Here's one aspect of Steve Jobs' legacy that Tim Cook, his successor at the helm of Apple, must be hating Wednesday: the company's reputation for lowballing its sales and profit estimates.
The company found itself in the odd position of reporting better results than it had projected -- and, more objectively, higher quarterly sales and profits than the year before -- yet having its stock hammered in after-hours trading. Why? Because analysts had predicted much higher sales and profits, and thus were surprised and disappointed.
Investors tend to base their decisions on the projections rather than waiting for the official earnings release, so if the actual numbers come out lower, the stock can suddenly seem overvalued. That's what causes a quick sell-off, as Apple experienced Tuesday.
The company had predicted $34 billion in revenue and $8.68 in earnings per share, which was less than it actually reported: $35 billion in revenue and $9.32 in earnings per share. So why did so many analysts -- all 42 who track Apple's stock -- disregard the guidance Apple offered in its previous earnings call?