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April 21, 2010
All Good at Apple. Again.
Below are my Twitter comments in chronological order as I was listening to the Apple conference call. I find these initial reaction comments, which for most companies are handwritten notes, are usually my best analysis. Gut reaction plus objective analysis is reliable. Or to put it another way, I like to keep it simple and not overanalyze every last detail.
To reiterate, I think this was a very good quarter from Apple and justifies raising my 2010 price target from $265 to $350 based on the math below.
• All good at $AAPL. If I HAD to nitpick...tax rate of $23.7% added about 23 cents. Cash build less than usual. Inventories up a bit.
• $AAPL made an acquisition and inventory build is probably iPad. Mac shipments and ASP in line. iPod units BTE on ASP BTE.
• $AAPL iPhone shipments of 8.74 million is way BTE. Flat against seasonally strong Dec Q. Good for $T thohg big rev gains outside US.
• $AAPL US rev +26%, Europe +63%, Japan +51%, Asia Pacific +184
• Old consensus for $AAPL for FY10 is $12.06. Figure it goes north of $13 now. 20 times EPS before deducting $45 in cash. 16.5 times adj P-E.
• $AAPL rev +49%, net income +90%. Say what you want about P-E, but at 16.5 adj for cash or 20 times unadjusted you get a lot of growth.
• How about $15 EPS for $AAPL in 2011. 18-20 P-E plus what will be north of $50 per share in cash for target of $350????
• $AAPL explains lower tax rate as "true up" to change from 29% to 27% for yr due to greater intl mix. Legit explanation. + for estimates.
• $AAPL guidance on gross margin is for seq drop of 470 bps due to iPad, forex, mac transition, and unannounced transition. Unannounced :-).
• Gr8 Q from Bernstein analyst on $APPL guidance and iPad. Either iPad unit or mgn expectations way too low. Or gross mgn guidance too low.
Disclosure: Apple is widely held by clients of Northlake Capital Management, LLC including in Steve Birenberg's personal account. Steve Birenberg is sole proprietor of Northlake Capital Management.
Posted by Steve Birenberg at April 21, 2010 08:29 AM in AAPL
THE SHANGHAI COMPOSITE SEEMS TO BREAKING DOWN. THE CURRENCIES OF GREECE,PORTUGAL AND SPAIN ALSO APPEAR TO BE DROPPING FAST. WILL THIS AFFECT CENTRAL EUROPE,EMERGING MARKETS AND CETV?
WILL THIS EVENTUALLY AFFECT THE US MARKET?
THE SHANGHAI COMPOSITE APPEARS TO BE BREAKING DOWN. THE CURRENCIES OF GREECE,SPAIN AND PORTUGAL SEEM TO BE DROPPING FAST.
WILL THIS AFFECT CENTRAL EUROPE,EMERGING MARKETS AND CETV?
WILL THIS EVENTUALLY AFFECT THE US MARKET AS WELL?
Just back from a trip out of town. Sorry for the slow response.
I think the market gave you your answers today. I would have said that the crisis in Europe was a risk but a manageable one and it is one that is likely to be resolved much like the bailouts of 18 months ago.
The biggest risk here is that the markets are extended. A pullback is overdue and we are very sensitive to negative news. But don;t ignore tons of positive news on US and global economic growth and remember monetary policy around the globe is going to remain very accomodative until the economy is well past proving it is healthy.
When we get a pullback it is likely to be led by small caps and emerging markets due their high betas. Emerging markets are already lagging thanks to China and Greece.
I remain sanguine with my major worry that everyone is a bit too confident. I still think any correction is likely contained to 5-7% and won;t get real ugly.
Posted by: Steve at April 29, 2010 03:44 PM