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AAPL Sideways In A Choppy Market
The market is choppy as May retail sales decline, in line with expectations, and Goldman cuts second quarter GDP estimates. Shares of AAPL are sideways in a red tech market. Investors remain focused on iPhone penetration globally and the anticipated launch of the next generation in the fall; iPad adoption; market share growth of the Mac business as well as the upcoming refresh; the introduction of the anticipated Apple TV set; and platforms such as Siri, iAd and iBooks. Shares of Apple trade at 9.1x Enterprise Value / Trailing Twelve Months Free Cash Flow (including long-term marketable securities).Apple’s WWDC Keynote By The Numbers (All Things Digital)
Liberally sprinkled throughout the keynote were a bunch of metrics and data points that collectively amount to a brief State of the Union for Apple:
- 400 million App Store accounts
- 650,000 apps in the App Store
- 225,000 of those apps are designed specifically for iPad
- 30 billion apps have been downloaded from the App Store
- The App Store has generated $5 billion in developer revenue
- 66 million Mac users, 3x the number Apple had just five years ago
And that’s just the beginning. There are many more metrics in the article.
The Top Three Takeaways From WWDC (Daring Fireball)
John Gruber weighs in:
- Apple has two OSes that are both in active concurrent development. Year-over-year, it’s hard to say which OS has seen the most improvement.
- The new MacBook Pro with Retina Display is “Back to the Mac” for hardware. This is an iOS-inspired appliance.
- Apple is forcing Google out of iOS.
Google made a mistake for not allying with Apple in mobile.
Here’s Why Apple Didn’t Open Up Apple TV (GigaOM)
There was one thing missing from WWDC: Apple TV announcements. In the TV space, Apple has a much smaller installed base which equals less money and opportunities for developers. Google TV has sold far fewer devices than Apple. However, the platform is based on Android, so users can still access thousands of Android apps, which gracefully scale up to the big screen. Apple on the other hand would start out with much smaller numbers because developers would be forced to build native TV Apps. Apple would essentially be where Android tablets are today, which is not a place the company wants to be in.
Only Apple Can Promise a Better Experience To Customers Every Year (TIME)
Apple is the only tech company that can promise, without the need to buy new hardware, that the user experience will get better every year by releasing new software for all its hardware on an annual basis. Google struggles immensely with this promise. Microsoft has had a better history, but its software updates are released every three years or more. And since they both licence their operating systems to independent third parties, it’s nearly impossible to promise that those hardware companies will be ready to support every new software release. Because Apple controls its end-to-end user experience, it can make such promises.
How Prepaid iPhones Will Remake The Mobile Market (ReadWriteWeb)
Up till now, if you wanted an iPhone, you signed a two-year service contract with a carrier and got a big discount on the price of the phone. Under this new model, users buy the phone at full price, but pay less for service and avoid getting locked into a contract. Over two years, the prepaid model comes out to be significantly cheaper. If Americans suddenly decided they’d rather pay full price for an iPhone with no contract, then the carriers would be off the hook but they might also deal with higher churn rates. This new approach won’t change everything overnight, but it will likely be seen as an attractive alternative.
Apple: A Growth Investor Stock All The Way (Validea)
Apple appeals to Validea’s Growth Investor model, based on the firm’s interpretation of the book Winning on Wall Street written by growth guru Martin Zweig. Validea’s Zweig-geared strategy looks for companies that have grown their earnings consistently over both long- and short-term periods, and that are showing signs of even further earnings acceleration. Apple meets all of these tests. The company is also showing signs of continued acceleration, with a year-over-year growth rate of over 90% in the current quarter. The combination of all these factors paints the picture of a company that is growing rapidly and is well positioned to continue that growth going forward, which is exactly the type of investment that Zweig would look for.
Apple And Google’s Experiences In China Are Sharply Different (Bloomberg)
In China, sometimes having the first-mover advantage is often no advantage at all. Case in point: Apple vs. Google. The two companies have taken very different approaches: Google moved quickly into the market while Apple was in no rush. The company waited until 2008 before opening its first Apple Store in Beijing. Not everyone is persuaded that Apple’s approach has worked. That said, If Apple had picked up the pace, it might have gone too fast for its own good. Just ask Google.
Developers Still More Interested In iOS Than Android (Flurry)
Flurry has found that Apple continues to garner more support from developers, despite Android’s greater market share. Roughly 70% of all apps are made for iOS while only 30% are for Android. “Apple offers the most compelling ‘build once, run anywhere’ value proposition in the market today, delivering maximum consumer reach to developers reach for minimal cost,” according to Flurry analyst Peter Farago. Android fragmentation is also an issue and is increasing the complexity and cost for app developers.
Siri’s Inventor Comes To Her defence (Fortune)
While he doesn’t deny she has her issues, the guy who invented Siri has a message for users who can’t get the hang of the Apple’s virtual personal assistant: She works just fine. Dag Kittlaus says, “I completely disagree with people who say it doesn’t work very well. You don’t launch a product that isn’t into the 90th percentile of working if you’re using it properly.” When asked how close Apple’s latest round of upgrades has come to meeting his original vision for Siri, Kittlaus said, “They’re just getting going… and I’m really excited to see where it goes.”
Apple Will Finally Throw In The Towel On Ping (All Things Digital)
Apple has finally acknowledged what the market has been telling it since it first debuted Ping, its social network for music, in September of 2010. The service is a failure. And rather than continue to maintain Ping, the company is abandoning it and using its partnerships with Twitter and Facebook to make its various software and service offerings social in a way that consumers actually care about. Sources close to the company say that Ping, which still exists today in iTunes 10.6.3 and the iOS 6 beta will be gone with the software’s next major release.
Why Apple Buying Facebook Now Makes Sense (The Street)
Facebook is now worth “just” $58.4 billion, a long way from the estimated $100 billion. Apple still lacks a social network. Its “cloud” is a data centre. Facebook has been building a real cloud and it has engineers who understand the need to save money on cloud installations if you want them to last. Facebook’s investors would jump at a bid of $80 billion. As of last quarter, Apple had a cash hoard estimated at $97.6 billion. So Apple could easily do a half-cash bid for Facebook, acquiring a fast-growing asset with significant cloud presence for less than one-tenth its common stock and less than one-half the cash it has on hand.