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So a perpetually bullish analyst aims too high with his iPad sales estimate for the quarter and you ... sell your shares of Apple (Nasdaq: AAPL ) ? Really?
Please the court, let this be exhibit A for why I think the market, as represented by a cavalcade of manic traders, panicked investors, and micro-point-gain-by-the-microsecond institutions, is, using clinical terms, "certifiably nuts."
What really happened
Crazy iPad optimism may have precipitated the sell-off. According to data from Fortune, the average pro was calling for Apple to sell 4.79 million iPads in Q4. Bloggers were calling for 5.52 million. Instead, the Mac maker moved "just" 4.19 million units. Investors sold on the news.
Shares of Apple fell more than 7% in after-hours trading last night and are down another 2% as I write today. Never mind that:
- Despite pressure from Motorola (NYSE: MOT ) , HTC, and other manufacturers of handsets that use Google's (Nasdaq: GOOG ) red-hot Android operating system, Apple managed to sell 14 million iPhones during the quarter.
- Mac unit sales grew 27% over last year's Q4. Mac revenue improved 22%.
- With more than $50 billion in cash (short- and long-term investments), Apple is now capable of funding its own stimulus package.
Bears will tell you that Apple fell because the stock has run too far, too fast and is now overpriced. I don't buy it. Shares of Apple have traded for more than 30 times earnings before interest and taxes during most of the reign of CEO Steve Jobs. Today, the stock trades for less than half that.
The iPad is bigger than you think
I'll grant that it's possible our Foolish analysis of the iPad may have been right all along, but can we at least consider the math? Over a 90-day quarter, Apple sold more than 46,500 iPads every day. Is that really so unimpressive?
Let's also remember this is a platform that both News Corp. (Nasdaq: NWS ) and Netflix (Nasdaq: NFLX ) are willing to bet on. They're presuming, correctly, I've come to believe, that the platform matters in media presentation.
Most investors know this, of course. That's why this morning's sell-off isn't as bad as last night's. Everyone's had a chance enjoy some coffee, read the report, and remember that Apple remains deliciously profitable and well-positioned.
Now it's your turn to weigh in. Do you like Apple at current prices? Please vote in the poll below and then leave a comment to explain your thinking.
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