Why do the pros get paid, with this failure rate on Apple analysis?

moneyby Molly DG

Apple’s 92% earnings windfall: The bloggers nail it, the pros miss by a mile
[Via Brainstorm Tech: Technology blogs, news and analysis from Fortune Magazine » Apple 2.0]

The shortfall in iPad sales was one of the few categories the Street called correctly

Click to enlarge.

The Wall Street analysts who get paid to cover Apple (AAPL) got some things right.

Several predicted Apple’s total revenue for the second fiscal quarter of 2011 within a few hundred million dollars. And their tendency to underestimate Apple’s unit sales served them well in the iPad category.

But when it came to the number that matters most — the bottom line: earnings per share — it was the amateurs, once again, who nailed it and the pros who blew it.

In our ranking of the best and worst analysts for Q2 2011, which lists them by how accurately they predicted Apple’s revenue and EPS, the amateurs took 13 of the top 15 spots.

The bottom 32 spots were all held by professionals working for banks and brokerage houses. Taken as a whole, the numbers they sent their paying clients were off by a margin (11%) more than four times as big as those generated by the guys who do it for free (2.5%).

The bloggers weren’t quite as prescient as they have been in past quarters. None of them foresaw that what COO Tim Cook called “the mother of all backlogs” would hurt iPad unit sales so badly. And as a group they overestimated Apple’s total revenue for the quarter. It was a Wall Street professional, Caris’ Robert Cihra, whose revenue estimate was closest to the mark.

But as a group, the professionals have nothing to be proud of, as the distribution of green (for good) and red (for bad) squares in the chart below the fold shows at a glance. 


Goldman Sachs was the worst. But see, in the rarified world of finance, you get to keep your job when you get the numbers wrong and fail to provide accurate advice. apparently that is what you are paid to do.

Meanwhile, those who do it for free are more accurate. Perhaps there are pressures and incentives on the professional advisors that prevents them from providing accurate numbers.

You think?

Maybe some of those people who made a ton of money based on what the amateurs wrote would send a little amount of money their way to show some appreciation?