Comments?
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