A brief history of the Apple...which brings us to...
Well, of course you've all heard by now that Apple did it again: according to the company's press release, it posted a $430 million profit last quarter on revenue of $3.68 billion, beating analysts' estimates and boosting year-end earnings and revenues to $1.335 billion and $13.93 billion respectively. That's a 384 percent profit increase over 2004, and also makes fiscal 2005 the company's best year ever-- financially speaking, anyway. Overall it can't compare to 2002, when Steve Jobs once won five games of Klondike in a row and also found a whole box of raisins-- sealed-- just sitting in the parking lot of the Circle K, but from a monetary standpoint, 2005 definitely finishes ahead.
As usual, the good news came fast and furious: Mac sales grew year-over-year by a whopping 48 percent, iPod sales were up a bordering-on-obscene 220 percent over the same time period, Apple's cash stockpile keeps growing and is apparently now up to over $8 billion, the company had its best sales in the education market in ten years, its retail effort is doing so well it's planning to open another 35 to 40 new stores in 2006, etc. etc. etc.-- and yet, within 30 minutes of Apple posting its Q4 results, its stock had plunged 10 percent in after-hours trading. What gives? Er, other than the fact that Apple's stock price always dips after the company announces better-than-expected financial results?
Well, as it turns out, apparently Wall Street was disappointed by iPod sales. It seems that a 220 percent year-over-year growth rate just wasn't good enough; as BusinessWeek described the situation, "iPod sales were merely torrid-- while analysts were looking for nothing less than molten." Apple's earnings call clarifications calmed the panicked sell-off a little; as MacNN reports, Apple still has 75 percent market share among MP3 players, despite having tapered off iPod mini shipments prior to the intro of the iPod nano. That artificially lowered overall iPod sales, as did the fact that Apple was unable to meet the "staggering" demand for the nano. That means there's already a backlog of deferred sales queued up for Q1/06, which mollified Wall Street somewhat and AAPL closed at 49.25, down only 4.75 percent and basically where it was just a little over a month ago. Heck, it's only $1.12 lower than it was just two days ago. So not much ground was lost after all.
Still, though, we don't mind admitting that when we saw AAPL shed five or six clams within half an hour of Apple's earnings announcement, we got a little worried. Like, "change of pants" worried. It all just underscores how fragile Apple's current love affair with Wall Street really is; all of the gains in recent years were based, more or less irrationally, on iPod sales. Despite record revenues and profits, one quarter of slower-than-expected iPod growth-- growth, mind you, but growth that's not as fast as analysts want-- is enough to send shares into free-fall. We fear for our retirement fund. Maybe we should sell some of our AAPL and put the money into something a little more stable. Besides, we always thought a few Krugerrands might class up the joint a little...
Source: As the Apple Turns: Bringing New Meaning To The Phrase "Psychotic Episodes."
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