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AAPL Up Against The Grain
Debt fears continue to hang over the markets as stocks fall in early trading ahead of a busy week for corporate earnings reports. Shares of AAPL are up, however, as investors anticipate quarterly earnings numbers. Catalysts include second calendar quarter results to be released tomorrow at 5pm ET; the next iPhone launch this fall as well as the possible iPad 3 ahead of the holidays; smartphone push into China and emerging markets; iCloud rollout and adoption; the continued evolution and next generation of Apple TV; and new platforms such as books / publishing and social (Ping). Shares of Apple trade at 12x Enterprise Value / Trailing Twelve Months Free Cash Flow (including long-term marketable securities), low versus historical standards.Join Business Insider LIVE For Apple’s Third Fiscal Quarter Results (SAI)
Apple is set to release quarterly financial results after the close tomorrow, Tuesday, July 19th. Please join us for LIVE commentary and analysis.
Wall Street Previews The Quarter (Various)
What investors need to know ahead of quarterly results tomorrow:
- Scott Craig at Bank of America Merrill Lynch expects healthy quarterly results that set up for a positive remainder of the year. He raised his revenue and already above consensus EPS estimates (revenue of $25.3 billion and EPS of $6.25) on better-than-expected iPhone and iPad sales. His conservative gross margin forecast remains well above Street. Strong quarterly results coupled with attractive valuation should continue to drive the stock higher.
- Matthew Hoffman at Cowan and Company remains constructive on the stock and expects ~20% appreciation in shares versus the market over the next 12 months as the iOS 5.0 product cycle proves more popular than expectations and the iPad continues to cannibalise PCs, helping to grow EPS and boost the stock’s multiple from today’s low level.
- Jeffery Fidacaro at Susquehanna Financial expects a solid quarter led by a ramp in iPad production, continued growth in iPhone and positive data points in the Mac business. He reiterates his Positive and Best Idea rating and $465 price target as the move to iCloud extends Apple’s competitive advantage and helps support the company’s long-term growth and margin profile.
- Andy Hargreaves at Pacific Crest believes that strong iPad units of at least 8 million should help drive upside to the the consensus EPS estimate of $5.80. He continues to view the stock as attractively priced at 12.9x P/E (NTM) and believes Apple’s combination of brand, vertical integration and unique ecosystem of content and services will allow it to gain share of the personal computing profit pool for the foreseeable future.
iPad 2 Supply Finally Caught Up With Demand (Fortune)
Since the launch of the iPad 2 in March, Apple has dealt with an overwhelming demand. Initially, the iPad 2 shipping times started from 2-3 weeks and eventually rose to as high as 4-5 weeks at one point. Supply has finally caught up with demand with shipping times now just days. Back in April Tim Cook told analysts that Apple was selling every iPad 2 it could make and it will be interesting to see just how many Apple sold this quarter.
Apple Bulks Up On Lawyers (AppleInsider)
On the heels of reports that the company’s chief patent counsel is leaving, new job postings reveal that Apple is shopping for lawyers to reinforce its litigation team as the company continues to vigorously defend its intellectual property. Two separate postings for a Sr. Patent Litigation Counsel (to manage major patent issues and outside legal teams) and Legal Counsel, Litigation (generalist) appeared on Apple’s job board last week.
Apple Wins Preliminary Ruling On HTC Patent Infringement (Various via iDygest)
In an initial ruling, the U.S. International Trade Commission found handset maker HTC infringed upon two Apple patents and which may apply to “every Android device out there.” If the judgment is made final, HTC could be banned from importing phones to the U.S. It’s the latest blow to Google’s Android operating system, which is being attacked by other competitors as well, Microsoft and Oracle.
App Downloads Trump Song Downloads (Asymco)
Research firm Asymco ran some numbers recently and concluded that App Store downloads have surpassed iTunes music downloads. Apple announced it reached 15 billion song downloads during WWDC in June and last week iTunes hit 15 billion app downloads. Because the milestones were less than a month apart, it’s a safe assumption that, by now, apps have overtaken songs. According to Asymco, app downloads amount to at least 31 million per month, while around 12 million songs are downloaded each month.
Android Losing Developer Support To iOS (Flurry)
Flurry Analytics shows a decline in Android developer support in the second quarter. Over 2010, support for the Android platform rose steadily enough that various pundits used it as evidence that iOS was in trouble. But the Android platform has begun losing developers to Apple’s iOS. Android new project starts dropped from 36% in the first quarter to 28% in the second quarter, while 10% of developers started new projects specifically for iPad and 54% focused on the iPhone/iPod touch combo.
Apple Leads Ad Impression Report (TechCrunch)
Mobile advertising company Millennial Media released its June ad impression report showing that Apple continues to be in the lead. Apple devices account for 30% of the top 15 manufacturers impression share, far above the next closest competitor, Samsung, with 15%. That’s an apples-and-oranges comparison if you ask me. Symbian and Windows Phone each gained a point to account for 3% and 2% of the impressions served, respectively. Windows Phone usage was up 31% quarter-over-quarter and BlackBerry OS usage was up 29% over the same period.
Foxconn Might Manufacture Amazon’s Tablet (Digitimes)
Amazon is rumoured to be in the early stages of planning a tablet computer of its own. And although it doesn’t yet appear that Apple should be nervous about another iPad competitor rolling off the assembly line, the Amazon venture could make for some awkward situations in the manufacturing realm. Foxconn, the longtime Apple partner, has secured orders for a 10.1-inch Amazon Android-powered tablet which is set to begin shipping in 2012.