The Apple Investor is a daily report from SAI. Sign up here to receive it by email.
AAPL Up As Market Sinks
Markets are off after the elections in Greece. Spain and Italy are also getting crushed. Shares of AAPL, however, as the tech tape climbs up after morning lows. 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; the introduction of the anticipated Apple TV set; and evolution of platforms such as Siri, iAd and iBooks. Shares of Apple trade at 9.0x Enterprise Value / Trailing Twelve Months Free Cash Flow (including long-term marketable securities).Apple TV Won’t Kill The Cable Companies (Forbes)
One of the thoughts being touted is that Apple is planning on destroying the cable companies with its HDTV set. People who believe in this scenario say Apple revolutionised the telecom industry with the iPhone introduced 5 years ago so why wouldn’t they revolutionise cable in the same way. Apple’s far more likely to partner with the cable companies instead of killing them. Why?
- If Apple was going to kill the cable companies with TV, they would have also had to kill the carriers when they introduced the iPhone (which Steve Jobs wanted to, but couldn’t).
- Content rights make partnering a better strategy with TV, at least at first.
- Hollywood makes more money and produces more content with the status quo bundled model. Apple is very sympathetic to these interests of content makers.
- Steve Jobs’ spouse is the biggest holder of Disney stock and Bob Iger serves on the Apple Board. Do you think Tim Cook went in to a recent board meeting to discuss his strategy of how to let consumers buy ESPN on a purely a la carte basis?
Apple Needs To Break Monotony Or They Will Become RIM (Jason Pensill)
Jason Pensill is trying to portray an accurate representation of where iOS 6 leaves Apple and the upcoming iPhone 5. Five years of monotony, when is enough enough? This is why he feels next year will be Apple’s year to push the envelope, if they don’t, they’ve truly become the new RIM. All other platforms are gaining traction, it is now Apple’s time to make that huge impact they initially made with the introduction of the iOS platform.
Will The iPhone 5 See Lower Than Anticipated Demand? (BGR)
BTIG analyst Walter Piecyk noted that AT&T estimates “that the vast majority of AT&T iPhone customers will not qualify for an upgrade” when the iPhone 5 launches later this year. There will likely be a number of iPhone 4S owners willing to pay full price for Apple’s sixth-generation iPhone. In the past, numerous iPhone users under contract have purchased new devices at full price and then recouped some of that expense by selling their previous-generation models. But the sheer volume of recent iPhone 4S buyers could very well impact demand for the upcoming iPhone, however, and at least at AT&T, this seems like it may be the case.
Does Apple’s Passbook Make Any Cents? (All Things Digital)
In many ways, the iPhone is already a wallet. Apple officially announced its first steps into the payments space with Passbook but hasn’t said if it will accept payments or store any credit card information. Most expect that is where Apple is headed. Accepting payments is a lot trickier than it sounds. Transferring money responsibly between parties is extremely sensitive. Even for Apple, it could prove difficult to come up with a game changer that would be as elegant as they’d like it to be and make everyone happy. It may be inevitable that Apple enters the payments space, but whether it pulls it off is another thing entirely.
Apple And Samsung Have 50% Market Share And 90% Of The Profits
(ABI Research via Cult Of Mac)
According ABI Research, Apple and Samsung have 50% of the smartphone market and 90% of the global profits from that market. Samsung shipped 43 million smartphones in the first quarter of this year, while Apple shipped 35 million. The firm quick to point out that the iPhone 4S was released in the fourth quarter of last year, shipping 37 million iPhones, “slipping” this quarter to a “still impressive” 35 million. Add them up and in two quarters, Apple shipped 53 million iPhones.
Apple’s Revenue Growth: A Bullet Train With A Dual Track (Seeking Alpha)
If Apple were a bullet train, it would be a bullet train powered by two parallel tracks. The first track is exceptional product design and the consequential product popularity. The second track is expansion of product sales into new and emerging markets. Although Apple’s annual cycle of product refreshes will influence and promote new product sales, the company’s continuing global expansion will govern the pace of unit sales and revenue growth. At 14x trailing 12-month earnings, more than $115 in cash standing behind each outstanding share and management’s relentless approach to global market expansion, Apple represents an attractive long-term buy.