Message Font: Serif | Sans-Serif
 
No. of Recommendations: 41
Considering that the reason behind the 100M topline miss is the inventory reduction in PowerMacs, I wasn't that much off at http://boards.fool.com/Message.asp?mid=15384099. At least I was right about them being primes! 61M, 17¢.

I loved the margins, the healthy R&D spending, and the 4.2B in cash. They sold a ton of iBooks (in this environment I'll happily take that backlog, thank you), and surprisingly sold more iMacs than last quarter. Amazing.

But the media and investors have become so irrational that they refuse to recognize the effectiveness of staying focused. It's as if Apple had said after the Q1 debacle, "lets not downsize, but concentrate and focus: we'll launch the best products ever, but only one after the other." First laptops, then desktops. Within each group, pro's go first, consumers later. Thus, we have the TiPB, iBook, PowerMac, iMac (believe it or not, the iMac is still the unit leader in the mix, so this way they squeeze the most $ out of it). Each one will carry the respective quarter, and each time they lower inventories on the other lines. A very lean machine indeed. 29% margins, and they say they can keep it up. WOW!

Oh, but the schizophrenic media and investors punish this! They desperately need to hear 50% growth promises, pedal-to-the-metal guidance, don't worry about the 1% speed limit, ignore the barricade ahead, just charge and all will be fine ... oh wait, we just went through the worst wreck in history ... bah, lets try that again. But Steve and Fred won't say what we want to hear; they're stealing our dream, while making a buck for themselves ... bad Apple, you deserve to be punished.

As mentioned by another Fool, the headlines used are extremely misleading, and some are blatantly false ("Apple Earnings in Line with Forecast" at http://dailynews.yahoo.com/h/nm/20010717/tc/tech_apple_earns_dc_1.html and "Apple Third Quarter As Expected" at http://dailynews.yahoo.com/h/nm/20010717/tc/tech_apple_earns_dc_3.html, and also within the text at http://dailynews.yahoo.com/h/nm/20010717/tc/tech_apple_earns_dc_4.html, are some examples by Reuters) But some of the worst defamatory cues are also buried in the text of the articles. For example, almost everyone reports last Q3 2000 EPS as 55¢, but that includes one time items (only AP makes the distinction). Obviously, this makes the Y-Y comparison even tougher (the 70% decline figure is manipulated in this manner). Another article, right here on TMF exposes that "gross margins ticked down slightly." (http://www.fool.com/news/2001/intc010717.htm?source=eheyhopop001101&ref=yhoolnk) Talk about nitpicking and whining!

Apple is 12¢ above estimates for the calendar 1st half, and will easily beat the 24¢ + 28¢ estimates for the rest of the year, especially in the Holiday shopping season, where they'll kill with the new iMac. On the face of the media focus on "Apple warns again," analysts will need to revise 2001 earnings upwards very quietly. The question is, will investors notice?

They can't help themselves. The audience wants blood and violence, bush and gore (not Bush and Gore). Even otherwise informative articles like http://www.thestreet.com/_yahoo/tech/thomaslepri/1493691.html and http://www.thestreet.com/_yahoo/tech/thomaslepri/1495011.html, need such slanderous headlines like "Apple Plunges on Sales Warning, Vindicating Newton" and "Apple Crisp: Jobs Gyrates at MacWorld as the Core Rots" to attract readers. That's what we get when pop culture is the main market mover. Soon we'll see Jerry Springer / Jenny Jones pitting CEOs on CNBC. Circus Maximus.

Even Ol' Alan "canned the mumbo-jumbo he's famous for and quite clearly stated that more monetary stimulus may be needed to revive a still struggling U.S. economy," (http://smartmoney.com/theeconomy/index.cfm?Story=200107181) but the market only hears things the other way around. Bears see him confirming the bad economy, bulls see him hesitating. They both want to see direction, but there isn't any. Its amazing how both Apple and the Fed have similar stances, but both are completely misunderstood: "disappointing corporate earnings, coupled with downbeat comments from Federal Reserve Chairman Alan Greenspan, cast a shadow over Wall Street." (http://biz.yahoo.com/rf/010718/n18249419_2.html)

Michael Dell Honored by Peers
http://dailynews.yahoo.com/h/ap/20010719/tc/dell_honored_1.html
"Essentially all of our competitors have gone into a loss, where Dell has maintained pretty reasonable profitability - certainly not what it was during the sort of peak up-cycle, but we're still nicely profitable," Dell said.

Now this is what the market loves to see: their Hero pummeling head on against his foes. And the media loves to report the body count from the train wreck. Oh, the humanity! Oh yeah, Apple's profit are down 70% vs. Dell's decline of 37% Y-Y (Q4e). That's about 140M for Apple vs. 215M for Dell. hmmm... I wonder what's worse. And this is a comparison against a year ago net margin of 12% for Apple, vs. 7.5% for Dell. But lets compare Dell's 2001 earnings with Apple's (reported and estimated):
DELL 18 17 16 17
AAPL 11 17 24 28
Still need a graph to see who's growing and who's in decline? OK, here you go. http://homepage.mac.com/tello/eps.gif

And I'm sure you won't here anymore from Mr. Dell about the education market.

Now look at Intel vs. Apple: While Steve was saying "let it RIP," about the P4vsG4 showdown, INTC came unscathed from their vague guidance for next quarter.

From CBS MarketWatch.com
http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B9811125D%2D19CA%2D4D77%2DB190%2D88D3B7915C81%7D
Looking ahead, the company said the third quarter's revenue should fall within $6.2 billion to $6.8 billion. Analysts had expected $6.51 billion.

Intel also expects to incur $100 million in equity investment losses in the third quarter.

In addition, lower gross margins should plague the company in the next quarter and for the full year.


Intel's Profits Fall 76 Percent (hey, wasn't that a 17% sedative for AAPL?)
http://dailynews.yahoo.com/h/nm/20010717/bs/tech_intel_earns_dc_6.html
...That range, while very wide, did provide some comfort that sales will rebound in the second half of the year.

"Their guidance is very wide, very broad," said Justin McNichols, portfolio manager with San Francisco-based Osborne Partners Capital Management, which owns Intel stock. ``What the bulls were hoping for would be some kind of flat guidance and, in a roundabout way, that's what they got.'


In other words, they will take flat guidance from Intel, who's been sweet-talking investors about the economy, but dismiss Apple's "sequential increase," even though they've always said consumer demand is still weak. They denounce Apple's 70% decline, but accept Intel's 76% tumble. And the market absolves INTC: http://www.clearstation.com/cgi-bin/rgraph?Symbol=AAPL&gs=Large&gr=1&cs=INTC&tic=5-day

What gives?

Deagol
Print the post Back To Top
No. of Recommendations: 9
DELL 18 17 16 17
AAPL 11 17 24 28
Still need a graph to see who's growing and who's in decline? OK, here you go. http://homepage.mac.com/tello/eps.gif
-deagol


-------
<applause>
<cheers>

hahaha
rock on deagol
<reaches over, wipes windshield>
the reason? people don't get it
they won't until the WSJ tells em so
and the stock has outperformed for 3 years
i don't think it will be too late
at that point...
but they'll surely miss the first Xbagger

besides, if the people that want in
blabbed it all over the street
that wouldn't really server their means eh?
gotta wait for them to get in
and to get 50million shares
in a company that trades like 5 million a day
takes time
weeks even...
think of all the funds with all the cash
generating the very same charts as you

sure it's not on the cover of time
THANK GOD
arbitrage op

now that earnings are "out" it's a done deal
last month it was a hope
6 months ago it was a dream
and 4 years ago it was a bet

funds move the most cash on facts
and reporters "report"
after the "fact"

iz fun no?
blue
Print the post Back To Top
No. of Recommendations: 0
Apple is 12¢ above estimates for the calendar 1st half, and will easily beat the 24¢ + 28¢ estimates for the rest of the year, especially in the Holiday shopping season, where they'll kill with the new iMac. On the face of the media focus on "Apple warns again," analysts will need to revise 2001 earnings upwards very quietly. The question is, will investors notice?

I think the Holiday shopping season is Q1 of the next FY.

However, I like your discussion and comparisons and contrasts of the commentary of analysts. Well done!

Paul
Print the post Back To Top
No. of Recommendations: 0
DeagolTheStoor wrote:

"They sold a ton of iBooks (in this environment I'll happily take that backlog, thank you)"


Better if they could ship them, though... the one I ordered three weeks ago still isn't here, and the place I ordered from says they have month-old orders that still haven't been filled. For awhile it seemed like Apple had this problem licked, now it is back again. There's always something wrong it seems. They can't sell what they can't produce.


Print the post Back To Top
No. of Recommendations: 3
Better if they could ship them, though... the one I ordered three weeks ago still isn't here, and the place I ordered from says they have month-old orders that still haven't been filled. For awhile it seemed like Apple had this problem licked, now it is back again. There's always something wrong it seems. They can't sell what they can't produce.

While I sympathize I'm glad we're not all sitting here saying they shouldn't have invested all of that capital on production facilities ASSUMING the iBook would break records. It's tough knowing we're losing sales, but remember what the write-off for the Cube did to the stock.

Buff
Print the post Back To Top
No. of Recommendations: 1
"Better if they could ship them, though... the one I ordered three weeks ago still isn't here, and the place I ordered from says they have month-old orders that still haven't been filled. For awhile it seemed like Apple had this problem licked, now it is back again. There's always something wrong it seems. They can't sell what they can't produce."

I think they have always had this problem. It started with the apple IIe. Anyway im not so sure it is even a problem. more like a stratagy. Didn't sony do this with the playstation II but on purpose to spur demand hell maybe Im thinking of beeny babies and cabage patch dolls. This is just a far flug guess but someone better informed about this phenomina might want to agree with me or condem me.

But with all things equal i think as an investor its better to have to underestemated demand then overestimated it. I think i would be sick to my stumic if apple had a wearhouse of ibooks sitting in a wearhouse right now but i do feel good knowing that right now somew people are diligently checking their door step each day for a fedex package..:)

azlok

Print the post Back To Top