Five takeaways from Apple CEO Tim Cook’s Goldman Sachs keynote

“If you needed any indication that the Apple ecosystem is growing, you got it this morning: Apple CEO Tim Cook said the company has paid out $8 billion to developers, up from $7 billion earlier this year,” Matthew Lynley writes for The Wall Street Journal.

“Apple CEO Tim Cook just wrapped up a big keynote address at the Goldman Sachs Technology and Internet conference this morning. There weren't a whole lot of earth-shattering surprises, but Cook did reveal a few new numbers that weren't otherwise known,” Lynley writes. “Things are moving pretty quickly over in Cupertino, it seems, and Cook is extremely bullish.”

Here are a few other takeaways from the keynote:
Retail is still a major focus
Specs don't matter
Halo effects matter
Services are also important
There's an enormous amount of head room for smartphones

Read more in the full article here.

[Thanks to MacDailyNews Reader "Arline M." for the heads up.]

Apple’s results aren’t the total disaster implied by the market meltdown

“At first glance, Apple disappointed Wall Street with its fiscal first-quarter results published late Wednesday. This was the first full quarter in which the iPhone 5 was available. In particular, at 47.8 million, the number of iPhones the company sold came in at the low end of analysts’ expectations. iPad unit sales of 22.9 million were also short of some forecasts,” Rolfe Winkler reports for The Wall Street Journal. “As a result, Apple shares dived nearly 10% after the market closed, leaving the company with a market capitalization of about $437 billion. Backing out Apple’s cash pile of $137 billion, that implies a valuation of less than eight times 2013 expected earnings.”

Winkler reports, “But were the results really that bad? At 13 weeks, this year’s fiscal first quarter was a week shorter than last year’s, making comparisons difficult. IPhone unit sales were up 29% in the quarter versus the prior year’s 14-week quarter, while iPad sales were up 48%. Unit sales per day, however, showed bigger jumps: 39% for the iPhone and 60% for iPads. Overall, revenue was up 18%, but on a fairer per-day basis, it jumped 27%. Meanwhile, despite the shorter quarter, earnings per share of $13.81 were actually better than the consensus estimate of $13.48... Clearly, Apple didn’t provide the kind of blowout quarter many have grown accustomed to. But the results aren’t the total disaster implied by the market meltdown.”

Read more in the full article here.

Adam Lashinsky: What Apple’s earnings really mean, and what’s that $9 billion in ‘equipment’ for?

“First, the bad news: Apple’s profits aren’t growing much. We pretty much know why. The iPad Mini accounts for about half of Apple’s iPad sales-and the Mini is a less profitable product than the Maxi,” Adam Lashinsky writes for Fortune. “The other strain on Apple’s profits is its capital expenditures, a forecasted $10 billion this year, up from $8 billion the year before.”

“[Plus], Apple’s quarter was a week shorter than in the year-earlier quarter,” Lashinsky writes. “Now for the good news: The iPad Mini’s success is a sign that no matter what CEO Tim Cook implies about not being concerned about market share-he answered a direct question on the subject by saying Apple is focused on building great products, not growing revenues-Apple is fighting to keep its share of the tablet market. He dismissed a question about Apple’s interest in producing multiple sizes of iPhones. All that means is that Apple hasn’t yet introduced multiple sizes of iPhones.”

Lashinsky writes, “If ever a company can afford to invest in its future by insuring that it brings in new customers it is Apple. It ended its quarter with $137 billion in cash. Another hopeful sign is that same capital-expenditure figure. Apple says it is spending about 10% of the $10 billion on new retail stores. The rest is for equipment. Those who question Apple’s ability to profit from its massive investments in new equipment to build category-defining products are betting against a juggernaut.”

Read more in the full article here.

MacDailyNews Take: All of that CAPEX. $9 billion for “equipment.” Is Apple’s Liquidmetal deal finally about to bear fruit?

Options market braces for big move in Apple shares after earnings

“The options market is bracing for a big move in Apple shares after it posts earnings on Wednesday amid what has been a dramatic plunge for the world’s most valuable publicly traded company,” Angela Moon and Doris Frankel report for Reuters.

“Based on options activity just hours before the announcement, due after the market close, traders were estimating about a 7 percent one-day move after the earnings, which would be a much more volatile outcome than normal for Apple,” Moon and Frankel report. “Such a move could push the shares as low as $465 or as high as $535, depending on how earnings come out.”

Moon and Frankel report, “‘Three ingredients make this earnings for Apple especially appetizing for options traders: (CEO) Tim Cook has missed earnings estimates 60 percent of the time over the past five quarters, the stock has crashed almost 30 percent since September, and no stock has as many hedge funds owning it,’ said Gareth Feighery, a founder of options education firm Markettamer.com in Philadelphia. ‘Combine those three factors together and Apple is a fireworks display ready to ignite, which makes it no surprise to see its options building in a move of close to 7 percent post-earnings.’”

Read more in the full article here.

Apple manipulated by Wall Street Journal before earnings?

“One week ago, I came out with a bullish report that advised readers to buy Apple (AAPL) before earnings. Though the shares have fallen since last week, I maintain that buying AAPL before earnings is the right move,” Jason Cimpl, Wyatt Investment Research, writes for Yahoo Finance. “In an unfortunate bit of timing, the Wall Street Journal reported that Apple was slashing parts orders on the same day as my bullish article. Initially, the WSJ claimed Apple was cutting iPhone parts orders by half from 65 million during the March quarter.”

“Though most investors turned negative on Apple, some devotees haven't changed their colors. In fact, a large portion of the investor base believes the stock was a victim of manipulation,” Cimpl writes. “BGR's Tero Kuittinen was among the first to challenge the numbers from the WSJ article. Kuittinen explained that the consensus sales estimate is 52 million iPhone units for the first quarter. The March quarter is soft (seasonality) and most analysts expect around 30 to 40 million iPhone unit sales.”

Cimpl writes, “Kuittinen rightfully questioned where the 65-million iPhone 5 number came from. Unit sales were never expected to be that high. Only 52 million unit sales are expected in Apple's strongest quarter. And roughly 85% of that figure will be from the iPhone 5. So why would the WSJ expect 65 million from the weakest quarter? The fishy part, as Kuittinen claimed, was that ‘the current version of the WSJ article no longer cites the 65 million unit figure. Sometime between Sunday at 8:00 p.m. EST and Monday at 7:00 a.m., the Journal decided to drop the number from its article. But if the 65 million number is not right, is the estimate for halving March orders correct?’ I'd agree that the 65-million number came from left field.”

MacDailyNews Take: The 65 million unit figure didn’t come from left field, it came from Japan’s Nikkei.com. The WSJ‘s error was in carrying the FUD in the first place. Dropping only the actual number was even stupider since it’s the number that makes the revised production orders look large.

As we wrote last Wednesday:

Here’s a snippet from the WSJ‘s yarn:

Apple Inc. has cut its component orders for the iPhone 5 because of weaker-than-expected demand, people familiar with the situation said Monday, indicating sales of the latest smartphone haven’t been as strong as anticipated... Japan’s Nikkei reported Monday that Apple has slashed its orders for iPhone 5 components. – Juro Osawa, The Wall Street Journal, January 13, 2013

We questioned this “weaker-than-expected-demand” bearshit conclusion that was initiated in the Nikkei FUD and repeated ad nauseam in the days afterward the second we read it. Why didn’t The Wall Street Journal?

We are left with five questions:

Who planted the FUD at Nikkei?
How much money did they make, if indeed they did make any money?
Who approved the publication of this poorly-sourced, unsubstantiated, rife-with-speculation tale at the WSJ?
How much money did they make, if indeed they did make any money?
Just how much noise will the SEC sleep through?

Contact info:
- Editorial Inquiries at Nikkei.com: ecntct@nikkei.co.jp
- Juro Osawa: juro.osawa@wsj.com
- WSJ Letters to the Editor: wsj.ltrs@wsj.com

Read more in the full article here.

Analyst reiterates $1,111 price target on Apple shares; says iPad mini is major catalyst

“On Friday, Brian White of Topeka Capital reiterated his buy rating on Apple and has maintained his price target of $1,111,” Richard Saintvilus reports for Forbes.

“In his research note, White pointed to the iPad mini as a major catalyst in international markets such as Hong Kong, where the smaller tablet was launched just a couple of weeks ago,” Saintvilus reports. “White says there has in an ‘insatiable appetite in both Hong Kong and China for the iPad mini, leading to further supply constraints in recent days.’”

Saintvilus reports, “He also noted that there have been shortages at both Apple stores in mainland as well as complete sell-outs at the location in Honk Kong.”

Read more in the full article here.

Apple stock in 2013: Hang on for another wild ride

“Following the dizzying ups and downs of 2012, investors may be hoping for a little less drama from Apple stock in 2013,” David Zeiler writes for Money Morning. “While 2013 figures to be a very different year for Apple Inc. (AAPL), don’t plan on the ride getting much smoother.”

“With 2012 annual revenue at $156.5 billion and annual profit at almost $42 billion, Apple’s biggest challenge heading into 2013 is figuring out how to add meaningful growth,” Zeiler writes. “For example, when Apple reports earnings on Jan. 24, you won’t see a repeat of last year’s incredible December quarter year-over-year revenue growth of 73% and profit growth of 118%.”

Zeiler writes, “Indeed, Apple stock throughout 2013 will face difficult year-over-year comparisons as each quarter goes up against 2012′s record numbers. AAPL is now officially a victim of its own success.”

Read more in the full article (subscription required) here.

Wall St. holiday ‘on standby’ as clock ticks on fiscal cliff; ‘quadruple witching’ looms

“The last two weeks of December are traditionally quiet for stocks, but traders accustomed to a bit of time off are staying close to their mobile devices, thanks to the ‘fiscal cliff,’” Angela Moon reports for Reuters.

“Last-minute negotiations in Washington on the so-called fiscal cliff – nearly $600 billion of tax increases and spending cuts set to take effect in January that could cause a sharp slowdown in growth or even a recession – are keeping some traders and analysts from taking Christmas holidays because any deal could have a big impact on markets,” Moon reports. “‘A lot of firms are saying to their trading desks, ‘You can take days off for Christmas, but you are on standby to come in if anything happens.’ This is certainly different from previous years, especially around this time of the year when things are supposed to be slowing down,’ said J.J. Kinahan, chief derivatives strategist at TD Ameritrade in Chicago. ‘Next week is going to be a Capitol Hill-driven market.’”

“With talks between President Barack Obama and House Speaker John Boehner at an apparent standstill, it was increasingly likely that Washington will not come up with a deal before Jan. 1,” Moon reports. “This coming Friday will mark the last so-called ‘quadruple witching’ day of the year, when contracts for stock options, single stock futures, stock index options and stock index futures all expire. This could make trading more volatile. ‘We could see some heavy selling as there is going to be a lot of re-establishing of positions, reallocation of assets before the year-end,’ Kinahan said.”

Moon reports, “Some market participants said tax-related selling may be behind the weaker trend in the stock price of market leader Apple. Apple’s stock has lost a quarter of its value since it hit a lifetime high of $705.07 on Sept. 21.”

Read more in the full article here.

2012: Apple’s annus horribilis?

“It should have been another great year as Apple [AAPL] emerged from mourning the loss of its great leader, Steve Jobs, equipped with a raft of exciting new product ideas — but sadly 2012 became Apple’s annus horribilis,” Jonny Evans writes for Computerworld.

“Apple’s new CEO, Tim Cook, is an operations man who ‘gets’ the importance of good product design, but don’t hold that against him: he’s absolutely committed to the company he now leads, but even he must be feeling the weight of 12-months of negative publicity thrown at the firm,” Evans writes. “Even this morning the company’s mapping service is under fire as Australian police warn that its inaccuracies can place lives at risk. That’s after months of criticism for the service’s problems, criticism which led to the ouster of iOS chief, Scott Forstall and a series of public apologies by Cook.”

Evans writes, “As the company status changes from that of media darling to media whipping boy, its public profile is under attack, giving its many competitors a little breathing room. And slashing its stock values.”

Read more in the full article here.

MacDailyNews Take: Much ado about nothing.

Apple’s “horrible year”saw it become the world’s most valuable company as it obliterated all-time company records revenue and profits and launched new versions and models of all of it’s most popular products. More, please.

If 2012 was Apple’s “annus horribilis,” the Cupertino Colossus’ would-be competitors are doomed.

[Thanks to MacDailyNews Reader "Fred Mertz" for the heads up.]

U.S. stocks steady before election

“U.S. stocks swayed between small gains and losses on Monday with investors reluctant to make major moves a day ahead of the U.S. presidential election,” Kate Gibson reports for MarketWatch.

“The Dow Jones Industrial Average gained 9.52 points to 13,102.6. The S&P 500 index added nearly 2 points to 1,416.04, with utilities leading sector declines and energy the best performing,” Gibson reports. “Apple Inc.gained [1.38%] after it sold 3 million units of its iPad mini and fourth-generation iPad during the product's first weekend. The Nasdaq Composite climbed 12.79 points to 2,994.92. Advancers and decliners ran nearly even on the New York Stock Exchange, where 389 million shares traded by 3:20 p.m. Eastern. Composite volume topped 2.2 billion.”

Gibson reports, “‘Stocks rallied over the summer as the likelihood of an Obama victory appeared greater. Once Romney gained momentum in the fall, stocks have been left wondering who might win and have ended up trading mostly sideways to negative,’ said Andrew Fitzpatrick, director of investments at Hinsdale Associates. Jeffrey Kleintop, chief market strategist at LPL Financial, had a similar take. ‘The stock market has priced in a close election compared with where it was a month ago ahead of the debates. As the race has tightened over the past month, the market has slipped while Republican-favored industries have outperformed Democrat-favored industries.’”

Read more in the full article here.

Related article:
5 iPhone apps for U.S. Election Day 2012 – November 5, 2012

Apple stock gives another negative signal

“As though Apple stock needs more trouble, Thursday, Apple traced out another dreaded pattern,” Nigam Arora writes for MarketWatch.

“Even though Apple is the leading stock with the heaviest weighting in Nasdaq 100, underperformance of Apple on a 15-minute chart is remarkable,” Arora writes. “According to traditional technical analysis, when a leading stock drastically underperforms its benchmark index, it is a negative signal.”

Arora writes, “Unfortunately, in the world of investments, there is nothing that is black and white. Technical patterns do not always work. On the positive side, Apple stock is oversold and due for a bounce. Further, there is reasonably strong support in the zone of $548 to $567. From a fundamental perspective, the fourth quarter is the strongest quarter for Apple. At this time, Apple stock is like dry tinder; the tiniest spark on the positive side may make the stock explode on the upside.”

Read more in the full article here.