How do you like them Apples?

How 'amateur' bloggers beat pro analysts on Apple results
Michael Babad
RTGAM



'Amateur' bloggers who follow the ups and downs - mostly ups - of Apple Inc. appear to be doing a better job than the Street pros at forecasting quarterly results.

Philip Elmer-DeWitt, a journalist who has covered Apple since 1982, writes today on Fortune's Apple 2.0 blog that, based on seven key numbers, amateurs took the top nine spots in a ranking of more than 40 analysts. The bottom 20 spots were all pros.

Late yesterday, Apple reported a blowout first quarter, prompting several analysts to boost their price targets on its stock.

Apple earned $6-billion, or $6.43 a share, in the first quarter, compared to $3.38-billion, or $3.67, a year earlier, and revenue surged to a record $26.7-billion on strong sales of the iPhone, iPad and Mac computers.

Mr. DeWitt tracked the predictions on profit, revenue, gross margins and unit sales, and wrote that some of the calls were "spectacular misses."

"Taken as a whole, the numbers they sent their paying clients were off by a margin (9.04 per cent) more than twice as big as those generated by the guys who do it for free (3.94 per cent)," he said.

But among the bloggers, Turley Muller of Financial Alchemist missed earnings per share by just a penny. Nicholas Mihalache of Traderhood was off by just 0.27 per cent on revenue and only 0.76 per cent on iPad unit sales. Dennis Hildebrand of Apple Gold, Mr. DeWitt said, "nailed" gross margin. And Patrick Smellie of Apple Finance Board, while not hitting any individual number was "close enough on all of them to take the No. 1 spot overall."

The amateurs don't always do it better, of course, and Bloomberg News notes today that the pros tend to be more conservative - remember the tech bust. They're closely followed by clients and they're regulated.

Mr. Muller, who writes his blog from Memphis, says he graduated from Rhodes College with a business degree, worked in mortgage trading for a big bank and is now working on getting his CFA designation.

"My investing philosophy mostly centres around the value discipline and GARP-growth at a reasonable price," he writes. Read Mr. DeWitt's blog postLatest earnings put shine on AppleApple's 2011: What to expect