Apple's Comically Low-Ball Guidance Strategy Suddenly Changed Last Year

For years, Apple would release low-ball earnings guidance which it would later demolish.

Something changed last year, as you can see in this chart, and it's now merely beating, not demolishing its earnings guidance.

For the nine quarters of March 2010 to March 2012, Apple beat its EPS guidance by 43.03% on average. In the last three quarters it beat EPS guidance by 12.75%. From March 2012 to March 2012, it beat its revenue guidance by 18.75%, for the last three quarters it beat by 4.54%.

This has been wreaking havoc with the reactions to the company after it posts earnings results.

Analysts eventually got wise to Apple's demolition, so they started jacking up their revenue and EPS estimates.

When Apple suddenly, without warning, shifted gears it started whiffing on estimates relative to Wall Street's estimates. Fair, or unfair, Apple's stock, and overall performance was judged against Wall Street's estimates.

In January, when Apple reported December guidance it tried to tell analysts it was being serious about its guidance this time.

"In recent years our guidance reflected a conservative point estimate of results every quarter that we have reasonable confidence in achieving," said CFO Peter Oppenheimer, "Going forward we plan to provide a range of guidance that reflects our belief of what we’re likely to achieve."

If Apple's EPS beats by the average established in the last three quarters, it will report $10.60 EPS, which will beat analysts estimates of $10.07. Using its last three quarters as a guide, revenue would be $43.91 billion, compared to analyst estimates of $42.49 billion.

Investors would be happy with these results. Lately, there's been whispers of Apple missing its own guidance. If that were to happen, watch out. It will be messy.