Jim Cramer: On Foolish Knee-Jerk Reactions
Yet, on the strength of that limited knowledge base, people sent this stock down 15 points on hundreds of thousands of shares. It was lunatic.
If you were involved in this sham of a process, you rightfully got your head handed to you, because the earnings release didn't capture the main reason you might have been negative -- the reason why gross margin didn't go higher: Apple made an accounting change that depressed the announced gross-margin number somewhat artificially. Some revenue that would have normally been included in the quarter got deferred, and that fell right out of the bottom line.
It was pretty shocking to see the scramble back up when the explanation came out on the call.
We are dealing with complicated companies here. Their results are not lending themselves to headline writers who do not understand the complexities that companies face when they try to make their earnings reports as simple as possible. The journalists who follow Apple are almost all uniformly excellent, but, in the end, they are in a race to get the story told. This is race in which there are no winners, because they are all looking at the same models of and the same analysts' forecasts and plugging in what they see and spitting out a story that has none of the nuances of what management might have to say on the quarter.
It's not just Apple. We saw the identical kind of nonsense occurring with Eaton