Big banks say Apple will weather financial storm

[AppleInsider]

Citi and Goldman Sachs have rebutted notions that Apple is in danger due to the US economic collapse and say that strong iPhone sales, new MacBooks and continued healthy growth should keep the company successful in the long term.

Even in the face of a near 18 percent slide in Apple stock value over consumer spending worries, analysts from both Citi and Goldman Sachs on Tuesday reiterated their "buy" recommendations, each confident that Apple's fundamental operations were better than what the share decline would suggest.

Of the two, Citi researcher Robert Gardner is the most explicit in his views. Although he sees computer and iPod-related income dipping by 3 and 12 percent respectively, Gardner explains that iPhone should still fuel overall growth. Mac sales are also expected to keep rising and are predicted to hover between 10 to 20 percent growth in the long run, even if Apple's breakneck pace of roughly 40 percent doesn't continue for much longer.

In the short term, Goldman Sachs' David Bailey adds that his firm believes Apple will have shipped more than 4.26 million iPhones during the summer quarter.

Both Bailey and Gardner also see incidental factors at work in Apple's favor. Prices for individual components, such as flash memory for iPhones and iPods, are continuing to drop and should translate to wider profit margins than expected. The usual holiday sales spike plus Apple's healthy cash flow should also contribute to sustained results, the Citi expert says.

The two analysts stress the potential wildcard of a comprehensive MacBook update that may improve Apple's performance in the next few weeks. Citi cites checks within the industry which indicate that Apple may drop the price of a base MacBook to $1,000 to remain competitive, but which is also more likely to add features rather than chase after lower-cost rivals.

The same bank warns that recent economic turmoil is pushing it to reduce its forecasts for Apple's fiscal 2009, which would now see Apple sell 10.2 million Macs, 50 million iPods and 18.5 million iPhones; Goldman Sachs is less specific but warns that Apple is more vulnerable to slowing home user sales and a more conservative market. Still, Bailey at Goldman insists that much of the blow dealt to Apple on the stock market on Monday was undeserved.

"The recent sell off creates an opportunity as we think Apple will outperform our group through the end of the year," he says. "We think yesterday’s -18% decline more than captures the concerns over Mac growth in a weakening spending environment, making Apple shares attractive at current levels."

[Obamadid911]

...New Macbooks? Where where?

[DCJ001]

Originally Posted by Obamadid911

...New Macbooks? Where where?

Not "where?" But "when?"

Soon (in the next two to three weeks). Probably on Tuesday, October 14.

[Obamadid911]

Originally Posted by DCJ001

Not "where?" But "when?"

Soon (in the next two to three weeks). Probably on Tuesday, October 14.

Hopefully.... I actually have the money to buy my first Mac now... *crosses fingers*

[anantksundaram]

Originally Posted by Obamadid911

.....

Unusual name...... want to explain? ([i]Not that you have to; and [ii] Don't infer that I am an Obama supporter. Just curious, that's all....)

[Obamadid911]

Originally Posted by anantksundaram

Unusual name...... want to explain? ([i]Not that you have to; and [ii] Don't infer that I am an Obama supporter. Just curious, that's all....)

Actually, I'm an Obama supporter. I wanted to post something here... so I had to register and that's the first thing that came to mind. heh

[Ensign Pulver]

Of the two, Citi researcher Robert Gardner is the most explicit in his views.

more explicit. Comparative, not superlative.

[CREB]

Big banks? Well, we all know where big banks are these days...looking for bailouts! Yes, Apple will do just fine if those in the financial markets cease trying to manipulate the market place regarding Apple and let Apple level where it should be on its own. Apple is capable of achieving just that—all without the input of "big banks."

[e1618978]

I just hope that Apple invested its $20 billion in something that didn't get wrecked - no mortgage backed securities, please.

[JeffDM]

Tell me, who held these notions that Apple was in danger of collapse? I mean, may be weakend, but collapse? Apple isn't under a debt load. I don't know where Apple's investments are, but I think it would take a lot to topple Apple at the moment, their investments would have to be wiped out and they would have to be a massive drop in sales. If Apple is in that much trouble (in the short term), then I think everyone else would be in at least as much trouble, maybe an eventual reversion to a pre-electronic age.

The stock market isn't for the easily spooked, those people are among the kind that are ruining things for everyone else.

[dmz]

30% Market creep.
iPhone.
At 22 times earnings (where 15 is about average for an average company going nowhere fast.)
Oodles of cash.

Doesn't sound too bad.

[dizzy13]

aaaaaaaaaaaaaaah!!! the sky is falling...


no wait... wait... it's not!

[monstrosity]

Originally Posted by e1618978

I just hope that Apple invested its $20 billion in something that didn't get wrecked - no mortgage backed securities, please.

yeah, does make me a little nervous. I would be surprised if they didn't take a hit somewhere to some extent.

[nvidia2008]

Are these the same "big banks" that are part of the cause of this whole financial storm??? Why are we listening to them *now* ???

[nvidia2008]

Originally Posted by e1618978

I just hope that Apple invested its $20 billion in something that didn't get wrecked - no mortgage backed securities, please.

Yea... When they say "cash", I've asked before... Is that like, a big pile of cash somewhere...?



Or... Some Wall Street guy saying, "er, yeah, it's invested in "cash""....

[bdkennedy1]

I don't see why this would be a problem. Apple has tens of billions in cash the bank.

[MuncyWeb]

Originally Posted by bdkennedy1

I don't see why this would be a problem. Apple has tens of billions in cash the bank.

Yeah, this is all assuming that the dollar doesn't crash or that Apple has invested in a large stockpile of gold bullion.

CarolinaLiberty.com

[nvidia2008]

Originally Posted by MuncyWeb

Yeah, this is all assuming that the dollar doesn't crash or that Apple has invested in a large stockpile of gold bullion.

CarolinaLiberty.com

INDEED. I am QFTing my own, very apt post:

[nvidia2008]

Originally Posted by JeffDM

Tell me, who held these notions that Apple was in danger of collapse? I mean, may be weakend, but collapse? Apple isn't under a debt load. I don't know where Apple's investments are, but I think it would take a lot to topple Apple at the moment, their investments would have to be wiped out and they would have to be a massive drop in sales. If Apple is in that much trouble (in the short term), then I think everyone else would be in at least as much trouble, maybe an eventual reversion to a pre-electronic age.

The stock market isn't for the easily spooked, those people are among the kind that are ruining things for everyone else.

It could just be me but common sense tells me that of all the Tech companies, Apple is most likely going to handle this fear and madness the best. Even if Steve Jobs continues to delegate more and more of his tasks, as he moves to a more, uh... "ceremonial" position.