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AAPL Off As Markets Dive
Stocks are off in early trading as global fears rock the markets again. Shares of AAPL are off on worry that the company will miss analyst expectations when it reports earnings for its third fiscal quarter TOMORROW after the close. Investors remain focused on iPhone penetration globally and await the next generation launch in the fall; iPad adoption and the rumoured launch of a smaller version; market share growth of the Mac business lines; the introduction of the anticipated Apple TV set and related products; and evolution of platforms such as Siri, iAd and iBooks. Shares of Apple trade at 9.6x Enterprise Value / Trailing Twelve Months Free Cash Flow (including long-term marketable securities).JOIN US LIVE FOR APPLE’S EARNINGS TOMORROW (Business Insider)
Tune in for live coverage of Apple’s earnings release and conference call tomorrow after the close. Do you think there’s upside in the stock or will it sell off after it reports earnings?
Analyst Thinks There’s A High Chance Apple Could Miss (Forbes)
Toni Sacconaghi of Sanford C. Bernstein & Co. believes there’s a “reasonable probability that Apple will miss consensus revenue expectations due to macroeconomic weakness in China and Europe, a product cycle lull in the iPhone, a later than expected introduction of the new iPad into China, and the late quarter introduction of new Mac notebooks.” Ouch. For the record, financial analysts are expecting sales of $37.3 billion and profit of $10.38 a share.
People Are Waiting To Buy The New iPhone (Bloomberg)
“People are waiting,” according to Andy Hargreaves, an analyst at Pacific Crest Securities. Apple will sell about 25.4 million iPhones, he estimates, compared with 35.1 million in the previous quarter. “It’s going to be bad now, but great later.” A similar slowdown occurred ahead of last year’s iPhone 4S release in October, causing Apple’s shares to slide when the company reported profit that fell short of analysts’ estimates for the first time since 2003. Do you still have an iPhone 3 or 3GS?
Apple Is No Longer The Company That Beats Estimates (Reuters)
Apple may still surprise market watchers, but many Wall Street analysts and investors remember how chatter over the launch of a new iPhone last year caused Apple to miss quarterly expectations in the fall, for the first time in years. “No longer is Apple the company that beats every time,” said Tim Lesko, portfolio manager at Granite Investment Advisors, which owns Apple stock. “I expect Apple to beat Apple’s guidance, but I don’t know whether they will beat Wall Street’s guidance.”
Apple Gets Paid For Products Before It Has To Pay Manufacturers (WSJ via 9To5Mac)
A fun fact from The Wall Street Journal just in time for Apple earnings: “Cash comes in before it goes out in part because Apple has incredible negotiating leverage vis-à-vis its suppliers. On average, in fiscal 2011 it didn’t pay suppliers for 83 days after being invoiced, according to Sanford C. Bernstein analyst Toni Sacconaghi. Yet Apple collected on its customer invoices much faster, 18 days on average. Meanwhile, it paid to keep just four days of inventory on hand in 2011, versus an already impressive 10 days in 2010.”
Why Apple Stands Apart From The Competition (Techpinions)
There have been a few guiding principles that have driven Apple from the intro of the Mac in 1984. The Mac broke all conventional wisdom of what a PC would and should look like. Here’s what sets Apple apart:
- “Think different” and not let what others do impact the products or services.
- How they run and control their own company.
The bottom line, unless these competitors start innovating on their own, Apple will continue to have at least a two year lead on them.
Apple Is Intimidating ‘Smart TV’ Makers (DigiTimes)
Display system providers TPV Technology and LG Electronics are said to either be forming alliances with one another or are seeking out additional partners for smart TV alliances. These alliances have been more and more prevalent throughout Asia recently and TV brands will need to rely on their supply chains rather than just high-end low-priced products to compete, added the sources. The alliances are also forming as Apple is preparing to release a smart TV. Due to Apple’s influence in the market, the sources fear it will further dominate the smart TV market, which is estimated to reach a 40% penetration rate by 2014.
The Apple HDTV Might Not Launch Until 2014 And In U.S. Only, At First (Stuff)
Informa’s broadband content and online video analyst Giles Cottle would find it “surprising if the Apple television wasn’t launched exclusively in the U.S. first, as content rights can be a massive burden and have to be managed on a country-by-country basis.” While it’s a given that Apple will eventually launch the iTV outside the U.S., there’s a strong possibility that international Apple fans could be left in the lurch when its rumoured 2014 release date rolls around.
Another Airline Chooses The iPad For In-flight Entertainment (ZDNet)
Qantas announced that it will roll out iPads to its 767 fleet to stream its entertainment. The tablets will be placed in the pocket before each seat. As of May this year, there were 23 Boeing 767-300 aircraft, each with between 229 and 254 seats, meaning that more than 5,000 iPads would be required to kit out the fleet. The system will roll out to the first aircraft in the fourth quarter of this year. Most of the flights offering the service will be on Australia’s east coast routes, with some also flying to Perth. The service will be free of charge.
Apple Dominates Mobile eCPMs (Opera Software)
The iPhone leads the smartphone OS pack with an average eCPM of $2.85, followed closely followed by Android devices at $2.10. The rest of the mobile phone field is significantly behind. Windows phones have most if not all of the advanced features of Android and iPhones, but low levels of user adoption stifle its performance. The iPad epitomizes the user-friendly device with large, touchscreen interactivity, as well as other features that enhance the user experience and delivers an average eCPM of $3.96.
Setting The Stage For This Week (Reuters)
The trend of better-than-expected earnings will be put to the test in the coming week when investors hope Apple can exceed already high expectations for the tech giant. Apple accounts for a significant proportion of the overall earnings of S&P 500 components. S&P 500 earnings are expected to show a rise of 5.7% in the second quarter from a year ago (4.8% excluding Apple). Apple’s results could help stocks build on last week’s gains and counter investor worries over the euro zone crisis.
CHART OF THE DAY: The iPad Is Becoming Our Primary Computer (Business Insider)
Business Insider ran a survey of their readers about how they use the iPad. Over 2,000 responded to this survey, but here is the highlight. After just three years, the iPad is becoming the primary computer for users. When they first ran the survey, only 29.1% of people said it was a primary computer. Today, it’s 46.7% of users. In the last three years, the iPad has gotten lighter and more powerful. Additionally, developers have built a variety of applications to make it more useful. Imagine what’s going to happen in the next three years.