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Apple Shares wiggle ahead of Worldwide Developers Conference

Admin — Mon, 06 Jun 2011 14:32:45 +0000

In recent days’ trading, Apple Inc.’s (NASDAQ: AAPL) shares have wavered in advance of its worldwide developers conference planned for today on buzz the company most likely will not unveil the new iPhone, which AAPL has done in the past, making analysts to lower their forecasts for the sales of the iPhone in 2011 and 2012.

Instead, AAPL disclosed that Steve Jobs is returning to give the keynote presentation and highlight the next versions of Mac OSX Lion and iOS 5. The company has also scheduled the introduction of the iCloud, an Internet-based service that allows consumers to stream music they bought to any Apple device. Accordingly, the iCloud is aiming to strengthen the potential of the iTunes and make it tougher to compete for rivals like Google Inc. (NASDAQ: GOOG) and Amazon (NASDAQ: AMZN), which require users to upload their library of songs to play music.

AAPL’s shares followed a bouncing ride this year amid impressive revenue and profitability growth, successful launch of the iPad 2, as well as concerns about Steve Job’s health and competitive pressure from devices powered by Android platform. The stock gained 4.2% since the beginning of 2011, compared to a gain of 56% in 2010.

The Q2 FY 2011 results, which smashed again consensus estimates, gave a significant boost to AAPL’s valuation. The company posted a net profit of $5.99 billion, or $6.40 a share, while revenue surged 83% to $24.67 billion. According to Thompson Reuters, analysts were expecting AAPL to earn $5.37 a share on revenue of $23.4 billion.

The company sold 3.76 million Macs during the last quarter, a 28% unit increase over the year-ago quarter. AAPL sold 18.65 million iPhones in Q2 FY 2011, representing 113% unit growth over the year-ago quarter. The company sold 9.02 million iPods during the quarter, representing a 17% unit decline from the year-ago quarter. The company has also sold 4.69 million iPads during the quarter. Altogether, AAPL sold nearly 20 million iPads in the first year it has been available.

According to IDC, Apple was ranked the second-largest smartphone vendor globally in terms of units sold in Q1 2011. The company earned a respectable 18.7% market share, compared to 24.2% share for Nokia. With a growth rate of 113% in the last quarter versus the year-ago quarter, AAPL has topped Nokia in smartphone revenue and is chasing the Finish phone maker for the title of world’s number one smartphone maker ranking by units shipments.

Meanwhile in the U.S., AAPL is claiming 28% of the smartphone market for the last quarter of 2010, while Android and Research in Motion’s (NASDAQ: RIMM) Blackberry tied with 27% each, according to a report from Nielsen. However, new phone purchases suggest a positive trend for Android and negative for BlackBerry. Apple’s share of new buyers has been virtually unchanged for the past year at 26%, but Android users now make up 43% those who bought a phone in the past six months.

Another trend that benefits AAPL is the forecast that sales of computer tablets and smartphones could outnumber traditional plug in PCs already in 2011. Consulting firm Deloitte reported that worldwide sales of smartphones and tablet computers would come to 425 million, well above sales of 390 million PCs. The trend was also backed by the analysis from Gartner, which forecast 2011 PC growth at 10.5% down from 15.9% previously. Worldwide PC shipments could hit 440.6 million units in 2012, a 13.6% increase from 2011, down from Gartner’s previous outlook of 14.8% growth, the market watcher added. Gartner has further claimed that the global tablet market could almost quadruple in 2011 to 70 million units from 15 million in 2010, and eat into the slowing PC market over the next four years. AAPL’s iPad could control about 69% of the 2011 tablet market, dropping to 47% by 2015; when nearly 300 million units would be probably sold. This means that AAPL could sell nearly 140 million iPads in 2015, which could result in remarkable revenue of $80 billion from this product alone.

From the business fundamentals perspective, AAPL is well positioned to further appreciate with another record quarter in terms of earnings and revenue. The company is reaching new customers internationally and among businesses that have not typically used its products, thus maintaining exponential growth prospects intact.

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Apple Shares Poised to Soar on Record Q1 2011 Results

Admin — Wed, 19 Jan 2011 15:12:40 +0000

Apple Inc. (NASDAQ: AAPL) shares soared 53% during 2010 on a solid growth track consistently outperforming analyst estimates. Moreover, the company climbed another 5.6% during the first trading weeks of 2011 and as of January 18, AAPL traded in the range of $340.65. Even more, the release of Q1 FY 2011 results, which topped the market consensus estimates, added another 2% to the company’s valuation in the afterhours trading session on January 18.

AAPL’s growth story is impressive, with revenue and EPS growing on average 36% and 58% a year over the last five years, respectively. Altogether, AAPL stock price increased 5-fold over the last five years to became the second-largest company in the United States.

The company’s growth story continued during the first quarters of fiscal 2011 at rates that exceeded historical growth levels and analyst expectations. For the last reporting quarter, Q1 FY2011, ended December 25, 2010, AAPL‘s revenue rose 71% to a record of $26.7 billion, much better than analyst consensus’ forecast for revenue of $24.4 billion. Previously, for Q4 FY2010, the company’s revenue jumped 67%.

AAPL reported earnings of $6 billion for Q1 FY2011, or $0.0643 a share, up 78% from a year-ago net profit of $3.4 billion, or $3.67 a share. Analysts on average were expecting a profit of $5.40 a share, according to Thomson Reuters. Previously, for Q4 FY2010, the company’s earnings grew 70%. Moreover, AAPL announced that for Q2 FY2011, it expects revenue of about $22 billion and diluted EPS of about $4.90, which represents more than 70% growth compared to Q2 FY 2010. According to Reuters Estimates, analysts were expecting the company to report revenue of $21 billion and EPS of $4.47 for second quarter of 2011.

The company’s growth was buoyed by holiday purchases of iPads, iPhones and Mac computers, with sales smashing even the most optimistic estimates last quarter. AAPL sold 4.13 million Macs during Q1 FY2011, a 23% unit increase over the year-ago quarter. That is eight times faster than IDC’s estimate of global personal computer shipments growth over the same period.

The company sold 16.24 million iPhones in the quarter, representing 86% unit growth over the year-ago quarter and continuing to gain market share from competing Research In Motion’s (NASDAQ: RIMM) BlackBerry. According to Nielsen’s latest Mobile Report, AAPL has nearly caught up to RIMM in the U.S. smartphone market, with 28% and 30% of installed base, respectively. Google (NASDAQ: GOOG) is gaining fast with Android and has 19% of installed base. The data for Q3 of calendar 2010 indicates that out of 21 million smartphone shipments in the U.S., GOOG’s Android shipped 43.6%, AAPL was second with 26.2% and RIMM came third with 24.2%.

Moreover, AAPL sold 7.33 million iPad tablets during the quarter, which is approximately a million more than analysts were expecting. The research company Gartner predicted that sales of tablets could grow from 19.5 million in 2010 year to 208 million in 2014. This represents a huge market to service and could provide significant upside potential for AAPL. In addition, the company sold 19.45 million iPods during the quarter, representing a 7% dip from the year-ago quarter, but still above analyst expectations.

Despite the impressive growth story and huge revenue base, the company will continue growing exponentially since it is reaching new customers internationally and among businesses that have not typically used its products. The upcoming introduction of iPhone to the U.S. largest carrier Verizon Wireless adds 93.2 million potential customers for AAPL. The supply of the iPad is still struggling to meet the burgeoning demand, while the distribution is still limited to 46 countries. For instance, iPhone is currently distributed through 185 carriers in 90 countries.

The optimistic outlook is also sustained by the company’s ability to innovate and create the next-generation gadgets. The strong Q1 FY2011 results wiped away investors concern that AAPL’s CEO Steve Jobs is taking another medical leave of absence. The solid gadgets sales will likely continue for the next years, with updates already scheduled for forthcoming release. This makes Job’s temporary absence less material with regard to the company’s near term perspectives.

Besides, during the last quarter, AAPL generated approximately $10 billion cash from operations pushing the liquidities balance to near the $60 billion range. The combination of $60 billion in cash and zero debt positions AAPL to pursue strategic acquisitions and expansions into additional markets leveraging further its technology and ability to innovate.

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