When Apple (NASDAQ: AAPL)
released in January its 1Q and end-of-year 2011 financial results, it
came as no surprise to me (I shall declare) that the tech powerhouse
surpassed analysts’ expectations, soon thereafter solidifying its
position as the world’s largest company in terms of market share. But
what I did find surprising, however, is the notion that everyone (it
seems) from Wall Street professionals to amateur analysts were beginning
to downplay the tech giant. Somehow forgetting that it’s not just
corporate culture and financials that affect the market value of some
companies, it’s also social significance that impacts price as well.
Lately I have strangely found myself on the inside looking out. Typically, anything that is remotely popular, say by more than…five people, I shun away. Perhaps it’s the introvert in me, but that’s beside the point. In a world where you can’t turn around without seeing someone with an Apple product in their hands, or ears for that matter, now appearing as skeptics to the socio-cultural icon is slowly becoming the new trend. What has happened? It seems as though everyone has jumped off the apple cart.
Yes, Apple’s 2012 guidance was low, but that wasn’t unusual. They’re known for setting low predictions for themselves, presumably, not to get carried away on their own hype; instead keeping focused on
producing quality products and corporate expansion, and that is what shareholders want companies to do, right?
Fiscal first-quarter sales (which ended December 31, 2011) of the iPhone, 4S and older models, reached 37 million units, 7 million more than the Street’s forecast, according to the New York Post. “Even with Amazon launching a credible tablet threat with its Kindle Fire – priced at $200, compared to iPad’s lowest price of $500 – Apple sold 15.43 million iPads, up a staggering 111 percent from a year earlier.”
Also noted, Apple sold 5.26 million Mac computers last quarter, up 26 percent from the year before while the iPod, which first went on sale 10 years ago, fell 21 percent with 15.4 million units sold.
Year-end total revenue amassed $108.25 billion, up 40 percent from $65.23 billion the prior year while net income nearly doubled from $14.01 billion to $25.92 billion. 2011 diluted EPS for Apple equaled $27.68, up 49 percent from $15.15. Year-over-year, EPS grew an impressive 116 percent.
Shares of Apple could easily top the $600 mark but too many traders are manipulating the stock market. Investors and Apple-lovers, stand up and fight for your right to say “No” to naysayers and say “Yes” to freedom…I mean value. I got a little carried away.
Nonetheless, Apple’s past quarter record-high results were in “sharp contrast” to analysts’ predictions. Apple’s 1Q gross margin saw 44.7 percent growth, beating estimations of 40.8 percent. Most Wall
Streeter’s were left scratching their heads and raising their eyebrows in amazement; but not in how did Apple get it right, but how did they get it wrong.
According to Bloomberg, Apple sees 2012 2Q revenue at about $32.5 billion with EPS at around $8.50. Despite the numbers there are still some who remain skeptical. Such as Brian Marshall, analyst at ISI
Group, who has forecasted only a 14 percent growth and trading to remain at multiples of 12x; when in fact the company’s performance growth has surmounted levels above 30 percent while the S&P 500 holds steady at just under 15 percent.
Critis say the tech titan will remain underestimated until they have proven themselves to be “back to normal.” However, most of the hubbub was due to the company not meeting earnings expectations in the fourth quarter of 2011- its first time in years. Net income had rose to $6.62 billion, or $7.05 a share when analysts had expected earnings of $7.39 a share on revenue of $29.69 billion, sending shares to fall 6 percent shortly after the announcement, according to Thomson Reuters.
So for this, Apple has somehow sealed their fate as being sustainable? Doesn’t being ranked by Fortune Magazine as the No. 1 most admired companies in the world, for five years in a row, account for something? What more does Apple have to do? Well, they could free up some cash. I’ll give you that one.
Sometimes we are so caught up in the act of cynicism that we forget to think about legitimate fundamentals. And I for once, find myself rooting for the “popular kids.”