Apple's Guidance Troubles the Street

SAN FRANCISCO - Apple(AAPL Quote)'s guidance was a sore point in its earnings report Monday.

Apple's stock plunged after the company issued a conservative guidance that was far off the mark of what analysts were expecting.

Unlike most technology companies whose earnings beat come in a few percentage points above their forecast, Apple usually reports numbers that diverge substantially from the bar it sets, leaving many analysts and company watchers wondering why Apple cannot offer better estimates.

In the last nine quarters, for example, Apple has beat its EPS numbers by an average of 22%, ranging from a high of a 45.3% EPS beat for its first-quarter fiscal 2007 results to a low of an 8% EPS beat during the second-quarter fiscal 2008.

That has worked in the past, as Wall Street loved to watch Apple trounce its outlook.

But with a weak economy, jittery investors, already worried about a bear market and factors such as the health of CEO Steve Jobs and succession planning, are unsure how much of the company's outlook is its traditional conservatism and how much of it is related to fears around the strength of the economy.

On Monday, Apple offered its guidance for the fourth or current quarter, saying it expects revenue of $7.8 billion and earnings of $1 a share. Analysts were expecting revenue of $8.32 billion and earnings of $1.24 a share.

Most media reports said Apple's outlook missed analysts' numbers and that among other factors took a toll on the company's stock.