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Tuesday, January 26, 2010

A look back at AAPL


Back in March of 2009, JP Morgan lowered their FY09 estimate to $4.73 from $4.82 and FY10 estimate to $5.15 from $5.26 for Apple to reflect the global downturn and their checks that indicate Mac and iPhone volumes are trending below expectations in the March quarter.

Back when AAPL was trading at 80--they had $23 a share in cash, and net of cash it was 11X next year's estimates. When we were supposedly heading into Great Depression II.

Now AAPL has $53 in cash, and they'll earn $13 next year.

And yet we have these wags telling us they'll still sell AAPL?

Boy those bearish on AAPL really have proved their case, didn't they!

But you could do that with so many stocks, yet those touting a retest or a bigger correction can't make a bearish case for any single stock individually, but collectively, they can tell us the market is going to hell in a handbasket!

Until it doesn't!

7 comments :

Anonymous said...

when do we find out if Big Ben is re-elected? will that help set off the markets? would it be best to set stops if he doesn't win?

palmoni said...

They'll probably drag it out--let him in, but make the vote tight for political sake-at least for those seeking re-election

I'd sure like to see a scalp from Treasury or the Fed.

I'd like to see Bernanke not get re-lected, even though they say it will cause the world to collapse, and even though he is probably better than any other current Fed official

I'd like to see them call that bet. I just don't buy it--but that's a fantasy bet. They'll let Ben in

Palmoni said...

GS on AAPL who has always been bearish, and they are at $12.50

What's changed
Apple continued its string of top- and bottom-line beats in the December quarter, but we think Mac strength is
offset by a slight shortfall in iPhone shipments, leaving the stock near current levels in the near term. Apple’s
December-quarter highlights the strength of the company’s three-pronged product strategy, with upside in
Macs, and a better mix of iPods (more iPod Touch) driving a higher-than-expected revenue and earnings
even though iPhones (8.7 mn units) were in line with our estimate and 300K short of consensus. At the same
time, while Apple’s gross margin of 40.9% came in 50 bp above our estimate, the gap was smaller than what
we have seen recently and, together with higher opex, somewhat limited the EPS upside ($3.67, 10% higher
than our forecast vs. a 20% beat last quarter). We are shifting to current-period revenue recognition for
iPhone and Apple TV for our estimates versus subscription accounting for these two product lines. Our new
calendar 2010 EPS estimate is $11.36 ($10.37 prior and $7.99 using subscription accounting), with 2011
earnings now at $12.50 ($10.36 prior and $9.11 using subscription accounting).
Implications
Our rating for Apple remains Neutral, as we think both the December-quarter upside and the tablet launch,
expected this Wednesday, are already mostly priced in to the shares. We see more near-term upside in
stocks like EMC (CL-Buy, $16.94) where expectations are lower and where the company should see the
benefits of both the cyclical and secular drivers in the datacenter that are just starting to kick in.
Valuation
Our 12-month price target of $230 ($220 prior) is based on a target EPS multiple of 20X (consistent with
recent historical median multiple) applied to our new CY10 EPS estimate.

Deutsche Bank on AAPL who is at $13.50

Upside driven by Macs and ASPs. AAPL adjusted its accounting treatment for iPhone
and Apple TV and reported revs of $15.7B & EPS of $3.67 (vs. DB at ~$14.9B/~$3.62).
Revenue upside was driven by very strong Mac units (+33% Y/Y) and ASPs increased
across all major products categories Q/Q. As expected, AAPL issued conservative
guidance and we expect continued robust iPhone and Mac demand, int’l expansion
and new product cycles (Tablet, Mac and iPhone refresh) to drive continued
momentum. We adjust estimates to reflect the new accounting. Maintain Buy and
$250 PT.
􀂄 Strong Mac results, iPods below but benefit from positive mix. Apple had another
exceptionally strong Mac quarter and shipped 3.4M Macs (vs. DB at 3.0M). DT
demand was particularly robust following the refresh with Macs DT units up 70% Y/Y
and NB demand was healthy with units up 18% Y/Y. iPods totaled 21M, which missed
our model (DB at 23M), but benefited from positive product mix (iTouch up 55% Y/Y).
Looking forward we expect investor attention to focus on Wednesday’s product
introduction and evaluate the financial impact of an expected Tablet announcement.
􀂄 Strong iPhone demand, ramping internationally. iPhone shipments of 8.7M beat our
model at 8.5M but was below consensus expectation (Street ~9-10M, DB preview:
~10M). iPhone results showed positive mix to the 3GS model with ASPs increasing to
~$638 (vs. ~$625 in prior Q). The iPhone remains immensely profitable (we est. ~60%
GM) and continues to ramp internationally in 86 countries (China and S Korea added in
the Dec Q).
􀂄 Adjusting estimates to reflect accounting change; maintain Buy and $250 PT. We
revise estimates to reflect the new accounting with FY10 GAAP EPS at $11.50 (vs.
prior GAAP $7.50 / pro-forma $11.50) and FY11 to $13.50 (vs. prior GAAP $9.00). Our
price target remains unchanged at $250 which is based on Apple trading at 17x CY10E
EPS x-cash (or ~15x CY10 EV/FCF); the lower end of its historical 12-70x FTM PE.
Risks to our thesis include slower consumer spending, price pressure in PCs and
faster-than-expected saturation of the MP3 market.

Palmoni said...

Thomas Weisel on AAPL

What's New: On January 25, 2010 AAPL announced F1Q10 (Dec Q) revenue of $15.68bn and EPS of $3.67, above the TWP estimate of $15.15 and $3.55 and consensus estimate of $14.96 and $3.50. The strong beat was driven by better than expected Mac units and iPod ASPs with iPhone units coming in below TWP and consensus expectations. Gross margin was 40.9%, below the consensus estimate of 41.5%. Overall, AAPL reported a strong quarter relative to historical levels and to First Call estimates, but relative to lofty investor expectations heading into the report we view the results as a more muted positive. More likely positive catalysts for AAPL shares, we believe, would be the announcement of a share repurchase program for AAPL's $39bn in cash or a favorable initial consumer response to the likely-but-still-unconfirmed unveiling of a new tablet device, which is expected on January 27th.
AAPL management guided revenue for the March quarter, to a range of $11.0bn - $11.4bn (up 21% - 25% y/y), below TWP estimate of $11.8bn (our former non-GAAP estimate). Gross margin guidance is 39%, above the TWP estimate of 38.3% while EPS guidance is $2.06 - $2.18, below TWP estimate of $2.37.
Revising estimates:We are reducing our March Q revenue estimate from $11.80bn to $11.63bn and EPS from $2.37 to $2.26.We are also lowering our FY10 revenue estimate from $53.5bn to $53.4bn but increasing our FY10 EPS estimate from $11.23 to $11.34 to reflect an increase in our FY10 gross margin from 39.1% to 39.7%.
Valuation: Our 12-month price target

Palmoni said...

UBS on AAPL who says they have been conservative on estimates-duh

".New" Guidance: How conservative is conservative? A number of positives in 1Q10; Tough to assess mgmt guidance
On an apples to apples basis (adjusting for the new reporting methodology), results were
essentially in line with UBS estimates, with much better than expected cash flow & Mac sales
clear highlights. Mgmt guidance calls for revs/margins/EPS of $11-$11.4b/~39%/$2.06-$2.18.
Given the change in accounting, the key question is how conservative this guidance is given the
d.ifficulty of using historical outperformance to judge future potential performance. Outlook still appears conservative
Although "new" guidance brings some new uncertainty (hence, initial sell off after market), mgn
guidance of 39% implies 500bps of mgn pressure in Macs/iPhones (likely unrealistic). Our
March Mac units are also likely conservative (potentially by ~200k units or ~$0.08 in EPS).
Though Tablet launch timing is unclear, we believe it is not embedded in our ests (~100k tablets
= $0.01 of EPS, w/ initial build plans likely in the 900k range). We see our $11.5bn/42.1%/$2.51
e.sts for the March qtr as conservative. Raising ests to reflect modestly higher margin assumptions/lower tax rate
Our FY10E rev/EPS adjusts to $52.1b/$11.82 (from $52.3b/$11.68) & FY11E to $56.6b/$12.88
(.from $55.2b/$12.03) Valuation: Maintaining $280 Target
Target based on 19x our calendar 2010 EPS estimate plus ~$53 cash per share.

Palmoni said...

And Barclays

Apple, Inc. (AAPL) US$ 203.07 1-Overweight / 1-Positive
Very Solid Quarter, Even With New Acctg Ben A. Reitzes
* We believe Apple's 1Q10 report was quite solid given upside in Macs,
significant cash flow & solid execution. Investors may look directly to
the company's special event set for Wednesday (1/27) where we believe the
company will introduce its highly anticipated tablet device & other
offerings. We continue to believe Apple's valuation is very attractive on
a free cash flow basis & believe shares can benefit into an iPhone
upgrade cycle later this year. Reiterate 1-OW (sector 1-Positive).

Anonymous said...

thanks

I don't have access to real time Wall Street research so I appreciate you putting it out for us