Yoshikami: Apple a $100 Billion Dollar Disappointment?
Apple shocked the street by missing analyst estimatesas iPhone sales disappointed the financial prognosticators.
But rather than providing an indication of Apple's decline, it instead highlights how easily influenced the investment community can be, caught up in momentum, and prone to setting unreasonable expectations for earnings estimates.
Apple is obviously in transition mode as the iPhone 4S was delayed by three months and released off its usual cycle. And with the new iPhone release, they appear back on track. Just this last week, Apple reported record iPhone sales for this product despite geek disappointment that the next iPhone iteration did not change the form factor. Lines were back and sold out signs were the norm once again.
With Steve Jobs no longer in charge, some are uncertain about the future of Apple and how they will handle this transition. But, with their pipeline overflowing with products including the iPhone5 and the iPAD3 heading our way, as well as very strong unit sales for Mac OS computers, you can expect this company to march forward. Look at the earnings miss as more of an indictment on overly optimistic guesses about earnings rather than a misstep by Apple. For the street to be shocked that the company missed lofty earnings estimates (despite business lines showed massive unit growth) simply illustrates that Wall Street has sometimes unreasonable expectations.
We expect Apple to continue to flourish as competitors struggle to catch up. As is always the case, watch headlines on an ongoing basis for any changes in the prospects for Apple and understand that even analysts are impacted by emotion. Perspectives are simply based on their educated guesses of what the future might hold. And don't blame Apple if expectations were more euphoric than they should have been; a $100 billion dollar fiscal year sales result is far from a disappointment.
Bottom line? The earnings miss drama surrounding Apple is merely noise. The stock is a buy and we believe it will continue to roll out products that will capture a greater share of the global smart phone and computer market. Momentum is on their side and despite the difficult news surrounding this company over the last several weeks, we do not expect Apple to slow down anytime soon. And look for the stock price to reflect this outcome.
Michael Yoshikami, Ph.D., CFP®, is CEO, Founder and Chairman of YCMNET's Investment Committee at YCMNET Advisors. Michael is a CNBC Contributor and appears regularly on the network. YCMNET is a San Francisco Bay Area-based independent money management firm that provides fee-based wealth management services to institutional investors and individual investors. The firm works with clients around the world. Michael was named by Barron's as one of the Top 100 Independent Financial Advisors for 2009, 2010 and 2011. He oversees all investment and research activities of the firm and is actively engaged on a daily basis in the firm's securities analysis activities and determines the macro tactical asset allocation weightings for client portfolios. He works with YCMNET's investment team in integrating behavioral investing strategies with the firm's core fundamental perspective. Michael holds a Ph.D. in education, other advanced degrees, and holds the Certified Financial Planner® (CFP) designation.