Sell Side Lemmings—-Apple Leaves Analysts Sucking Wind

By Tyler Durden at ZeroHedge

Apple’s guidance was considerably worse than expected, but always spinning positively, analysts proclaim somehows that it was “better than feared.” It appears not as AAPL is now down almost 4% despite every sell-side analyst’s pleas that “the bottom is in.” The ultimate “no brainer” stock is now down over 28% from its highs last year and analyst targets are still at $137 on average – a nearly 50% gain from here. And finally, as if a crashing stock was not enough, Apple’s Safari browser is reportedly crashing if users attempt to search – not a great day for Tim Cook.

It appears Tim Cook forgot to email Jim Cramer about how bad China had become…

We know the conditions in China have been a source of concern for many investors. Last summer, while many companies were experiencing weakness in their China-based results, we were seeing just the opposite with incredible momentum for iPhone, Mac, and the App Store in particular. In the December quarter, despite the turbulent environment, we produced our best results ever in Greater China with revenue growing 14% over last year, 47% sequentially and 17% year-over-year in constant currency. These great results were fueled by our highest-ever quarterly iPhone sales and record App Store performance.Notwithstanding these record results, we began to see some signs of economic softness in Greater China earlier this month, most notably in Hong Kong.

Here’s Goldman…

AAPL reported 1Q earnings post close. The bottom line from our trading desk (not GS research): “Results are pretty much smack in line with how most of the street previewed the stock. Our sense is the reaction to the print will be somewhat muted.”

Hhhmmm no…

Here is Wall Street’s best and brightest herders…

A smattering of Wall Street “Bullish” advice since the earnings hit…

FBR (Daniel H. Ives)

AAPL’s March guidance “better than feared”; co. likely has ‘‘tough’’ qtrs ahead of iPhone 7 introduction later this yr
Co.’s software ecosystem, services segment remains ‘‘core advantage”; likely to help gross margins, profitability in next 12-18 months
Rates outperform, cuts PT to $130 from $150

PACIFIC CREST (Andy Hargreaves)

Sustained pricing power, recovering iPhone unit growth in FY17 likely to result in margin expansion, increased profit
Strong iPhone prices show consumers likely not ‘‘trading down’’ to cheaper models as smartphone market matures
Customers still ‘‘extremely loyal”
Rates overweight, PT $132

BARCLAYS (Mark Moskowitz)

1Q results, 2Q outlook “not as bad as investors feared”
Stock likely attractive to L-T investors in case of any near-term weakness; sees iPhone 7 prototypes in 2Q, expanded capital allocation in 3Q as potential catalysts
Rates overweight, cuts PT to $142 from $150

MACQUARIE (Ben Schachter)

Sees March qtr as “bottom” for iPhone unit growth; iPhone 7 likely to return AAPL to growth
Co. likely to continue to gain share, especially if it introduces products that create new “use cases” for iPhone, other devices
Rates outperform, PT $117

RAYMOND JAMES (Tavis C. McCourt)

Weaker 2Q guidance reflects maturing smartphone mkt, forex concerns
Shares likely to stay within “recent range” until growth trends stabilize
Rates market perform

And finally, if it weas not enbough that the stock was crashing, now the browser is too…

Apple’s Safari search browser is crashing for some users when they run a search from the address bar in both iOS and OS X devices, the Verge reported.
The problem appears to be affecting iOS and OS X devices worldwide, the Verge reported on Wednesday.

Apple’s iPhones and iPads run on iOS, while its Mac computers operate on OS X.

The problem, which is related to Safari’s search suggestions feature, can be rectified temporarily by disabling the feature or using the private mode option in the browser, the Verge reported, citing an iOS developer Steven Troughton-Smith.

Meanwhile, this is what really happened:

iPhone units were < 75M, but that included 3.3M of incremental units into channel inventory (a year ago, Channel Inventory came down) – so, sell through was down 4% Y/Y on reported Flat Sell-In.   Apparently, the email to Cramer alerting him to the slowing in China over the last few weeks, which Cook copped to on the call, got caught in the spam folder.

iPads were pretty bad too,  with units at least 2M below the consensus, and Y/Y declined worsened to ~ 25% from ~ 20% last quarter. This is with something like 3M iPad Pro’s shipped, quasi-new product to the category.

Apple’s Mac figure was down like 4% Y/Y, IDC had Mac’s up like 4% Y/Y. This is 2nd straight quarter of relevant delta between these figures, again no idea why.


The sellside had been cutting like crazy over the last month, and yet nobody got down < $53B in Sales vs. the guided mid-point of ~ $51.5B. Guide implies < 50M iPhone Units, which is where people were starting to model, although not clear what Apple plans for Channel Inventory.

Source: “No Brainer” Apple Extends Losses Despite Analyst Pleas That Guidance “Better Than Feared” – ZeroHedge