Personal Bytes

Analysts are those guys that miss 49% of their predictions (so, you’re welcome to throw a coin for getting about the same accuracy) but they’re still needed. When you know nothing about a subject it’s highly probable that 1% might actually make a difference.

Anyway, everyone’s deeply scared with the recent results of the market. AAPL reflects this, as it is a player like everyone else. But some people try to justify it by giving other cause than the upcoming recession.

After a splendid quarter, there’s not much left that AAPL could have made but hadn’t. They did pretty well. $1.76 of Earnings Per Share. Considering the diluted free float AAPL has, it’s something amazing.

Still, in an attempt to grasp the recent tumble (AAPL is down today about 10%), some analysts justify it by pointing to the slow growth in iPod sales. Here’s the chart that Paul Kedrosky provided to support his claim:

First, a little bit of simple math. You start selling 1000 units of a product. That’s a 1000% growth (to be precise in mathematical terms, that would be an infinite growth as you had 0 units sold and suddenly you have 1000. For the sake of simplicity we’ll stay with the inaccurate 1000%). Seems easy. Now, you’re selling 22 million units every Quarter, which accounts to about 88 million units every Year. Do you expect to have such a steep climb has you had when you started selling the product?

Unless the poor countries suddenly got rich or all the iPods got stolen, how can one presume that such high growth would continue? I mean, nothing lasts forever, and considering that a lot of people already have iPods (or other MP3 players) it’s not reasonable to expect constant high growth.

One could actually think, while succumbed to such financial jargon-fest, that the recent drop in AAPL’s value had anything to do with the iPod growth (or the lack thereof).

P.S. - Revenue growth on the iPods is also up, as they’ve been selling more expensive iPods (like the iPod touch).