Just when Apple Inc. (NASDAQ:AAPL) makes it own break with some positive news, it can’t catch a break. It is getting to an almost absurd point that for Apple stock to rally, it needs everything to go right. And we mean everything. A single mistake, and the stock falls 10 percent. And it’s odd, but it seems that once CEO Tim Cook got to talking on Apple’s quarterly earnings conference call Tuesday evening, that little mistake – having Cook talk guidance for the next three months – spoiled what good news came out of the report just minutes earlier.
Heading into the week, Apple Inc. (NASDAQ:AAPL) was floundering at just $390 a share – granted, that was 12 percent higher than when Cook took over as CEO in late 2011, but who cares when your stock is down 40 percent in seven months? – after being as high as $705 in September.
As Monday and Tuesday trading days ramped up toward Apple’s earnings report, the stock found a small rally past the $405 mark at the close of business Tuesday. The earnings report came out, and it showed that Apple Inc. (NASDAQ:AAPL) had actually topped estimates, including a beat by 1 million iPad sales and a beat on revenue by $1.6 billion. Right after that report came out, Apple stock rose 5 percent into the $420 range. Apple was going to rally!
Tim Cook spoke during the earnings conference call a short time later. Once he started talking about Apple Inc. (NASDAQ:AAPL)’s guidance, all of the momentum fell like a lead balloon with an anvil tied to it.
The stock dropped 8 percentage points by the time the call was over – from a 5-percent gain to a 3-percent loss, where pre-market Wednesday the stock sat at $393, nearly where Apple started the week.
We know that Tim Cook has to be transparent when it comes to speaking about guidance for the next three to six months, as per SEC rules, so on the one hand this isn’t entirely his fault.
However, we noticed similar stock movement the last quarterly earnings report. Apple Inc. (NASDAQ:AAPL) had lofty expectations set for it, and it hit for the most part ad the stock rallied for a short time – but after Cook spoke on the conference call about guidance for the March quarter, the stock fell precipitously.
What might be the deal with that?
It is true that Apple always takes a very conservative stance on its guidance in forward quarters, only to then beat those numbers. But when Cook talks and gives guidance that is even softer than some analysts’ already-soft estimates, it seems that Cook’s shortcoming compared to the late Steve Jobs is that Cook lacks the pizzazz to make even soft guidance sound really encouraging.
After months of bad news, Cook’s company some good news in the earnings report, and he ruined it by opening his mouth. This even as he talked about a stock-stimulus program that would put about $100 billion cash back in the hands of stockholders over the next two years. Yet the red continued.
What would be best for the company moving forward?
Maybe Apple Inc. (NASDAQ:AAPL) would be better off having design master Jony Ive handle the conference call next time around. Perhaps the company could consider hiding Cook for a little while. What do you think? Is this just a coincidence, or is there something about Cook that seems to spook the markets? Let us know your thoughts in the comments section below.
DISCLOSURE: I own no positions in any stock mentioned.
