Friday, 26 October 2012

The stakes can't be higher with Apple earnings tonight

Dear Friends,

I believe that the stakes are high with Apple earnings tonight. Not only for the company, but for the whole tech sector or Nasdaq. It certainly will bring market confidence into the poor earnings season so far. Or at least when Wall Street these days focus on some major companies that fall below expectations.

Apple is expected to post an earnings per share of $8.85. But Wall Street is whispering a figure of $9.32. So let us see if it did fetch better than $9.32.

Although I seldom predict earnings, my research shows me that Apple has a good chance of beating this estimates. Do not forget that we need to price in the iphone earnings. Last quarter EPS is also $9.32. There is a good chance it might just be better, right?

Having said that, earnings is something we should not bet on. Even though I think positively, nothing is certain in earnings. In earnings, there is also something called the guidance. Like what some tech companies have done recently, even though they may beat earnings, the company actually issue a warning guidance to its future earnings or revenue. If Apple do that too, there goes the stock... But with christmas season round the corner, I doubt they will do that. Wallstreet will also scrutinize on the sales of iphone 5 to see if it is above estimates. All this makes the prediction more uncertain.

But I am still leaning towards Tim Cook delivering a positive, at least that is what I hope, together with the bulls... if not, get ready for a rough ride.

(Updated after market hours upon Apple earnings release)

Apple posted fiscal fourth-quarter earnings of $8.67 a share, below the estimate of $8.85 a share.

Earnings in the year-ago period were $7.05 a share. Revenue jumped 27% to $36 billion in the most recent quarter, ahead of Wall Street’s call for $35.8 billion.
Apple also projected fiscal first-quarter earnings of $11.75 a share on revenue of $52 billion. Analysts had been expecting earnings of $15.41 a share on revenue of $55 billion. More about Apple's Q4 results. 

Though the results are poor, but after market hours show that Apple is still holding steadily at $609, which is at least a sign that it might not gap down much the next day. This shows that expectation may have already priced into the recent decline. We shall see how it goes on the opening bell tonight. 

Tech earnings in general are POOR as Amazon pulls off a bad earnings too. 

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