Daniel Eran Dilger
An after-hours sell off of Apple shares resulted in the company's effective market capitalization falling to $436 billion, just over three times the size of its growing cash reserves, now worth $137 billion.
The bizarre turn, which occured after standard trading stopped on Thursday as Apple presented earnings, means that until trading resumes on Friday, the market has determined that Apple's operations, brand and all associated goodwill are worth just $299 billion, or $318 per outstanding share after considering its staggering cash position.
Justifying the temporary selloff, a series of reports described Apple's earnings as "flat," because while revenues were up, its reported profits were the same as the winter quarter of last year. However, as Apple's executives repeatedly pointed out, both back then and today, last year's winter quarter was a full week longer than this year's.
Comparing the two winter quarters' results over equal time periods of 13 weeks, Apple's revenues were up 25 percent and its earnings were up 13.5 percent over the year ago quarter.
Apple has also been criticized for failing to sufficiently "innovate," although it appears the performance of company's record winter quarter was held back in large part because it was innovating so rapidly that it struggled to produce enough of the devices in its completely refreshed product lines to meet demand.
Apple's chief executive Tim Cook noted that supplies the new iPhone 5 and iPad mini remained constrained throughout the quarter. Additionally, Apple's thin new iMac design, unveiled uncharacteristically late in the year, was not available for purchase at all until late November, while supplies of its higher end model were held up into December.
The company's depressed share price was bantered around as "the beginning of the end" of Apple by a variety of pundits who both decried Apple's supposed lack of innovation (but who also failed to see any promise in the iPad when it was originally released, or alternatively needled the company for not jumping on the bandwagon of building a low cost netbook), but Apple itself stands to benefit from discounted shares as it executes plans to buy back billions of its own shares to make up for stock based compensation being offered to attract new hires and retain existing talent.
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53 Comments
Failing to innovate? That's got NOTHING to do with why they sold what they sold and earned what they earned. Absolutely nothing relative to one another. If Apple releases new products and they have so much demand that they can't build them fast enough and they have some suppliers that are trying to meet parts ordered because they are ramping up the production of a new product and yields are down, that has nothing to do with whether is innovating or not. GOD, some of the dumbest statements come out of some of these so-called analysts and journalists. Why even report their dumb statements? Who are these pundits? Do they have a name? Or are they just idiots that just like to talk so they can hear themselves?
Great time to get hired by Apple. You'll never get a better incentive stock option price.
Not too far from the 52 week low for a company that just had a record quarter and does not believe it can meet demand for iMac and iPad mini in this next quarter. I'm in for some more shares today. I wish they could take cash home from overseas though without all the taxes. Bigger dividends would be awesome too, but so would more expansion in the US.
Apple is operating in totally uncharted territory, and is currently where no other tech company has ever gone before. On the list of the largest Corporate earnings of all time, Apple's just released Q1 2013 results is number four. Apple holds three spots out of the top ten, and there's not a single other tech company there on that list to see. The only other companies that Apple shares space with on that list is with oil companies. When you get that big and are selling more than anybody has ever sold before in the history of the world, I think that it's pretty unrealistic and downright ignorant to keep expecting record breaking results that no other company has ever achieved before.
I think that the main cause behind the drastic sell off in AH is a combination of fear, stupidity, herd mentality and clueless people. Every tiny, negative thing (true or not) that has to do with Apple gets amplified at least a thousandfold, and leads to a very negative atmosphere surrounding the stock, including yesterday's ridiculous over-reaction. People talk about margins? Look at the damn margins of other tech companies, and anybody can see that Apples' are still very respectable and most other tech companies would kill to have Apple's margins.
Apple made a shitload of money last quarter, more than ever before, but I guess that that's simply not good enough. With the way that the stock dropped, you'd think that Apple reported that they sold one hundred iPhone 5s in total and had negative earnings. The way that Wall Street reacts to and treats Apple as a company is a total joke.
I do also think that there might be something to be said about the law of large numbers. There are not endless Apple customers on planet earth, and even though there are still some emerging markets (China comes to mind), I think that there is a point where you will reach saturation in other, already established, developed markets. And to that I say, so what? That's just how things are. You can't change nature. Apple could release the best ever earnings in mankind's history, but if those earnings are one hundredth of a decimal point below the estimate of some
analystcrackhead on Wall Street, then it is a complete and utter failure.I was lucky enough to sell yesterday before the drop, but I'll probably be buying back in soon again, especially at these laughable prices.
Anybody who thinks the analysts and pundits are wrong can speak loudly by buying shares at the depressed prices.