Apple Inc. under the leadership of Steve Jobs was never known for giving particularly good guidance to Wall Street when it came to how much the tech giant might earn. Things appear to have gotten a whole lot uglier under Tim Cook.
There are 42 analysts that track Apple’s stock, and every single one of them got it wrong. Apple turned in third-quarter earnings of $9.32 a share. Analysts' estimates were for $10.37, with the lowest projection coming in at $9.45 and the highest at $12.51.
Here’s how it works on Wall Street between analysts and the companies they cover: communication. The chief financial officer provides guidance during the quarter to analysts that might be a little too low or high in their estimates. This is why you’ll see many companies beating or missing estimates by a penny or so.
That’s never been the case with Apple, who under the Jobs’ regime was always very conservative about giving guidance. Some on Wall Street say they did this on purpose, hoping to dazzle investors with big blowout quarters that would send the company’s shares skyrocketing. This time around the opposite occurred.
Apple stock took a big shellacking in after-hours trading. The stock, which traded lower during the regular session, plunged 6% to $570.70.
Analysts are likely going to apply even more scrutiny to Apple’s fourth-quarter estimates of $7.65 a share. Right now, that forecast falls well below the average analyst projection of $10.22 a share.
Maybe next quarter Apple will be a bit more communicative, and analysts will get it right.