The Apple Investor is a daily report from SAI. Sign up here to receive it by email.
AAPL Down With The Rest
Stocks are tanking today as non-farm payrolls added only 80K jobs versus the expected 104K jobs. While the unemployment rate on the home front fell to 9%, concerns over Europe’s stability – Italy (and Greece) in particular – are bring the markets down. Shares of AAPL are also in the negative trading just below $400. Catalysts include iPhone upgrade cycle and response to the free iPhone 3GS; update to the iPad in early 2012 (see below); continued growth of the Mac business line; penetration China and emerging markets; the evolution and reconstruction of Apple TV; and platforms such as mobile advertising (iAd), books / publishing and social (Ping). Shares of Apple trade at 8.9x Enterprise Value / Trailing Twelve Months Free Cash Flow (including long-term marketable securities).CapEx Guidance Suggests Street Is Low On Fiscal 2012 Revenue Estimates (Barron’s)
Barclays analyst Ben Reitzes believes that a look at capital expenditures (capex) may imply fiscal 2012 revenue above Street consensus. The Street is currently modelling $139 billion in revenue. Apple projects it’ll have capital spending of $8 billion this year, up from $4.6 billion last year. Meaning if Apple were to increase its “capex-to-revenue ratio to 5% in FY12, based on its capex guidance it would still imply an FY12 revenue figure of close to $160 billion.” Reitzes maintains an Overweight rating and $555 price-target.
Amazon Kindle Fire Will Only Make Users Flee To The iPad Says Apple (BGR)
Again, busy Barclays analyst Ben Reitzes spoke with Apple CEO Tim Cook and CFO Peter Oppenheimer about Amazon’s Kindle Fire and they aren’t worried. They see Amazon’s forthcoming tablet as good news for the iPad. The Kindle Fire’s low price point makes it accessible, but Apple believes it further fragments the Android ecosystem, which may cause consumers (and developers) to flee to the iPad. Reitzes does “believe Apple will get more aggressive on price with the iPad eventually but not compromise the product quality and experience.” Per usual Apple style.
IDC Confirms Samsung Was Smartphone Leader Over The Summer (IDC)
Research group IDC confirmed that Samsung had overtaken Apple (at least temporarily) for the lead in global smartphone shipments. It is estimated that Samsung shipped 23.6 million smartphones in the summer, or 20% market share. A wait for the iPhone 4S meant Apple’s 17.1 million units pushed it to 14.5%. Nokia continued to slide where its market share was more than cut in half to 14.2% while HTC’s climbed to 10.8% ahead of Research In Motion at 10%. We’ll see what happens in the holiday quarter with the iPhone 4S. Apple will probably be back on top.
Is Apple Going To Overhaul All Product Lines Next Year? (DigiTimes)
Apple may have plan to completely overhaul product lineups, including: iPad, iMac, iPhone and MacBook Air next year. The company is expected to finalise order volumes for key parts and components for the next-generation iPad in December. The next-generation iPhone and iMac are unlikely to be revealed until the second half of 2012. At first, a complete refresh of all product lines seems like a tall order. And yet, if you drill down, it doesn’t seem that far fetched. Check out this chart from SplatF.
To Succeed At TV, Apple Will Have To Embrace Ads (GigaOM)
If Apple hopes to succeed at getting content providers on board with a new TV platform, it’s going to need to open up Apple TV (and whatever incarnation that may be coming) to allow third-party ads to be served. Current content on Apple TV is either subscription-based or pay-per-view. Even sites that serve ads online have yet to monetise views on Apple TV. There’s currently no mechanism for serving ads other than through AirPlay streaming from a mobile device. This is where Apple needs to get on the ball if it hopes to get its “apps as channels” plans underway.
Since They Wouldn’t Sell, Apple Is Sticking It To Dropbox (MacWorld)
Tricky. Registered iCloud OS X Lion users have a hidden “drop box” in the their Library folder that allows for easy document and file syncing between Macs. Popping files into the folder isn’t as easy right now as it is with Dropbox and SugarSync. But it is strong evidence that Apple is considering a new Dropbox-like project. All Apple would have to do is make this folder visible. Apple did try to buy Dropbox and got rejected big time.