Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Are Expectations for Apple Too High?


Company's on a stellar run -- but it better not trip.

As I mentioned yesterday, I whipped my kids in Wii Boxing over the weekend. Well they just couldn't let it go, so last night we had a best-of-seven rematch and I beat them again. Looks like those endless hours of playing Atari and Pong are finally paying off.

Asian stocks rose overnight. The Hang Seng was up 0.83% while the Nikkei was up 0.98%. However, European stocks were in the red earlier this morning. And here in the US, we're currently trading lower.

Here's what I'm seeing this morning:

Apple (AAPL):
The company known for its iPods, Macs, and chief executive who seems to own a small warehouse full of black outfits, was out with its fourth-quarter numbers after the bell last night.

The results were great -- it put up $1.82, which was a big beat even by Apple's standards (the Street was at $1.42). It beat on the top line, as well.

Some thoughts:

1. I don't think anyone can really bad-mouth that quarter. It blew away expectations and showed great year-over-year improvement. The company sold 7.4 million iPhones. At this clip, everyone in the galaxy will be outfitted with them in a couple of years.

2. For the first quarter, the company is looking for $1.70 to $1.78, which is well below the $1.91-per-share estimate I'm seeing. But many believe that estimate is on the conservative side, and that the $1.91 will end up in the rear-view mirror. There's speculation among some that the company could also come out with another new gadget or next-generation something or other for the holiday season. If that happens, it could propel the stock higher.

3. I certainly don't want to fight the tape. There could be a decent trade here. But I don't want to accumulate and sit on a big position at this point because, as I've said in the past, if the company trips up in any way, the stock could get absolutely slammed. Expectations just seem so high on so many levels.

Texas Instruments (TXN):
The chipmaker was out with its third-quarter results, and like Apple, it beat expectations. In fact, it put up $0.42, which was $0.02 better than analyst expectations, and it beat on the revenue line, too.

My feel:

1. It was a decent quarter and it's too bad that the company has to share the spotlight with Apple in today's session.

2. In the release, it indicated that it's looking for $2.78 to $3.02 billion in revenue and $0.42 to $0.50 on the bottom line in the fourth quarter. That's not half bad because analysts were at $2.78 billion on the top line and $0.40 on the bottom line. My hunch is that we're going to see estimates cranking up in the next few days, which could give the shares a sweet little goose.

One thing, however: While there's upside to be had here, I wouldn't be surprised to see some profit-taking over the next few days if the excitement should die down. I also sense some vulnerability if the larger market runs out of gas, as I suspect it might.

For my previous take on Texas Instruments, click here.
< Previous
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos