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AAPL Up Slightly As Market Fights To Come Back
The market is staging a big turnaround, off of morning lows. Shares of AAPL are up marginally. 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 8.9x Enterprise Value / Trailing Twelve Months Free Cash Flow (including long-term marketable securities).The Market Doesn’t Value Apple On Earnings Growth (Asymco)
Apple’s share price has been de-coupled from its earnings for many years. There is no correlation between EPS growth and value growth, even consistent earnings growth above 70%. Then what is being valued? Since future cash flows are being thrown out of the equation, the company must be valued as a multiple of its cash and a strong correlation can be observed. Of course, the market “is being irrational” because it values on the basis of the present only. So as far as the market is concerned Apple’s future is irrelevant. Its value is defined as a constant multiple of cash.
China Telecom Makes A Push For The Corporate iPhone Consumer (The Standard)
China Telecom launched a promotion in a bid to boost sales of iPhones in Beijing. Customers who buy 10 iPhone 4S sets together and register for a plan at the same time will be given another iPhone. A China Telecom spokesman said the promotion was aimed at corporate clients who are providing members of their staffs with cutting-edge communication tools. The program is also being seen as an effort to quickly boost profits following disappointing earnings in the first three months of the year.
Does Apple’s Dependence On China Make It Vulnerable? (Read Write Web)
Apple seems able to do no wrong. Such stellar numbers disguise the possibility that Apple’s near future may not be so prosperous, particularly if it falters in China. The best indicators of Apple’s future are likely to be seen in China, where the company is trying to strike a deal with the country’s largest carrier, China Mobile. “Apple needs the partnership in order for them to continue to expand their share there,” says Crawford Del Prete, analyst for market researcher IDC. Even with China Mobile, though, Apple faces hurdles. Namely competition and pricing.
This Carrier Subsidy Thing Might Be Worrisome (Business Insider)
Henry Blodget at Business Insider highlights some issues regarding the carriers that really could be a thorn in Apple’s stock. First, the iPhone now accounts for more than 50% of Apple’s revenues (see chart above). So any change in the growth trajectory of the product line will have a big impact on the company’s performance. Second, carriers do not need to eliminate subsidies for there to be a negative impact on the velocity of iPhone sales. Carriers merely have to discourage rapid upgrades and encourage existing customers to keep phones longer. And the rate at which each generation of iPhones (and other smartphones) improves over the prior generation is slowing.
Apple’s Reputation Unfazed By Tax Avoidance Report (YouGov)
Apple is virtually “Teflon” in public reputation in the U.S. The company’s consumer reputation has barely budged since The New York Times story revealing that the company avoids paying taxes. On the other hand, when The New York Times ran a similar report on GE, the reaction was more pronounced and longer: the company’s reputation took a steep drop and two months to recover to pre-crisis levels. Apple’s reputation score actually went up.
30 New Countries To Get The New iPad This Week (Various via Scoople)
Apple will be rolling out its newest iPad to 30 more countries this weekend. Of the lot, 23 countries will start selling the third-generation iPad on Friday and 7 more countries will be added Saturday. The largest of the countries to get the new iPad is Brazil. That seems a little insensitive on Apple’s part to delay the launch so long considering Foxconn’s Brazilian factories build the device. Analysts should probably start upping their iPad estimates.
T-Mobile Will Be iPhone Ready End Of Year (All Things Digital)
While much of the attention on T-Mobile’s planned $4 billion network upgrade has centered around its plans to launch LTE next year, there is another key component to the strategy. The company is also looking to free up space in another part of its spectrum that should finally allow iPhone users to run on its network at full speed. The company has about a million iPhone subscribers, even though those devices can only run at slow 2G speeds. T-Mobile USA does not sell the iPhone itself.
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