Steve Jobs health and Apple's outlook cause investors to think twice

Today after the closing bell Apple released its quarterly results. The results from the third quarter were quite impressive. Apple beat analysts expectations by 11 cents and also beat the revenue estimates by bringing in $7.46 billion. Macintosh shipments were up a staggering 41% over the same period last year, showing the real growing strength in that core business. Apple also said that it sold 717,000 iPhones in the third quarter, far more than the 270,000 it sold in the period a year ago. IPod shipments jumped to 11 million, a 12% unit growth over last year.

If things were so great then why is Apple's stock plunging in after-hours trading? There appear to be two main reasons for this sour response. The first is that Apple guided estimates lower for the fourth quarter of 2008. Apple CFO Peter Oppenheimer said that profit margins would be hurt in the fourth quarter as the company makes a product transition. When pressed Oppenheimer said that he is not at liberty to discuss that transition. The specifics that Apple gave for the fourth quarter weren't impressive at all. The company said that it is projecting it will earn about $1.00 a share on revenue of $7.8 billion. Analysts estimates were far higher than this, at around $1.24 a share and revenue at $8.32 billion. Is Apple simply underpromising so it can overperform? Quite possibly, the company has been noted to do that several times in the past.

The second issue that is hurting Apple's stock is the increasing questions about Steve Jobs health. Steve Jobs has done a brilliant job running the company and his innovative product rollouts have really turned the company around. Today during the conference call Oppenheimer fielded a question about Steve Jobs health and completely deflected the question by saying simply that Steve Jobs has no plans to leave Apple and that his health is his private matter. The New York Post reported earlier today that Jobs health is causing several hedge fund managers to start selling some of their position to hedge a possible large move downward in Apple shares. In recent appearances Jobs has appeared extremely thin, which has led to much of the speculation that his cancer could be back. In 2003 Jobs was diagnosed with pancreatic cancer, but the company didn't disclose the information for at least nine months. Apple said that they have no succession plan in place. The increasing questions about Jobs health, with no answer from the company are bound to leave investors with even more questions about the company.

It is important to note that the Q3 release today didn't include any iPhone 3G sales figures. Those figures will be in on the Q4 release.

The current product lineup at Apple is clearly second to none with the iPhone 3G, the ever popular IPod, and the Macintosh. One can be sure that these products will continue to sell and sell very well. The bigger question is how will Apple's stock fare on the street with these new uncertainties.

For more info on the iPhone 3G Launch Visit this previous post