Apple Investor: Is Apple Saving The PC Industry?

The Apple Investor is a daily report from TBI Research. Sign up here to receive it by email.

AAPL Trades Up All Day, Loses Steam Towards The Close
AAPL shares were down yesterday, testing support levels. The stock felt a bit uneasy with the swift afternoon downward dip. Many traders saw the weakness as a buying opportunity and think perhaps there will be a couple of days’ pause running into options expiry this Friday. Apple has approximately 49,000 open interest contracts so if you’re looking to buy or sell big blocks, Friday might be your day. The stock closed the session at $224.12 or 16.9x estimated fiscal-year 2010 EPS and 17.5x Enterprise Value / Trailing Twelve Months Free Cash Flow (TTMFCF). Upcoming catalysts include speculation and analysis of iPad sales and trends; the March quarter earnings release (likely around the third week in April); and the release of the next generation iPhone this summer.

Positive AAPL Commentary On TV Yesterday: Trade Options If The Stock Is Too Expensive
(The, CNBC)
Yesterday on “Fast Money,” guest Mike Khouw of Cantor Fitzgerald suggested playing with options as a way to own Apple stock by buying an in the money call spread. It’s a relatively premium-neutral trade for a stock as expensive as Apple. Investors should buy the July $220 Call Option at $18.25 and sell the July $230 Call Option at $13.25 against it. Net net investors are paying a $5 dollar premium but it doesn’t have to go to $300 for you to make money; it can go to $230 and will double (profits above $225, capped at $230, loses below $220). Mike continues to say that “this is a company that keeps doing things right,” but that the company will have to continue to create product lines that open up niche businesses and the iPad is certainly viewed as the next product to do so.

Is Apple Saving The Entire PC Industry
(Apple Insider)
Robert Cihra, financial analyst at Caris & Company, estimates that Apple will be responsible for 25% of the world’s computer sales growth this year. PC sales are expected to grow 15% to 20% in 2010, fuelled by greater than 90% growth in sales of netbooks and notebooks. Desktop sales are rebounding for the first time in two years thanks to the strong performance of Apple’s Mac business.  Mac sales alone could boost year-over-year shipments by approximately 3% (see historical year over year unit growth rate for Apple computers). The recovery in desktops is being driven by emerging markets, corporate use and gamers. Cihra reiterated his Buy rating on AAPL shares and expects the Mac to grow at 1.6x the industry average during calendar 2010.

First Week Of iPad Orders Generating Between $100 – $275 Million In Sales
After initial reports of a somewhat lackluster weekend, iPad pre-orders are now estimated to be averaging 10,000 per day. It is speculated that Apple passed the 180,000 unit mark on Wednesday (that’s 45,000 more than total Nexus One phones sold over 75 days) with orders expected to reach the 200,000 mark by Friday. This number does not include retail store reservations, which would put the total number of iPads reserved or pre-ordered in the first week close to 400,000. If true, based on pricing of between $499 – $699 for the Wi-Fi only product, revenue generated from the gadget could be anywhere from $100 million to $275 million dollars in the first week alone.

Google Planning On Taking Over Your TV, Could Push Apple To Do Something With Apple TV
(The New York Times)
Google is working on an Android-based set-top box software with Intel and Sony, the New York Times reports. It’s the latest in Google’s ongoing efforts to enter the TV industry. What does that mean for Apple? At an investor conference last month, Apple COO Tim Cook said the company has “no interest in being in the TV market” but that it will continue to invest in its “hobby” Apple TV product. Dan Frommer at Business Insider points out Apple’s tendency to say one thing and then do the exact opposite, suggesting that Apple will come out with a TV in a year and proclaim that it’s the greatest TV of all time.

HTC Not Ready To Roll Over, Will Fight Apple On Infringement Suit
HTC finally stepped forward and publicly addressed Apple’s infringement allegations. Vice President of HTC America, Jason Mackenzie said that “HTC disagrees strongly with Apple’s actions and we plan to use all the legal tools we have at our disposal to defend ourselves, as well as to set the record straight.” He did not say whether the company plans to countersue Apple or how much legal aid HTC would be receiving from Google (Apple’s real target). He did go on to remind the public that HTC has “been in business since 1997 and a pioneer in the smart phone space. We absolutely have our share of patents.” The biggest detriment to HTC in the interim is the negative press the suit has been generating, which could lead to continued weak sales of Nexus One. Google can absorb a short-term hit to sales and experiment with various distribution models, but Jay Yarrow at Business Insider argues it is terrible for HTC, which is missing out on many potential phone sales. All in all, a net positive for Apple in the fight against Google on the mobile front.


The Apple Investor is a daily report from TBI Research. Sign up here to receive it by email.

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.

Tagged In

apple tbiresearch-us