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AAPL Rockets On Earnings
The market is up on Apple’s earnings, removing weeks-old overhang on the NASDAQ. AAPL shares are up more than 50-points or ~7%. Next month, Tim Cook will be the keynote speaker at the D10 Conference on May 29. Apple’s developer conference (WWDC) is slated to start June 11. Investors remain focused on iPhone penetration globally and the anticipated launch of the next generation iPhone in the fall; new iPad adoption; market share growth of the Mac business as well as the upcoming refresh; the evolution of Apple TV; and platforms such as Siri, iAd, iBooks and Ping. Based on last night’s close, shares of Apple trade at 8.8x Enterprise Value / Trailing Twelve Months Free Cash Flow (including long-term marketable securities). Click here for Business Insider’s updated Apple model, complete with charts and analytics.Apple Delivers Monster Quarter (Business Insider)
Jay Yarow covered yesterday’s earnings release and conference call live. Check out all the commentary.
What Analysts Are Saying About Apple’s Blowout Quarter (Various)
Well, they did it again. Apple reported March quarter results of of $12.30 in EPS on $39.19 billion of revenue, above the Street at $10.04 on $36.85, respectively.
- Goldman Sachs: Bill Shope says that out of all the good news in the quarter, he believes Apple’s margin upside has the most important long-term implications for the story. While these margins should come down in quarters where iPhone mix is less substantial, the results suggest that annual margins can sustainably be much higher than investors previously appreciated. This substantially increases long-term earnings and cash flow generation potential. Rating: Buy.
- Piper Jaffray: Gene Munster believes the bigger story for iPhone is the coming launch of iPhone 5 in October 2012. He is shifting units from the Sept quarter to the December quarter but is not changing his overall expectations for sales. While March was about international sales, Munster believes the U.S. still represents a growing opportunity for three reasons: 1) market share at Verizon and AT&T could climb from the current 64% to 80% in the next year; 2) the upgrade opportunity; and 3) growth of the overall smartphone market. Rating: Overweight.
- Morgan Stanley: Katy Huberty says to anticipate a downtick for the iPhone in the June quarter which is a function of a sequential decline in channel inventory build and less benefit from new carriers. The research and development uptick a strong indicator of upcoming product cycles and new product categories as those expenses increased 11% sequentially, 7-points above normal seasonal trends. The last time this happened was two years prior to the iPad introduction and 18 months prior to the iPhone introduction. Rating: Overweight.
- Bank of America Merrill Lynch: Scott Craig says this is a typical Apple quarter, with large top and bottom line beats driven by China (especially iPhone) and gross margin, despite investor fears. Per usual, he believes the June quarter guidance is conservative and the Street will largely ignore it. He reiterates is Buy stance on valuation, product trends, gross margin upside and Street EPS revisions. Rating: Buy.
- Citi: Richard Gardner continues to see potential for a merely in-line quarter at some point this year ahead of the iPhone 5 transition, despite the fact that the product line is defying gravity. Richard no longer expects the iPhone 5 to prompt as much of a temporary reset to iPhone margins as the 3S to 4 transition. He says valuation is not demanding and would be aggressive buyers on any potential weakness. Rating: Buy.
- Canaccord Genuity: Michael Walkley says that while his checks indicate slowing iPhone sales ahead of the iPhone 5 launch, he believes very strong international sales position Apple for very strong sales of the LTE iPhone 5 in the December quarter. The company is well positioned for strong sales and earnings growth driven by new product introductions across its portfolio, including iPhone 5 during this fall and iTV during fiscal 2013. Given his increased confidence of an iTV launch, he is adding that to estimates. Rating: Buy.
- Topeka Capital Markets: Brian White believes that Apple’s quarter once again demonstrated how quickly Apple fever is spreading around the world. This trend continues to drive meaningful upside. He believes the negative vibes that have held back the stock over the past couple of weeks will now be replaced with the fear of missing the next leg up in the stock price that we are forecasting will reach $1,111 over the next year.
That should alleviate investor fears which have driven the stock down as of late.
Apple’s App Store Heading To 1 Million Apps (Business Insider)
Apple revealed that there are now 600,000 apps in the App Store, 200,000 of which are specifically for the iPad. By comparison, there were roughly 350,000 apps in the App Store in the second quarter of 2011. That means the number of apps has increased by about 71%. If this pace continues, there would be more than one million apps in the App Store by this time next year.
The iTV Will revolutionise Television (BGR)
According to Michael Lantz, the CEO of Accedo a smart TV applications provider, “The TV set industry is in crisis mode. The manufacturers are scrambling to cut costs but still add features to roll out ever higher volumes of TV sets through struggling retailers. Even though design is an important feature for high end TV sets, this is a much smaller share of the market than it should be. It is my firm belief that there is a wide open market slot for a high-end design-led Apple TV set in this market.” He believes Apple’s design will be a main focus for consumers.
Don’t Expect A Thinner iPhone 5, Expect A Bigger Battery (GigaOM)
Despite recent rumour about the thinner iPhone 5, it actually makes more sense for Apple to use the space savings to offer more room for the battery. A thicker battery in the same overall iPhone size would offset any additional power usage for an LTE radio in the next handset. Apple was able to slightly redesign its most recent iPad to create more room internally and much of that space, if not all of it, was used for a battery with 70% more capacity. As a result, the new iPad with LTE and the high-resolution Retina Display, which also uses more power, still offers about the same run time as prior models.
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