Does Apple Always Lowball Guidance?
The excitement every quarter when Apple beats by a landslide can be summed up in one word: Lowball.
That’s right — Apple offers up guidance that is purposely conservative.
Proof: When Apple announced second quarter results Wednesday, it blasted through revenue and earnings expectations. But its third quarter guidance lagged, with an earnings forecast of $5.03 per share on revenue of $23 billion. Consensus expectations was for earnings of $5.25 per share and revenue of $23.8 billion.
In most companies, a miss like that would crush a stock. But Apple’s shares lifted 2 percent on the news.
When I dared question on Twitter and the frenetic Apple feed on StockTwits about whether the miss would eventually matter, I was laughed off the stage.
“They always sandbag,” was the typical response.
To which I tweeted back: “If they always lowball and everybody knows it, what’s the point of guidance?”
Again — laughed off the stage.
That's because at Apple, beyond the normal jaw-dropping performance, part of the game is the beat, not the guidance. With the company still apparently in growth mode, everybody knows to ignore it.
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