New products, possible Verizon deal expected to boost Apple stock

[AppleInsider]

MacBook Pro and iPod refreshes, iPhone 3GS expansion, and a possible data-centric Verizon Wireless device are expected to increase Apple's stock in the short-term, according to a new analysis.

UBS on Monday issued a short-term "Buy" rating on Apple's stock, and also raised the target price from $160 to $170. Analyst Maynard Um, however, maintained the stock's neutral rating for its 12-month forecast.

"Although our concerns regarding the potential impact of broader economic weakness remain," Um wrote, "a full (quarter) of MacBook Pro refreshes & iPhone 3GS expansion internationally should help Sept. (quarter). From a catalyst perspective, a potential data-centric (product) at Verizon Wireless, potential iPod refreshes, & new wireless operators (China, Europe non-exclusives, etc.) may help near term sentiment."

In the past, Um has expressed concern that increased component costs, particularly on LCD panels, could hurt the company's bottom line. He believes, however, that the announcement of a Verizon Wireless product would change the stock's outlook. Of all major analysts surveyed by AppleInsider after Apple's third quarter earnings report, UBS was the only one that was not bullish on AAPL stock.

With his latest report, Um believes that iPhone 3GS expansion, Mac sales and new products will drive the company's revenue higher in the short term. However, he believes it will be somewhat offset by component pricing -- what he calls "the big wild card."

Um notes that Apple's fourth-quarter gross margins are usually lower, though that may be offset this year by higher margins on the iPhone.

In the June quarter, Apple reported record sales on the strength of the Mac and iPhone. The company posted revenue of $8.34 billion and a net quarterly profit of $1.23 billion, or $1.35 per diluted share.

Apple has clearly stated they intend to launch the iPhone in China soon. Last month, a new model of the iPhone for the China Unicom network was approved for use in the country, fueling speculation that an announcement could be nearing.

[ View this article at AppleInsider.com ]

[Zoolook]

As far as individual investors go, unless Apple offers a dividend, they're only going to be a short term opportunity. It just can't be justified as a buy and hold stock, it's always going to be a buy and sell.

[Quadra 610]

This might help as well . . . if it's true.

http://www.macdailynews.com/index.ph..._with_blu_ray/

[crees!]

This is another post that just says nothing.

He believes, however, that the announcement of a Verizon Wireless product would change the stock's outlook.

Let's put it this way. Announcing a product or NOT announcing a product will affect the company's stock outlook. What do you think of those apples.

[wizard69]

Appleinsider this is starting to get really old an analysts report is not news and is not a rumor thus is not info we need to see here. I mean really a contract with another cell company might impact Apples stock - who would have thought of such a thing. A prostitute has more reason for being than these guys.

I don't know what the rest of Appleinsider thinks but these analyst reports are a waste of time. Maybe a poll is in order to see if the readership is even half interested in this stuff. It is just a shame that Appleinsider validates these idiots by printing this crap.




Dave

[teckstud]

Originally Posted by wizard69

Appleinsider this is starting to get really old an analysts report is not news and is not a rumor thus is not info we need to see here. I mean really a contract with another cell company might impact Apples stock - who would have thought of such a thing. A prostitute has more reason for being than these guys.

I don't know what the rest of Appleinsider thinks but these analyst reports are a waste of time. Maybe a poll is in order to see if the readership is even half interested in this stuff. It is just a shame that Appleinsider validates these idiots by printing this crap.




Dave

Totally agree- but just like anything similar, I ignore it. I mean if this were written 3 months ago, it might have some credence but now as is? total BS.

[al_bundy]

the growth is down to 10% which is a dead money stock

MS introduced a lot of new products and gained market share in a lot of markets in the last 10 years and yet its stock went no where with it's 10% average growth

Mac's to Apple are like bastard step children. like windows and office is to MS. it's a source of cash you can't give up but there is no more innovation and the growth is low single digits at best. The cool stuff for Apple are the consumer devices and for MS the server business and X-Box

[jazzguru]

In other words: stuff that Apple may or may not do in the near future may or may not affect their stock price positively or negatively.

Brilliant.

[Bageljoey]

Originally Posted by Zoolook

As far as individual investors go, unless Apple offers a dividend, they're only going to be a short term opportunity. It just can't be justified as a buy and hold stock, it's always going to be a buy and sell.

Yeah, this makes a lot of sense...
Maybe a poll of people who bought and held Apple 8-10 years ago is in order. We could ask them how much they miss those dividends that GM and Citigroup were giving out...

[sequitur]

Originally Posted by Zoolook

As far as individual investors go, unless Apple offers a dividend, they're only going to be a short term opportunity. It just can't be justified as a buy and hold stock, it's always going to be a buy and sell.

You're right. That's been my experience.

[kenaustus]

I think Apple is getting ready to jolt the market and the stock market in the near future. The back-to-school special ends around September 1st and I'm looking for some new products at that time.

When you think about it, Apple has the talent and potential to deliver some products that consumers will lust after. I have a new 13" MBP and the wife has a new Air and I'm ready to lust for more - like a new iMac.

The netbook market is still open for a tablet or a 10" - 11" MBP.

New iPods for the Holiday Season, maybe even an iPhone Nano?

And the list goes on. It's called Apple's Fall Potential in my books.

[Bageljoey]

Originally Posted by wizard69

I don't know what the rest of Appleinsider thinks but these analyst reports are a waste of time. Maybe a poll is in order to see if the readership is even half interested in this stuff. It is just a shame that Appleinsider validates these idiots by printing this crap.

Dave

It's no biggie to me. It is almost always clear from the title when they will be putting up annalysts claims. Easy to skip if you have no interest.
Me, I read them for two reasons.
1) even if I don't think a pundent has a clue, it can be informative to hear what others might be hearing and taking for fact. This is true for me with any kind of reporting, not just financial. And
2) I get some perverse pleasure out of seeing how long it takes before someone posts "these analysts are all idiots!!!1!". It is the same with patent claim articles and the inevitable "well, I patented air (or the word 'the' or binary numbers).

[Tut]

He made a mistake when he was negative after the Q3 report (a $160 target). A simple check will show any of his customers that he was way off. All the talk about coming products is just an excuse to raise his target above the current price ($164.40).

He should be ignored.

[SpamSandwich]

Originally Posted by jazzguru

In other words: stuff that Apple may or may not do in the near future may or may not affect their stock price positively or negatively.

Brilliant.

That's as good a summary as any analysts report.

[SpamSandwich]

Originally Posted by kenaustus

I think Apple is getting ready to jolt the market and the stock market in the near future. The back-to-school special ends around September 1st and I'm looking for some new products at that time.

When you think about it, Apple has the talent and potential to deliver some products that consumers will lust after. I have a new 13" MBP and the wife has a new Air and I'm ready to lust for more - like a new iMac.

The netbook market is still open for a tablet or a 10" - 11" MBP.

New iPods for the Holiday Season, maybe even an iPhone Nano?

And the list goes on. It's called Apple's Fall Potential in my books.

No, the Back To School selling season has already begun. Something that Apple needs to be taken to task over, IMO. There ARE retail selling seasons that they simply do not take advantage of, and that is simply bad business.

[Quadra 610]

Originally Posted by jazzguru

In other words: stuff that Apple may or may not do in the near future may or may not affect their stock price positively or negatively.

Brilliant.

That's money, right there. You've just qualified to be an analyst. In fact, you've pretty much summed up the extent of most analysts' average knowledge on the subject.

[elroth]

Originally Posted by Zoolook

As far as individual investors go, unless Apple offers a dividend, they're only going to be a short term opportunity. It just can't be justified as a buy and hold stock, it's always going to be a buy and sell.

That's hilarious.

[Dr Millmoss]

Originally Posted by Zoolook

As far as individual investors go, unless Apple offers a dividend, they're only going to be a short term opportunity. It just can't be justified as a buy and hold stock, it's always going to be a buy and sell.

I'm not sure what you are arguing here. I think Apple should declare a dividend, not because they don't have growth potential, but because they have far more cash on hand than they can reinvest sensibly in their business.

Originally Posted by Bageljoey

Yeah, this makes a lot of sense...
Maybe a poll of people who bought and held Apple 8-10 years ago is in order. We could ask them how much they miss those dividends that GM and Citigroup were giving out...

I've been an AAPL stockholder for 12 years. I think they should have declared a modest dividend two or three years ago.

[Johnny Mozzarella]

Originally Posted by al_bundy

the growth is down to 10% which is a dead money stock

MS introduced a lot of new products and gained market share in a lot of markets in the last 10 years and yet its stock went no where with it's 10% average growth

Mac's to Apple are like bastard step children. like windows and office is to MS. it's a source of cash you can't give up but there is no more innovation and the growth is low single digits at best. The cool stuff for Apple are the consumer devices and for MS the server business and X-Box

Are you trolling or just stupid?

Apple is innovating in all it's core businesses and they ALL FEED ON EACH OTHER. An investment in one area benefits all other areas.

[melgross]

Originally Posted by Zoolook

As far as individual investors go, unless Apple offers a dividend, they're only going to be a short term opportunity. It just can't be justified as a buy and hold stock, it's always going to be a buy and sell.

That's not true at all. I bought a large amount of Apple in mid 2004, and have bought more over time. Look at the price back then, and the split, and you'll see why you are wrong.

[melgross]

Originally Posted by al_bundy

the growth is down to 10% which is a dead money stock

MS introduced a lot of new products and gained market share in a lot of markets in the last 10 years and yet its stock went no where with it's 10% average growth

Mac's to Apple are like bastard step children. like windows and office is to MS. it's a source of cash you can't give up but there is no more innovation and the growth is low single digits at best. The cool stuff for Apple are the consumer devices and for MS the server business and X-Box

Apple's growth this year is down to 10% because we're in the middle of the biggest worldwide recession since the Great Depression. No doubt, over time, this will be known as the Great Recession.

Don't use numbers of a company during a major financial crisis as your new expected growth rate. Doing that shows you have no long term understanding of Apple and its markets.

Considering that Apple is doing much better than expected during this time, you should be taking that into account vs other comparable competitors.

[Quadra 610]

Originally Posted by melgross

Apple's growth this year is down to 10% because we're in the middle of the biggest worldwide recession since the Great Depression. No doubt, over time, this will be known as the Great Recession.

Don't use numbers of a company during a major financial crisis as your new expected growth rate. Doing that shows you have no long term understanding of Apple and its markets.

Considering that Apple is doing much better than expected during this time, you should be taking that into account vs other comparable competitors.

It's also interesting to note that Apple is currently recession-proof. Everyone else is losing money, especially on dumb ventures like low-cost, low-quality netboosks. Examples are Dell and Lenovo.

[jazzguru]

Originally Posted by Quadra 610

It's also interesting to note that Apple is currently recession-proof. Everyone else is losing money, especially on dumb ventures like low-cost, low-quality netboosks. Examples are Dell and Lenovo.

I agree. I find the netbook phenomenon fascinating. I personally own one and I love it for what it is. It does fill a particular need for me that not even a MacBook could have filled in terms of portability.

But the profit margins are so slim that unless you have a corner on the netbook market - which no one company does at this point - you're not going to make a lot of money there. You have to sell millions of the things in order to make a semi-decent profit.

So, while Dell, HP, MSI, Acer, Asus, etc. fight for advantage in a super-crowded market, Apple is quite comfortable with its 90+% share of the high-end market, where the profit margins are much, MUCH better.

[Dr Millmoss]

Originally Posted by jazzguru

But the profit margins are so slim that unless you have a corner on the netbook market - which no one company does at this point - you're not going to make a lot of money there. You have to sell millions of the things in order to make a semi-decent profit.

The margins are still going to stink. Really the netbook market is just a microcosm of the larger Windows PC market.

[Zoolook]

Originally Posted by elroth

That's hilarious.

It is?

Originally Posted by Dr Millmoss

I'm not sure what you are arguing here. I think Apple should declare a dividend, not because they don't have growth potential, but because they have far more cash on hand than they can reinvest sensibly in their business.

I've been an AAPL stockholder for 12 years. I think they should have declared a modest dividend two or three years ago.

That's an additional reason they should, yes.

Originally Posted by melgross

That's not true at all. I bought a large amount of Apple in mid 2004, and have bought more over time. Look at the price back then, and the split, and you'll see why you are wrong.

You understand the difference between realized and unrealized PnL right? Until you sell, it's unrealized and (heaven forbid) if Apple were to get themselves into trouble for any bizzare reason, your investment might suddenly deliver nothing. Sure, with Apple that's exceptionally unlikely given the current market and their cash reserves, but not entirely unprecedented. You could have bought APPL in 1987 at $13, you' have only just broken even in 2004. An investment of $10,000 even with a 0.02 yield (reinvested) on the other hand, would have netted the investor $5,000 profit in the same period, meaning the share price would need to collapse to half its value to suffer an actual loss.

Many day traders are tying to ride APPL up and down, making buy-and-hold investments risky, because small time investors never know when they may actually need that cash and be forced to sell. A dividend always means you can ride a small price drop and still come out on top in the medium term.

Before telling someone out and out that they're wrong, you might want to find out what they do for a living. Drop me a PM and I'll tell you.

[StrangeThingInTheLand]

Originally Posted by jazzguru

But the profit margins are so slim that unless you have a corner on the netbook market - which no one company does at this point - you're not going to make a lot of money there. You have to sell millions of the things in order to make a semi-decent profit.
.

Perhaps no PC maker, but I think some of the component suppliers have done just that . . . Intel comes to mind.

[SpamSandwich]

Originally Posted by melgross

Apple's growth this year is down to 10% because we're in the middle of the biggest worldwide recession since the Great Depression. No doubt, over time, this will be known as the Great Recession.

I wonder at what point the Great Depression was actually given that name? Our generation is so prone to categorizing, labeling and putting things into boxes events (9/11, The Great Recession) that fundamental understanding of events is glossed over in favor of an easily digestible news bite.

http://en.wikipedia.org/wiki/Great_Depression#Causes
(See the Austrian School explanation on the cause for the Great Depression)

A return to the gold standard and dissolving the Fed would do wonders for our nation and economy's health, although unlikely what with the fashionable wave of pro-government anti-thought that seems to be in such favor.

[Zoolook]

Originally Posted by SpamSandwich

I wonder at what point the Great Depression was actually given that name? Our generation is so prone to categorizing, labeling and putting things into boxes events (9/11, The Great Recession) that fundamental understanding of events is glossed over in favor of an easily digestible news bite.

During the depression, there were also market rallies of up to 45% before further crashes. We're currently in a very low volume rally (meaning it's weak), so the parallels with 1929 may not yet be too soon to ignore.

[aaarrrgggh]

Originally Posted by Zoolook

As far as individual investors go, unless Apple offers a dividend, they're only going to be a short term opportunity. It just can't be justified as a buy and hold stock, it's always going to be a buy and sell.

That is just plain wrong... on so many levels. While it is a great stock to trade around a position, it is also a very good low-maintenance buy-and-hold stock.

Dividends give you 5% yield on a (very) good day. If this analyst was credible and you were only going to get 5% share appreciation in the next 12 months then you could arguably make a case for safety, but the reality is that there is considerably more upside potential with Apple. The P/E of 28 suggests expectations of 14% growth, which I think are pretty low: smart money says they hit $1.50-1.70 EPS for FYQ4, which should bring P/E ratio closer to the historical norm of 35.

The only argument for not just plain holding the stock is that you think it will lose half its value if Steve Jobs dies. It's pretty hard to outperform Apple.

[jazzguru]

Originally Posted by SpamSandwich

A return to the gold standard and dissolving the Fed would do wonders for our nation and economy's health, although unlikely what with the fashionable wave of pro-government anti-thought that seems to be in such favor.

Werd. Abolishing the IRS and Department of Education should follow soon after.

[StrangeThingInTheLand]

Originally Posted by Zoolook

As far as individual investors go, unless Apple offers a dividend, they're only going to be a short term opportunity. It just can't be justified as a buy and hold stock, it's always going to be a buy and sell.

Not sure I buy this. While not without its detractors, Miller-Modigliana Theorem is widely regarded, and suggests that whether or not a company pays dividends is unrelated, to first order, to overall investment payout. There may be other reasons not to make Apple a buy and hold stock, but does it really hinge on the dividend issue?

Just a thought.

[Virgil-TB2]

Originally Posted by AppleInsider

... a possible data-centric Verizon Wireless device ...

I really wish people would stop regurgitating this nonsense.

It's quoted all over the place lately that Apple is thinking of making a device with a Verizon option and it's often the tablet that's fingered, but the implication from the way it's phrased is always that it's a Verizon exclusive when that would be the stupidest thing Apple could do to a new product.

Apple would not make any new product a Verizon exclusive. It won't happen.

It would screw over most of it's most important customers. Why would they do that? Any new product (tablet) that comes out, *if* it has a cell data connection, would of course work with AT&T and *maybe* Verizon as well, but it won't be exclusive to Verizon like everyone keeps implying, and if it isn't exclusive to Verizon, it should not be refered to as a "Verizon Wireless device" now should it?

[Zoolook]

Originally Posted by aaarrrgggh

That is just plain wrong... on so many levels. While it is a great stock to trade around a position, it is also a very good low-maintenance buy-and-hold stock.

I don't agree, see above.

Dividends give you 5% yield on a (very) good day. If this analyst was credible and you were only going to get 5% share appreciation in the next 12 months then you could arguably make a case for safety, but the reality is that there is considerably more upside potential with Apple.

A 12 month pitch-in is hardly a "buy-and-hold" it's a medium term bet, at best.

The P/E of 28 suggests expectations of 14% growth, which I think are pretty low: smart money says they hit $1.50-1.70 EPS for FYQ4, which should bring P/E ratio closer to the historical norm of 35.

Sure, and if you want to realize that, you need to sell towards the end of the year. Apple's business model is far from cemented; the iPhone is still very young, the Mac market isn't really doing anything radical outside of the US and iTunes may never become the video mecca some of us would like it to be. BTW, I am a ridiculous Apple fanboy so I say those things only from the point of view of a potential investor.

If someone has a spare $5,000 to throw at the market for a 5 year invest, APPL probably isn't the worst, but certainly not the best bet. I am not even going to go into the tax benefits of dividends to investors (and companies for that matter) or the fact that a dividend would probably drive the price up even further.

The only argument for not just plain holding the stock is that you think it will lose half its value if Steve Jobs dies. It's pretty hard to outperform Apple.

Or if you suddenly need that money to pay your mortgage. I don't think there is necessarily a right or wrong answer to this, it depends on whether you need to remain liquid to an extent, your investment timeframe and the rest of your portfolio.

I'm getting a bit fed up of being told I am 'wrong' for offering an opinion though...

[Zoolook]

Originally Posted by StrangeThingInTheLand

Not sure I buy this. While not without its detractors, Miller-Modigliana Theorem is widely regarded, and suggests that whether or not a company pays dividends is unrelated, to first order, to overall investment payout. There may be other reasons not to make Apple a buy and hold stock, but does it really hinge on the dividend issue?

Just a thought.

You're right, it's not the only factor, but for individual investors with limited capital and ability to absorb losses, for tax reasons and liquidity reasons, dividend paying stocks are usually advised. But that is not necessarily written in stone.

[PXT]

Originally Posted by wizard69

Appleinsider this is starting to get really old an analysts report is not news and is not a rumor thus is not info we need to see here. I mean really a contract with another cell company might impact Apples stock - who would have thought of such a thing. A prostitute has more reason for being than these guys.

I don't know what the rest of Appleinsider thinks but these analyst reports are a waste of time. Maybe a poll is in order to see if the readership is even half interested in this stuff. It is just a shame that Appleinsider validates these idiots by printing this crap.




Dave

Agreed. When news is light, I'd rather AppleInsider openly initiate a discussion on a topic, rather than print stuff from analysts as news.

Analysts are in the business of selling opinion. It doesn't matter what opinion, just that they have one, are forthright about it, then explain with another opinion when they turn out to be wrong. It's a good way of making money from old rope, but it's not news, it's not business intelligence and it's not really interesting.

Love the site.

[christopher126]

Originally Posted by Dr Millmoss

The margins are still going to stink. Really the netbook market is just a microcosm of the larger Windows PC market.

Agreed! Dell and others are employing a flawed business model, 'shave pennies off production costs to increase profitability. It's a mug's game!

You can't "save" yourself into prosperity.

Once again it will take Apple to innovate (10" Tablet) giving the netbook producers something to imitate, albeit with an inferior product, but with healthier margins.

They will be sold to the uninformed and those with misguided ideas of 'value,' ie., choice made solely on low price.

Very similar to what Apple did with the iPhone for RIM, Sprint, etc., to some degree what OSX did for MS/Vista and certainly what their laptops/desktops have done for HP and all the rest of the Windows' machines!

[hiimamac]

Doesn't verizon have that new portable 4G hotspot? If so I could see that hurting AT&T in Data pricing. At the same time, I could see iPhones taking a hit on teethering. One portable hotspot for all, including iPhones vseach iPhone data plan at a slower speed 3g vs 4G. Time fir AT&T to finally dump the overpriced Data plan that doesn't include teethering, streaming over 10 megs, enough is enough AT&T.

Maybe verizon will be the temporary AMD that drive down the price if intel chips for years.

Peace.

Originally Posted by crees!

This is another post that just says nothing.



Let's put it this way. Announcing a product or NOT announcing a product will affect the company's stock outlook. What do you think of those apples.

Originally Posted by kenaustus

I think Apple is getting ready to jolt the market and the stock market in the near future. The back-to-school special ends around September 1st and I'm looking for some new products at that time.

When you think about it, Apple has the talent and potential to deliver some products that consumers will lust after. I have a new 13" MBP and the wife has a new Air and I'm ready to lust for more - like a new iMac.

The netbook market is still open for a tablet or a 10" - 11" MBP.

New iPods for the Holiday Season, maybe even an iPhone Nano?

And the list goes on. It's called Apple's Fall Potential in my books.

[tundraboy]

Originally Posted by jazzguru

But the profit margins are so slim that unless you have a corner on the netbook market - which no one company does at this point - you're not going to make a lot of money there. You have to sell millions of the things in order to make a semi-decent profit.

I believe you mean 'unless you have cornered the netbook market'. If you have a corner on the market or anything else for that matter, that sounds like you only have a small piece of it.

Yes, I'm being picky.

[christopher126]

Originally Posted by SpamSandwich

I wonder at what point the Great Depression was actually given that name? Our generation is so prone to categorizing, labeling and putting things into boxes events (9/11, The Great Recession) that fundamental understanding of events is glossed over in favor of an easily digestible news bite.

http://en.wikipedia.org/wiki/Great_Depression#Causes
(See the Austrian School explanation on the cause for the Great Depression)

A return to the gold standard and dissolving the Fed would do wonders for our nation and economy's health, although unlikely what with the fashionable wave of pro-government anti-thought that seems to be in such favor.

Whether more 'free market, capitalism' is the answer or more 'government oversight' is the answer is really irrelevant, Congress will screw it up. Congress is the biggest problem!

[Wiggin]

Originally Posted by Zoolook

As far as individual investors go, unless Apple offers a dividend, they're only going to be a short term opportunity. It just can't be justified as a buy and hold stock, it's always going to be a buy and sell.

I know several others have challenged this statement, but if you think about it, if Apple never pays a dividend, then the only way to make money off Apple's stock is to buy and then sell it, correct? You may have held Apple's stock for 12 years, and it may be worth far more now than when you bought it; but unless you sell it you have not made a dime.

This is a bit of an exageration, but Apple doesn't need to give a damn about it's stock price. And I've often wondered if investors will ever catch on that Apple is not in business to make shareholders money. This is why they are recession proof. Contrast Apple with other companies who manage (manipulate?) their stock price. They do this in part because the more assets they have on their books, the more money they can borrow on favorable credit terms. And then they run their business on borrowed money and try to expand further, increase their worth, borrow more money, and the cycle goes on. But then when the stock market plunges and the value of their stock drops, they can't borrow any more money to keep their businesses running.

Apple, with its $30 billion (or whatever it's at now) in the bank, doesn't need to borrow money from anyone. So why would they care that their stock price was cut in half with the rest of the stock market last year? Why would they care to make owning Apple stock more attractive to shareholders, and thus driving up demand/price, by paying out a dividend?

Apple's stock price could drop to $1/share and they could keep on operating as normal because no bank will be calling in their loans or denying new loans to keep things running (because they have no loans). And they could still be making $500 million deals for flash memory just using cash on hand.

Ok, this is a vast oversimplification, but moreso than most other companies, Apple doesn't need to worry about managing to stock holders expectations. And historically, they have not done so.