NEW YORK ( TheStreet) -- Before Monday's open, Apple ( AAPL) 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.