Apple Shares Tumble After Rare Profit Disappointment

by Michael Goodman | October 18, 2011 5:01 pm

Apple Shares Tumble After Rare Profit Disappointment

Hold the iPhone: Apple (NASDAQ:AAPL[1]) has disappointed investors.

Shares of the tech darling fell 6% to $397 in late trading Tuesday after the company’s fiscal fourth-quarter profit and revenue missed analysts’ estimates (and, of course, surprising absolutely nobody that the results beat Apple’s now-standard conservative projections.)

That’s not to say that in a vacuum these numbers weren’t still impressive: Apple’s quarterly net income still jumped to $6.62 billion from $4.31 billion, and revenue surged nearly 39% to $28.3 billion.

But perhaps this is a case of Apple’s extensive network of hardcore customers and fans working, for once, against the company’s results. Apple sold “only” 17.1 million iPhones during its most recent quarter — impressive 21% growth, but well below the analyst consensus expectations of 21 million.

In fact, the shortfall is almost eerily on target: Apple’s 4 million-phone shortfall is the exact number the company said it just moved of its latest model, the 4S. Try as it might in the past few months to not tip its hand that a new model was on its way, the scrutiny and global hobby that is Apple-watching made it all but impossible that many customers were going to wait for the next update.

But iPad sales also came in light, with the company’s 11.1 million devices sold coming in below Street expectations for about 12 million iPads.

Apple’s Mac sales, however, were strong at 4.89 million computers vs. expectations for 4.5 million Macs sold.

The company’s fiscal first-quarter guidance, to largely be ignored because of Apple’s customary uber-conservatism, was well above Wall Street expectations.

Looking very smart in all of this is BGC Partners analyst Colin Gillis, who had the gumption to downgrade Apple shares to “hold,” citing the stock’s 14% jump since Oct. 7 and, among other concerns, the high bar already established for the company’s need to continue shattering iPad sales records.

It should be noted that Gillis said he would like the stock more on a move below $400. It now remains to be seen whether the rest of the market now sees a bargain.

Endnotes:
  1. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL

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