This Day On The Street
Continue to site
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

Cheerleader Analysts Shaft Apple, Investors

NEW YORK ( TheStreet) -- Before Monday's open, Apple (AAPL - Get Report) announced launch-weekend iPhone 5 sales of more than 5 million.

While "plunged" would be too strong a word, the stock dropped considerably in the premarket and at the open.

You can link several direct causes to the downside -- the supply chain, the riot at Foxconn in China and whatever may or may not be going on with sales.

That said, "we" ignore the bigger picture implications of this noise. It doesn't matter whether analysts were "right" or "wrong" on iPhone 5 numbers. This story provides the opportunity to consider fundamental flaws existing in the relationship between Wall Street analysts, the media and investors.

Sterne Agee analyst Shaw Wu riffed wise in a note picked up Monday morning by Barron's: "We find it unfortunate that some analysts continue to publish irresponsible estimates without taking into account realistic demand trends and potential supply constraints on new in-cell touchscreens."

We should not take analyst estimates on these things seriously in the first place. Even if they did a better job taking the supply chain into account, the estimates they generate would not be reliable.

Gene Munster, a Piper Jaffray analyst, and his fellow Apple bulls immediately rolled out the excuses for their iPhone 5 miss. As Business Insider reported first, guys like Munster blame uncounted pre-orders for the apparent shortfall.

Apple cannot book a sale on a preorder until a customer signs for it. In a few hours, when my iPhone 5s arrive via FedEx, they can add two more to the total.

Munster was the most bullish, calling 6 million phones sold the opening weekend the "worst case scenario," predicting 8 million out the door, but leaving the window open for as many as 10 million iPhone 5 sales.

I wish I could just write Munster et al. off as irrelevant, but, sadly, they're incredibly relevant. It's because of them that, if you bought AAPL for $700, you woke up to losses (realized or not) Monday morning.

But, on short-term drops like this one and, potentially, over the long run, it's the "irresponsible estimates" and hack analysis from Wall Street types that hurt Apple more than they help. More importantly, they deliver scant value to a firm's clients and the general investing public.
1 of 3

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
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.99 0.00%
FB $102.01 0.00%
GOOG $682.40 0.00%
TSLA $151.04 0.00%
YHOO $27.04 0.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs