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AAPL Mixed As Market Rises
Markets are up in early trading as April industrial production numbers and housing starts jump. Shares of AAPL are sideways on the heels of yesterday’s relentless selling. Upcoming events include Tim Cook’s keynote at the D10 Conference on May 29 and 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; 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 8.8x Enterprise Value / Trailing Twelve Months Free Cash Flow (including long-term marketable securities).
More Analysts Concerned With Quarter, But Sticking To Their Guns (Barron’s)
Recent analyst activity:
- Topeka Capital: Brian White reiterated his Buy rating on shares of Apple with a $1,111 price-target however his sales “barometer” for Apple points to weak than usual activity in April. The metric fell 8%, month-over-month, worse than the usual 1% decline. Still, it was 24% growth, year-over-year, and it’s likely Apple can still deliver results for this quarter better than its own forecast.
- Piper Jaffray: Gene Munster reiterated an Overweight rating on Apple shares and a $910 price-target, despite U.S. sales of the Mac for April showing a 13% year-over-year decline in unit sales (according to NPD data) versus quarterly Street consensus estimates of up ~15%. Munster thinks Apple can still make that consensus number: “We expect a Mac refresh in the quarter, which will reinvigorate unit sales.”
Not an outright panic yet.
Time Warner Cable CEO Doesn’t Know What He’s Up Against (The New York Times)
As most of us know, Apple’s AirPlay is widely viewed as being potentially disruptive to the cable industry, because it makes it easy for people to view a broad variety of Internet content on a television. Time Warner Cable CEO Glenn Britt, however, hasn’t heard of it. He says that there was no simple way to get Internet-based video onto the television screen. “I’m not sure I know what AirPlay is,” he said. To be fair, Britt runs a massive entertainment company. But you would think someone would have briefed him about the service at some point.
The iTV Doesn’t Make Sense And Would Be A Terrible Use Of Retail Space (Fortune)
There is no shortage of iTV speculation, however, Pacific Crest analyst Andy Hargreaves has poured the coldest water on the idea yet. He makes two main points:
- Content: “Investment in Apple television makes little sense without a unique TV content offering.”
- Retail Space: “An Apple television would be a terrible use of retail space relative to iPhone, iPad or the Apple TV set-top box.”
Apple is reportedly courting Hollywood to let it stream content onto its TV, though it’s unclear whether how successful these efforts have been to date. That all said, here’s an exclusive on how the new Apple TV software might work.
Chrome On iOS Is Going To Have A Tough Go Of It (GigaOM)
Google’s Chrome browser is assumed to be coming for Apple’s iPhone, iPad and iPod touch devices by Macquarie (USA) Equities Research. The report suggests it could reduce the amount of money Google pays to Apple for the use of Google searches in the native iOS Safari browser. Given the growth of iOS devices sales and usage, the reduction in such payments could be meaningful if users transition from Safari to Chrome on iOS. That said, the odds of a third-party browser on iOS becoming a major success are very limited at best because none of them can be set as the default browser. Bring on the second wave of browser wars.
Apple Supposedly Abandoning Google Maps For Something In-House (9to5Mac)
According to sources, Apple will abandon Google’s mapping back-end in the next major iteration of iOS, replacing it with a brand-new mapping application powered by Apple technology. The application design is said to be fairly similar to the current Google Maps program on the iPhone, iPad, and iPod touch, but it is described as a much cleaner, faster, and more reliable experience.
iPad Is Dominating In The Doctors Office And Will Continue To Do So (PMLiVE)
According to Manhattan Research, U.S. doctors’ use of mobile devices like smartphones and Apple’s iPad is firmly in the mainstream. Adoption of tablet devices by U.S. physicians, for whom the iPad is the dominant platform, has nearly doubled since 2011, with 62% of those surveyed saying they use one for professional purposes. The iPad is expected to continue its domination of the market over the next 12 months, and forecast two thirds of physicians will be using iPads professionally in 2013.
Cadillac Taking A Page Out Of Mercedes Book And Using Apple As Value-Add (Wired)
Cadillac plans to give every new CTS owner an iPad full of directions that go over the car’s features to “be the leader in customer experience.” It is worth noting that Cadillac does not plan to actually integrate the iPad into the dashboard, but it will rather come preloaded with manuals that teach the new owners all about the car. Mercedes’ new A-class is launching with Siri built-in, allowing drivers to make appointments, send text messages and emails, get weather information, and control their music through voice commands. Apple is also patenting an in-car iPod remote.
Are “Huge” Orders Of Flexible Screens Coming From Apple? (The Korean Times)
Apple is rumoured to be one of the handset makers who will ask Samsung to provide them with flexible OLED screens which go into mass production later this year. Samsung Vice Chairman Kwon Oh-hyun revealed his company has seen “huge” orders for its pliable organic light emitting diode displays. The flexible OLED will not be found in Apple’s sixth-generation iPhone, but it’s possible that Apple could adapt the technology in the future, for what it dubbed an “iPhone Yoga.” Oh brother.
Four More Reasons Why Apple Is A Bubble (Forbes)
In a follow up to an earlier article, here are four more reasons why Apple is a bubble:
- $ per head of the whole of humanity: Apple is worth $1,700 for every man, woman and child in the U.S. That is equivalent to $78 per man, woman and child in the whole world. Doesn’t that strike you as rather a lot?
- Android: iPhone now has real competition and surely it will have more and more.
- Bumpers are off: The iPhone has now become an every day item. The magic is gone; the iPhone is mundane.
- $1 trillion dollars: At $1,000, Apple will be worth $1 trillion dollars. It occurs to me that the statement “a company worth $1 trillion dollars is a bubble” is a tautology.
He could be wrong.
Why Apple Is So Undervalued Versus Amazon (Seeking Alpha)
One of the great mysteries of today’s market is the way Apple stock trades at such a huge discount to say Amazon. In terms of price-to-earnings, Apple trades at a forward 2012 P/E of 12x, while Amazon trades at a forward 2012 P/E of 193x. Basically, the valuation differential is impossible to rationally explain. The allocation of actively managed growth funds might be at the basis of the discrepancy, since these funds are severely under-weighting Apple vs. Amazon. The too-large weight of Apple and the lack of large-cap growth alternatives might be plausible causes for the phenomenon.