Apple 2.0

Covering the business that Steve Jobs built

Apple's blow-out quarter: The bloggers called it. The Street blew it.

April 20, 2010: 7:13 PM ET

Once again, the armchair analysts humiliate Wall Street's professionals

There's almost nothing good to say about the estimates published by professional analysts in advance of Apple's (AAPL) second quarter earnings. Not only did the pros badly underestimate almost every aspect of the company's business -- from revenue and earnings to unit sales -- but they were bested in every category by a rag-tag group of bloggers, day traders and armchair analysts.

The chart posted below the fold says it all. The bright greens (indicating best estimates) are all in the top portion of the chart, where the estimates of the so-called unaffiliated analysts were recorded.

The bright reds (indicating worst estimates) all went to the pros. A few of the professionals scored some light greens, indicating second- or third-best guess. But all the pinks (second- or third-worst) fell in their portion of the chart.

Without further delay, the dismal results:

Green: best. Red: worst. Light green: 2nd or 3rd best. Pink: 2nd or 3rd worst.

To be fair, in most categories, Apple blew past even the bloggers' best estimates. See here. Basically, the amateurs won the smackdown by being more bullish than Wall Street's most bullish analysts.

Still, some of their estimates were remarkably prescient.

Special mention goes, once more, to Turley Muller, who writes an occasional blog called Financial Alchemist. Not only did he outperform the pack this quarter -- scoring four greens and a light green -- but this is the sixth straight quarter in a row that he's done it.

"I knew iPhones were going to be a blowout," he wrote from a bar where he was celebrating the results. "I was just surprised at the magnitude."

Three other unaffiliates scored solid greens: Robert Paul Leitao from The Mac Observer's Apple Finance Board; Daniel Tello from Deagol's AAPL Model (who also got three light greens) and Bullish Cross' Andy Zaky, who nailed the Mac number.

And who were the worst Apple analysts this quarter?

  • Morgan Stanley's Katy Huberty with two reds and not a trace of green.
  • Citicorp's Richard Gardner, with two reds and a pink, leavened only slightly by one light green
  • Morgan Keegan's Travis McCourt, with a red on EPS and a pink on revenue.
  • Piper Jaffray's Gene Munster and Merrill Lynch's Scott Craig, with one solid red apiece.

In defense of the professionals, they are paid to cover a range of tech companies, not just Apple. The amateurs, as group, tend to be investor-enthusiasts who concentrate only on their favorite stock.

But still.

UPDATE: Daniel Tello has used our chart to rank the analysts by how far they were off, with Muller on top (5.9%) and Gardner on the bottom (14.3%). According to Tello's calculations, the amateurs as a group were off by 7.7%; the pros were off by 11.6% -- 51% worse. See here.

See also:

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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