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Apple Just Gave Stock Market a Big Headache

Tuesday, 24 Jul 2012 | 6:17 PM ET

Of all the earnings reports released this season, who’d have ever thought it would be Apple that could take down the stock market.

Almost nobody – that is, until Tuesday.

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But after the bell, Apple released quarterly results that left pros with their jaws agape. “This is a real negative. The Street is shocked by this,” said trader Tim Seymour, founder of EmergingMoney.com, on CNBC's Fast Money.

Apple missed earnings estimates, revenue estimates and iPhone sales estimates.

For the quarter ended June 30, Apple reported a profit of $8.82 billion, or $9.32 a share. After revisions lower, analysts had most recently predicted a per-share profit of $10.37 a share. Also, Apple sold 26 million iPhone units — the Street was looking for 29 million.

“This makes problems for the stock market bulls,” said Dennis Gartman, author of The Gartman Letter. “It makes problems for anyone that’s long.”

Apple Earnings Miss on Bottom & Top Lines
Apple shares are falling about 5 percent after today's trading session, and the company reported a disappointing Q3 EPS of $9.32, versus an estimate of $10.37, with the Fast Money traders, and CNBC's Jon Fortt.

In part that’s because Apple is the largest company by market cap. And any decline in Apple stock tends to be amplified. But more important, results will also kill sentiment.

Apple’s results suggest that recent economic data is not to be ignored; that the global economy is getting a lot worse.

“Pro traders expect Apple to buck the trend at least somewhat. The thinking is people will buy Apple’s gadgets simply because they are Apple’s gadgets,” added Karen Finerman, president of Metropolitan Capital, a NYC based hedge fund. "It was a driver of the bull story and now, pros worry that it might not be."

Money managers will say, “If Apple is not immune (to the malaise) then I’m out of the market. I don’t need to buy anything,” added trader Tim Seymour.

Not everyone agrees.

Trader Joe Terranova, chief market strategist for Virtus, doesn’t think the results are as shocking as the other Fast traders. He simply thinks sales are slower because people who buy Apple products expect new gadgets in the fall – especially a new iPhone.

And Terranova is convinced once those gadgets hit the shelves, Apple shares are looking at a major catalyst. “I’m looking forward to the December quarter and then the March quarter," he said. "In December I expect to hear iPhone sales are north of 50 million – an historic high.”

What do you think? We want to know!

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Posted by CNBC's Lee Brodie

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Trader disclosure: On July 25, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Tim Seymour is long AAPL; Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long SBUX; Tim Seymour is long MSFT; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long JPM ; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long GOOG; Karen Finerman is long MSFT; Karen Finerman is long JCP PUT SPREAD; Karen Finerman is long NFLX PUT SPREAD; Karen Finerman is long M; Karen Finerman is short SPY; Karen Finerman is short IWM; Karen Finerman is short MDY; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long USB; Joe Terranova is long GS; Joe Terranova is long JPM; Joe Terranova is long YHOO; Joe Terranova is long SBUX; Joe Terranova is long NKE; Joe Terranova is long WFM; Joe Terranova is long AAPL; Joe Terranova is long EMC; Joe Terranova is long NXPI; Dennis Gartman is long AAPL; Dennis Gartman is long GLD; Dennis Gartman is long MCD; Dennis Gartman is long T; Dennis Gartman is long VZ; Dennis Gartman is short NFLX; Dennis Gartman is short YEN; Dennis Gartman is short S&P FUTURES

For Daniel Ernst
Hudson Square Research, Inc. has not previously received compensation, nor does it plan to solicit business from the subject company(ies) of this report.
Hudson Square Research, Inc. is not a broker dealer and therefore, among other things does not make a market for the securities recommended in the report. Hudson Square Research, Inc. is a New York registered investment advisor.
Neither the analyst(s) responsible for preparing this report, nor Hudson Square Research, Inc. hold a position in the securities recommended in this report.

For Brian Nagel
A member of the household of an Oppenheimer & Co. Inc. research analyst who covers this company has a long position in JCP



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