The Apple Investor is a daily report from SAI. Sign up here to receive it by email.
AAPL Up On Positive Market Sentiment
The market is up as investors gain confidence in the banking sector and China’s economy continues its robust growth. Shares of AAPL are up a strong $4 in early trading. Future catalysts for AAPL include monthly NPD data (Mac / iPod business); iPhone unit updates and AT&T exclusivity expiration; iPad sales updates; new content revenue streams such as video and books; and the refresh of Apple TV. AAPL trades at 15x Enterprise Value / Trailing Twelve Months Free Cash Flow (incl. long-term marketable securities).
Investors Are Loathing The Tech Sector; Apple Rising Relatively Above The Crowd (Barron’s)
Bernstein Research analyst Toni Sacconaghi is pointing out that tech shares have dropped to their lowest valuation, relative to the S&P 500, in nearly 20 years. Investors have developed a new found hatred for the sector with several large-cap tech companies experiencing the brunt of the disdain. Reason’s behind the change; investors may believe the sector is secular, there could be an increase in perceived risk, and annoyance at the refusal to grant dividends. Another reason could be that these companies do not report GAAP earnings, save one: Apple.
Getting To Tens Of Millions Of FaceTime Enable Devices Means New iPad And iChat (Forbes)
Steve Jobs said Apple would ship “tens of millions” of FaceTime (Wi-Fi-based video conferencing protocol) devices by the end of the year. Selling about 1 million units of the iPhone 4 gets the company to about 6-8 million enabled devices. However, Apple Insider is reporting that Apple is speeding up development of a camera-equipped iPad that could run the protocol. And, if FaceTime comes to iChat before Christmas, the Mac line would be included in that number as well.
Apple’s Concession to Developers May End Up Pushing iPhone Pricing Down (The Wall Street Journal)
Martin Peers at the Wall Street Journal believes that Apple’s concession to developers may reduce the company’s competitive edge over Google’s Android in the app world and could lead to an erosion of profits. In the short term, Apple likely has more to lose, given its existing lead in apps and no longer holding automatic claim to the best hardware (given the antenna debacle). The longer-term question is whether Apple can keep the premium price on the iPhone. Investors “need to really worry if Android starts forcing the price of iPhones down sharply.”
iPhone Being Tested In Two Major Banks As A Blackberry Alternative (Bloomberg)
JPMorgan (220,000 worldwide employees) is testing the iPhone as well as Android smartphones as a Blackberry alternative. UBS (63,000 employees) also said it is also considering allowing staff to use iPhones for company messaging as more employees opt for the Apple product. Back in May, Standard Chartered Bank said that the company was switching from the BlackBerry to the iPhone for employees and expects to have 15,000 distributed by year-end. More evidence that Blackberry is in some serious trouble.
Apple Poised To Knock Exxon Out As The Most Valuable Company (The Motley Fool)
Erin Bleeker at The Motley Fool believes that Apple will dethrone Exxon to become the most valuable company in the world for the following reasons: 1) software is the new kingmaker; 2) iOS scales; 3) positive consumer behaviour; and 4) underrated smartphone growth. Admittedly, Apple has some risks. Namely Google. And with ~$240 billion market-cap, it has a ways to catch up to Exxon at $310 billion.
Business Insider Emails & Alerts
Site highlights each day to your inbox.