As I leave the office after the Apple call wraps up on Tuesday night, the stock is trading at $102, up a little over $10 from the NY close, regaining more than the $7 loss during regular hours.
I posted the big news on the call while it was still going on (immediately below). Steve Jobs made a very rare appearance and presented an enthusiastic outlook beyond the unpredictable economic climate. He was especially optimistic on iPhones and the App Store. He mentioned the virtuous cycle those two things create. He also said copying the App Store is not as easy as it looks. He downplayed a second iteration of the iPhone. He says smartphones are software driven which means that form factor can stay the same unlike voice only phones.
Guidance looks really poor. At the midpoint of assumptions I get $1.21 on $9.5 billion in revenues vs. consensus of $10.6 billion and $1.65. The guidance is characterized as conservative. I also believe the whole discussion of GAAP vs. Adjusted financials may have some impact on the guidance. It did not come up on the call but revenue recognized per iPhone unit looks awfully low. If that carries over to December quarter and analysts did not have it then part of the issue may be accounting related.
And since Adjusted EPS assuming no subscription accounting are $2.69 in the quarter it is clear that earnings power is immense. 4Q should be up sequentially implying earnings power near $10 per share. And cash is at $27 per share.
Even if you collapse the multiple because 39% of adjusted revenue is phones the stock looks awfully cheap. I think buys around $100 will look very good.