With all of the quarterly earnings reports that have come out (and are still coming) the last couple of days, it’s sometimes hard to see it all and make sense of most of it. In a previous post we showed off our Wednesday winners list of major companies who exceeding expectations in their quarterly earnings, and their stocks reflected that with higher prices (with one exception – it begins with an F). Speaking of F, now we come to these recognizable companies and stocks who missed expectations and thus are being punished by the market.
Perhaps the biggest earnings miss and disappointment came from Apple, Inc. (NASDAQ:AAPL), which has usually been so reliable in its reports. Apple, Inc., posted a $9.32 EPS, which missed estimates by more than a dollar, and revenues of $35 billion was $2. billion short of estimates – despite the number being up 22 percent over Q2 of 2011. Apple iPhone sales were lower than expected but iPads werre better than estimates, yet the company lowered FQ4 guidance ($34 billion in revenue) far below consensus ($38 billion). Shares in Apple, Inc., stock fell 5 percent overnight and was another 4.5 percent lower Wednesday morning to $573 a share. This does not bode well for hedge funds like Ken Griffin’s Citadel Investment Group, which not only had $1.3 billion invested in Apple stock at the end of March, but also had put and call options out for a combined value of $9 billion. However, Greenlight Capital boss David Einhorn said here recently that Apple, Inc., was still one of his favorite positions.
T. Rowe Price Group, Inc. (NASDAQ:TROW), of investment fame, also came up short in its earnings report when it hit the market. T. Rowe Price Group, Inc., posted an EPS of 79 cents, which missed estimates by 2 cents, and revenue of $737 million missed by $22 million. The revenue number was up about 3 percent over the same period in 2011, but the stock price has suffered. Since the report came out just before Wednesday’s open, T. Rowe Price Group, Inc., stock was down more than 2.5 percent to a little more than $59 per share. This will not be good news for hedge funds like Ken Griffin’s Citadel Investment Group, which had $71.5 million invested in TROW stock at the end of March, and had increased its stock stake by more than 100 percent during that quarter.
Another recognizable company that missed estimates was RadioShack Corporation (NYSE:RSH), which is seen as having major fundamental and structural flaws in its operation. The company reported a negative EPS of minus-21 cents, which missed estimates by a full 25 cents, and revenue of $953 million missed by more than $18 million. RadioShack Corporation does not seem to be on solid footing by analysts going forward, and the stock is tanking. As of midday ET Wednesday, the stock was down 27 percent to about $2.60 a share. This will barely affect hedge funds like Cliff Asness’ AQR Capital Management, however, as that fund had only committed less than 0.05 percent of its portfolio in RSH stock at the end of March (about $14 million).