THE APPLE INVESTOR: What You Need To Know Ahead Of Tomorrow's Earnings

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AAPL Sliding In A Down Market 
It’s an ugly open for U.S. stocks on Europe fears and Wal-Mart’s bribery scandal. Shares of AAPL started off the day sideways but are currently following the rest of tech into the red. Apple will report calendar first quarter earnings TOMORROW at 5:00pm ET. A live audio webcast of the call will also be available. Next month, Tim Cook will also be the keynote speaker at the D10 Conference on May 29. Investors remain focused on new iPad adoption; iPhone penetration, especially in China and emerging markets; market share growth of the Mac business as well as timing of the next generation launch; the evolution of Apple TV; and platforms such as Siri, iAd, iBooks and Ping. Shares of Apple trade at 10.8x Enterprise Value / Trailing Twelve Months Free Cash Flow (including long-term marketable securities).

Join SAI For LIVE Coverage Of Apple Earnings TOMORROW (Silicon Alley Insider)
Apple reports first calendar quarter earnings after the market close. Join us tomorrow night for LIVE coverage of the release and conference call at 5:00pm ET.

What Analysts Are Saying (Various)
The Street is looking for revenue of ~$36.5 billion, up 48% from last year on EPS of ~$9.89. Just to put that into perspective, Apple guided to revenue of $32.5 billion and EPS of $8.50.

  • Bernstein Research: Toni Sacconaghi says that despite continued near-term volatility, he encourages investors to remain overweight given Apple’s attractive valuation, opportunity for broadened ownership among value and yield funds, and difficulty in timing moves in the stock. Despite the risk of potentially weak gross margin guidance for next quarter, Apple’s stock has historically been difficult to short-term trade as outperformance tends to be concentrated within short periods of time. Rating: Outperform. Price-Target: $710.
  • Piper Jaffray: Gene Munster is expecting typical impressive upside with iPhone 5 being the next catalyst. He estimates that buy side is anticipating 33 million iPhones (Street ~30.5), 13 million iPads (Street ~13), and 4.3 million Mac’s (Street ~4.4). Beyond March, the upcoming iPhone 5 is the next major catalyst, launch timing should be clarified by Apple’s guidance. He expects Apple TV to be announced late in the December quarter with sales starting in 2013. Rating: Overweight. Price-Target: $910.
  • Goldman Sachs: Bill Shope continues to believe Apple’s shares are very attractive at current levels. It remains his top pick, and he’s a buyer ahead of earnings tomorrow. Shope is expects solid March-quarter upside, which is likely to trigger healthy increases in iPhone, iPad and overall earnings expectations for the full year. Investor concerns over a “catalyst-light” June quarter are misguided; it is the quarter when many of the recent catalysts begin to fully manifest into earnings power. Rating: Buy. Price-Target: $750.
  • Jefferies: Peter Misek believes that despite only having 13 weeks in the quarter, strength at Sprint and Verizon along with the addition of KDDI and China Telecom should more than make up for this shortfall in terms of iPhone sales. He also believes iPhone sales at AT&T were solid but likely in line with expectations. He is confident that the iPhone 5 will launch in September despite possible supply issues at Qualcomm. Rating: Buy. Price Target: $800.
  • Credit Suisse: Kulbinder Garcha believes Apple is well positioned to maintain momentum across key product lines driven by continued evolution and innovation in hardware, software and services. The speed of carrier expansion as well as smartphone market growth should continue to drive Apple’s smartphone market share in 2012. Rating: Outperform. Price-Target: $750.
  • Pacific Crest: Andy Hargreaves believes strong iPad and iPhone sales should drive results well ahead of consensus. He is looking for revenue of $41 billion and EPS of $11.80. The Fall iPhone refresh could affect estimates as management guides for decelerating sell-through and reduced channel inventory. He believes the potential upside to Apple stock has shrunk. Rating: Outperform. Price-Target: 

Should be interesting.

The iPad Mini Is An Unlikely Apple Strategy (eWeek)
Some analysts and news reports have suggested a smaller iPad with a price point in the area of $300 could deliver a fatal blow to other players in the tablet industry. However, Michael Oh, president of Apple retail and care specialist at TechSuperpowers, dismisses the rumours as evidence of prototypes, not actual for-market products. “The space in that sub-$300 tablet sector is really crowded, or it will be very soon,” he said, noting strong sales of Amazon’s Kindle Fire tablet and the numerous Android devices in various form factors.

Apple Adding 500 Jobs To Its European Headquarters (Irish Times)
In the next 18 months, Apple will create 500 new jobs in its European headquarters of Cork, Ireland. Apple will build a new office complex in the next year and a half to accommodate the new staff. Apple currently employs about 2,800 people total in Cork. “Apple has been in Cork for over 30 years, and we are thrilled to be expanding our presence there,” according to an Apple spokesman. “Our plans will add over 500 new jobs to support our growing business across Europe.”

New iPad Wait Times Decrease (CNet)
Consumers in the U.S. looking to order the new iPad (all variations of the tablet) through Apple’s online store now face a shorter wait time of just 5-7 business days. That is a notable improvement from the 2-3 weeks that buyers had to wait when it debuted in mid-March. The iPad 2 faced hefty wait times over a much longer period last year. It would seem that Apple was better prepared this year to ramp up supply to keep up with demand. Either that or demand is soft. Let’s hope it’s the former.

In Terms Of Mobile Usage, iOS Dominates (TechCrunch)
A new research tool from Chitika which tracks mobile usage in real-time shows that users in the U.S. are far more active on Apple’s devices than on any other. In the last 24 hours, iOS devices (iPhone, iPad and iPod), accounted for ~70% of all usage on its network. Android, meanwhile, accounted for just over 24%. Other platforms (Windows Phone, BlackBerry, etc.) were less than 5% of all activity.

Why Apple’s Stock Drives Investors Crazy (Business Insider)
Apple’s stock makes investors very uncomfortable. Because of its size and amazing run, it’s made a ton of investors an insane amount of money and now likely represents an uncomfortably large position in their portfolio. A traditional, conservative investor would be inclined to pare back. On the other hand, the one mistake you can make with Apple stock is selling it. Making the problem even more complicated is that it’s still not that expensive by traditional valuation techniques. So while people are nervous about a stock that’s surged like crazy, at the same time, they can’t come up with a compelling reason to be bearish on it.

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