SAI’s Dan Frommer joined us on TechTicker yesterday…
Apple delivered a shockingly strong quarter last night, driving the stock to a record high. One question that stemmed from this, though, is why anyone was surprised.
Quarter after quarter, Apple delivers a comically conservative outlook to Wall Street. And quarter after quarter, analysts fall for it and publish “estimates” that Apple then blows away.
So what gives?
Analysts would rather be “surprised” on the upside than humiliated by appearing too bullish, Business Insider‘s Deputy Editor Dan Frommer says. Also, yesterday, anyway, Apple’s super-strong iPhone sales really did surprise everyone.
For the past few years, Frommer has charted the difference between Apple’s conservative “guidance” to Wall Street (the outlook it provides each quarter to analysts), and the actual performance of the company. For the past few years, this difference has been remarkably consistent (Apple has tended to beat its revenue guidance by about 7% and its earnings guidance by about 40%.) Yesterday, however, the company delivered performance well in excess of this.
But it wasn’t all good news, Frommer says. AT&T reported this morning that activations of new iPhones in the U.S. actually fell from last quarter, suggesting that the AT&T subscriber base in the U.S. is starting to be fully penetrated. A critical move for Apple over the next year, Frommer says, is to expand availability of the iPhone to other US carriers, most notably Verizon.
In the video, Frommer discusses this and other issues facing the company.
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