Expectations are so high for Apple that even when the company reports record earnings, the stock declines. On Monday after the market closed, Apple reported their results for the December quarter. And by most measures, they were amazing:
• A record 51 million iPhones sold
• A record 26 million iPads sold
• A record $57.6 billion in sales
So why did the stock go down? On average, Wall Street analysts were expecting Apple to have sold 55 million iPhones. So that was a letdown, even though the figure of 51 million exceeded Apple's own prediction. In addition, Apple predicted sales of $42-44 billion this quarter, but Wall Street had been expecting a forecast in the range of $46 billion. Also, Apple's profit of $13.1 billion was about the same as a year ago.
A high stock valuation depends on a company's potential for future growth, and Wall Street seems to be of the opinion that Apple has reached its peak, and that the astonishing growth that began in 2001 with the introduction of the iPod is now over. Tim Cook begs to disagree. In his conference call with investors following Apple's report, he cited the tremendous growth potential in China. And, once again, he very vaguely referred to exciting new products in the pipeline.
Generally, the sense is that in order for Apple to grow, the company needs to enter a new product category, such as an iWatch or other wearable device. It will be interesting to see if Apple can pull off another disruption. It's a tall order, yet the culture that produced the revolutionary products of the past 13 years is still there.
You can find notes from Cook's conference call on MacDailyNews. One point that interested me was that Cook was more explicit than usual when he acknowledged that Apple has plans for mobile payment systems. He said that people like the fact they can use Touch ID to purchase things, but that Apple will also be bringing out other mobile payment solutions that don't use touch ID. It's likely that these solutions will be based around Apple's iBeacon.
You can read more about Apple's earnings report in a story by Reuters. And Wired has an interesting article on why Apple's stock falls even when the news is good.