NEW YORK ( TheStreet) -- Of all the statistics and data points that were taken from the Apple (AAPL - Get Report) earnings release and conference call on Wednesday, one was more noteworthy than the rest: the way Apple gives guidance, Wall Street parlance for "outlook." Why did Apple change its policy?
In the fiscal first-quarter earnings release, Apple gave its forecasts for the March quarter: revenue between $41 billion and $43 billion, gross margins between 37.5% and 38.5%, operating expenses between $3.8 billion and $3.9 billion, and a tax rate of 26%. Previously, Apple had given specific targets, not ranges, on revenue, earnings and gross margins.
The point was brought up on the conference call by Sanford Bernstein's Toni Sacconaghi, who questioned the change. It's been widely assumed that Apple would under-promise and over-deliver (UPOD) on its guidance, in effect playing games with Wall Street and ensuring that the stock would rise.
"In the past we gave you a single-point estimate of guidance. It was conservative that we had reasonable confidence as you can have that we would achieve," CFO Peter Oppenheimer said on the conference call. "We're now providing you a range of guidance that we expect to as best we can report within."He ended up spooking investors even more. The shares fell while Oppenheimer was discussing changes to guidance. Apple can say it's all about transparency, but there has to be a fundamental reason for the guidance shift. Hudson Square Research analyst Dan Ernst believes this may be the result of slowing growth. "Guidance, while pointing to slowing growth as we expected, did not reflect the steep drop implied by the numerous supply chain notes from
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