This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Trading Apple After Earnings

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- Here are four thoughts on the Apple's (AAPL - Get Report) earnings announcement.

First, the $26 after-hours selloff reiterates our belief that investors must be conservatively invested during an earnings report. The inherent uncertainty is impossible to predict. We are very pleased to have 70% of the EconomicTiming.com portfolio in cash with 20% of it in low risk April 2012 $350 calls. After a $70 move off the $354 low this was the right move to make. We should only be fully loaded at lows.

Second, the fundamental reason for the earnings miss is extremely important. The Street is disappointed with the 17 million iPhone number but is that disappointment warranted?

When the iPhone 4 was brand new it sold 14 million units. As an ancient piece of technology, it still sold 17 million units even though the entire universe knew a new phone was coming in October. The problem stems from unrealistic expectations.

There were surprising analyst reports released during the quarter that suggested iPhone sales were trending ahead of expectations. Those analyst reports were counter intuitive at the time and proved false in the end.

Apple was in uncharted waters during this quarter in terms of precedent; the delay in the iPhone 4S caused a year-over-year gap in the cycle. This anomaly caused by a change in the Apple calendar should not be extrapolated. The iPhone is still a great product and the 4 million iPhone 4S units sold on opening weekend is the real barometer of demand. The software upgrades including iCloud and Siri should help the iPhone to surpass 30 million units sold in the holiday quarter.

Third, Tim Cook continues to talk up the prospects of Chinese growth. China accounted for 16% of Apple revenue. Rather than building large quantities of new Apple retail stores in the country, Cook revealed that Apple has partnered with over 200 high-end Apple resellers and also revealed that Apple has over 7,000 points of sale for the iPhone. China is now No. 2 on Apple's list of top-revenue countries after the Asia Pacific region grew by 139% year over year. Chinese market share growth will be Tim Cook's legacy.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $109.27 -1.00%
FB $88.26 0.12%
GOOG $600.70 -0.92%
TSLA $241.93 -1.48%
YHOO $31.58 -2.95%

Markets

Chart of I:DJI
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASDAQ 4,683.9190 -49.5780 -1.05%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs