Apple Beats Across The Board, Too Bad It’s Not Enough

Apple (AAPL) lost ground at the end of regular trading, down over 2% to just above $95.. Even with conservative guidance for the next quarter, results were overwhelmingly positive and the stock rose over 4% to top $99 after hours. Then the market started to think about guidance, and the stock reversed field moving well below $94.

Apple sold 21 million iPods, beating expectations of about 16.3 million. Revenue hit $7.12 billion, and EPS of $1.14. Mac sales were the only disappointment hitting 1.6 million units, slightly below Wall St.’s dreams.

The company’s profit was $1 billion, up 78% over the same quarter last year.

Apple followed its tradition of conservative guidance. It forecast the next quarter’s results to have revenue of $4.8 billion to $4.9 billion. Reuters’ estimate is $5.24 billion. The company’s EPS forecast for the next quarter is $.54 to $.56 compared to the Reuters’ estimate of $.60.

The Banc of America analyst, Keith Bachman, is a 5-star rated analyst with Starmine and he recently reiterated his Buy rating and lifted his $100 target to $110 after the new products were unveiled.  The street was looking for earnings of $0.78, but the Starmine SmartEstimate(R) was  $0.81.  The higher-end of the range was $0.83.  Revenue expectations from Wall Street were roughly $6.43 Billion.  The company only guided $0.70 to $0.73 and $6.0 to $6.2 Billion implied with its last earnings when it gave guidance.

Apple’s chart shows an overbought reading, but that is frequently the case and almost every sell-off in Apple shares has been met with a buying flurry and a surge to newer and higher all-time highs.  On an adjusted basis, Apple is up more than TENFOLD since October 2001 when Windows XP was released and when the economy was choking on the impact from 9/11.  Shares are also up huge from last earnings when its shares went out at $74.29 ahead of earnings.

The real impact from new products is actually two and three quarters away, so there is a lot of calendar between now and more forward guidance.  Any supply hiccups or any real changes in the component markets could speed up or delay the launches, and many research firms have to try factoring that variable into estimates.  Yesterday, options traders appear braced for a move of up to $4.00 in either direction; but that "expectation from options pricing" should compress rapidly as the results are out and as the time value left on the options will erode until Friday’s options expiration date.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.