Wall Street's failure to contextualize Apple's iPhone sales

When discussing a company's financial results, context is extremely important. Yet when it come to Apple, and the iPhone in particular, analysts on Wall Street consistently seem unable to properly put sales data into perspective.

When discussing a company's financial results, context is extremely important. Yet when it come to Apple, and the iPhone in particular, analysts on Wall Street consistently seem unable to properly put sales data into perspective.

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Earlier this morning, AT&T released their earnings for the first quarter of 2012 and announced 4.6 million iPhone activations. That's about a 20% increase from the same quarter a year-ago, yet Wall Street is giving Apple's share price a beating as it represents a precipitous drop from the 7.6 million iPhones it activated during the December quarter of 2011.

This is absolutely mind boggling for a few reasons.

The December quarter is by far the most profitable quarter for nearly every consumer electronics company as it encompasses the busy holiday shopping season. To that end, comparing iPhone activations in the March quarter to iPhone activations in the December quarter is hardly informative and utlimately paints an incomplete picture.

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What's more, Apple's December quarter last year was 13 weeks long compared to the 12 weeks that made up the recent quarter. Also, keep in mind that the December 2011 quarter also encompassed the iPhone 4S launch which many folks had been eagerly awaiting for months on end.

Consequently, comparing iPhone activations from the past quarter to Apple's most successful holiday quarter of all time, and one which featured a new phone release no less, makes absolutely no sense.

And in the midst of Apple shares taking a plunge, investors seem to be overlooking an otherwise impressive fact, namely that iPhone activations on Verizon and AT&T during Q1 2012 represented more than half of all smartphone activations on each carrier respectively.

And on AT&T in particular, iPhone activations represent upwards of 75% of all of AT&T's quarterly smartphone sales. And in spite of this, somehow the takeaway is that Apple is in trouble.

I suppose that when you toss context to the curb, you can draw up any ol' conclusion you want. Apple will release their earnings for the March quarter in a few hours (at 4:30 EST) and it"ll be interesting to see how iPhone sales measure up, but this "the sky is falling" response from pundits and Wall Street analysts is wholly premature.

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