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50M iPhone sales, 'booming' iPad mini expected in Apple's holiday quarter

post #1 of 53
Thread Starter 
Upside to market consensus on Apple is expected from one Wall Street analyst, who sees a big holiday quarter for both the iPhone 5 and iPad mini.

Evercore


Rob Cihra of Evercore Partners updated his projections for Apple's December quarter on Thursday in anticipation of the company's quarterly earnings report, scheduled for Jan. 23. Cihra expects Apple to report sales of 50 million iPhones, a 35 percent year over year increase and 86 percent growth from the previous quarter.

As for Apple's newly expanded iPad lineup, Cihra believes the company sold 24 million touchscreen tablets in the quarter, representing 56 percent year-over-year growth and a 71 percent boost from the September quarter.

In particular, he expects iPad growth to be driven by the iPad mini, which he believes accounted for 10 million units during the quarter. Cihra also noted that supply of the iPad mini remains constrained with strong demand continuing after what he called a "booming launch."

Evercore


While strong performances are expected from the iPhone and iPad, Cihra believes Mac sales will decrease 3 percent year over year, hitting 5 million units in the December quarter. He attributed his forecast to limited early supply of the new iMac desktops.

Apple's record setting pace in the December quarter is expected to have consequences going forward, though. Cihra believes the company's rapid roll-out of the iPhone 5 will lead to production cuts in the March quarter, where he has forecast sales of 39 million units.

Cihra has trimmed his price target for AAPL stock to $750, down from his previous forecast of $775. But he has also maintained his "overweight" rating for the stock, and noted his figures are "wholly conservative."
post #2 of 53
Revenue on Nook readers and books down 12.6% from a year ago. Tablets are killing the e-reader market.
post #3 of 53

Of course we are now going to hear all the good news. Have to drive that stock price up past $700 after trying so hard to drive it below $500.
 

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post #4 of 53
Quote:
Originally Posted by island hermit View Post

Of course we are now going to hear all the good news. Have to drive that stock price up past $700 after trying so hard to drive it below $500.
 

Smart investors are buying up Apple stock now. It's almost like an after Christmas clearance sale for the stock.

post #5 of 53

Except these types of comments do not help Apple because they greatly exceed Apple's own conservative guidance. Apple can beat last year's sales on all accounts, but if it fails to exceed these inflated guesses the stock will be hammered. The big boys, however, will likely make sure they are in on dividend day. 

post #6 of 53
Quote:
Originally Posted by island hermit View Post

Of course we are now going to hear all the good news. Have to drive that stock price up past $700 after trying so hard to drive it below $500.

 

That's not the way it works. This week, we'll have analysts trying to out-do themselves with their estimates of how many trillion phones Apple sold and zillions of tablets. Then, when Apple 'only' sells 20% more than their guidance, the stock will plummet.
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post #7 of 53
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Originally Posted by jragosta View Post


That's not the way it works. This week, we'll have analysts trying to out-do themselves with their estimates of how many trillion phones Apple sold and zillions of tablets. Then, when Apple 'only' sells 20% more than their guidance, the stock will plummet.

 

Well, the stock will plummet for good reason because, as you know, the iPad is losing market share.

 

/s

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post #8 of 53
Quote:
Originally Posted by island hermit View Post

Well, the stock will plummet for good reason because, as you know, the iPad is losing market share.

/s

Absolutely. 79% of 100 M units is obviously far worse than 80% of 10 M units.
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post #9 of 53
Quote:
Originally Posted by jragosta View Post


That's not the way it works. This week, we'll have analysts trying to out-do themselves with their estimates of how many trillion phones Apple sold and zillions of tablets. Then, when Apple 'only' sells 20% more than their guidance, the stock will plummet.

 

If I were Apple, I would consider stopping to give such guidance. It isn't considered anyway. 

post #10 of 53
Quote:
Originally Posted by TBell View Post

Except these types of comments do not help Apple because they greatly exceed Apple's own conservative guidance. Apple can beat last year's sales on all accounts, but if it fails to exceed these inflated guesses the stock will be hammered. The big boys, however, will likely make sure they are in on dividend day. 

Bingo. That seems to be it in a nutshell. Feels a bit like revenge for Apple not splitting stocks like all the analysts said they should and would
post #11 of 53
Can anyone explain why Apple's current P/E is so damn low compared to its historical levels? Why should it be lower than Microsoft's and even Cisco's? It's been dropping for years. Isn't there anything Apple can do to reverse that trend. I've owned Apple for years and even despite the introduction of the iPhone and iPad, Apple's P/E keeps getting lower and lower. The more products Apple sells, the lower the P/E gets. What makes it so different from other companies in this respect? I could understand if Apple's sales have stagnated, but they haven't. The P/E should have at least leveled out at some point.
post #12 of 53
Quote:
Originally Posted by charlituna View Post


Bingo. That seems to be it in a nutshell. Feels a bit like revenge for Apple not splitting stocks like all the analysts said they should and would

You know 'splitting stocks' does nothing of particular good don't you?  

It's just fodder for the analysts to get newbies excited over nothing.

post #13 of 53
So, who thinks they can do better at guessing Apple's sales and margin? It is actually a pretty good analysis; it is about 10% higher on iPhones than I expect, and I think his ipad number is about 20% high (but I am staying conservative), but it gives you the numbers if you want to play the game yourself. The real question mark is on margin.

I think his numbers would be a Q1 $17 EPS, or a TTM EPS of $47... Which would likely keep us range-bound between $517 and $705 until the March quarter results come in. We will be at the bottom end when the debt ceiling bickering comes around next time, and the top end at some other point.

At this point, why not have some fun with the swings? Until Apple provides a more significant dividend, you can make some good money... If you can take the stress. If not, hey... You can always put your cash under the mattress.
post #14 of 53
Quote:
Originally Posted by monstrosity View Post

You know 'splitting stocks' does nothing of particular good don't you?  
It's just fodder for the analysts to get newbies excited over nothing.

Not entirely true. The high share price favors bigger players, especially in terms of options. It might not impact the company's financials, but it does impact retail investing.
post #15 of 53
Quote:
Originally Posted by aaarrrgggh View Post


Not entirely true. The high share price favors bigger players, especially in terms of options. It might not impact the company's financials, but it does impact retail investing.


I'm not sure how buying 10 shares at $540 makes anyone feel any better than buying 1 share at $540.

 

If someone can't afford to buy one share then they shouldn't even be considering buying stocks.

 

jmho

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post #16 of 53
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Originally Posted by Constable Odo View Post

Can anyone explain why Apple's current P/E is so damn low compared to its historical levels? Why should it be lower than Microsoft's and even Cisco's? It's been dropping for years. Isn't there anything Apple can do to reverse that trend. I've owned Apple for years and even despite the introduction of the iPhone and iPad, Apple's P/E keeps getting lower and lower. The more products Apple sells, the lower the P/E gets. What makes it so different from other companies in this respect? I could understand if Apple's sales have stagnated, but they haven't. The P/E should have at least leveled out at some point.

In theory, a stock's value is the present value of future profits (less liabilities plus cash). "Accelerating" earnings growth makes small profits today potentially worth much more in the future. Constant earnings growth rates that exceed "cost of capital" are worth marginally more in the future, but as earnings growth flattens then future earnings are worth less than if the money was made today.

So, if earnings are constant each year (say $1), the present value at 10% interest would be
$1+(1-10%)*$1+(1-10%)^2*$1+(1-10%)^3*$1+(1-10%)^4*$1...

Ultimately, you would end up with the stock being worth $7 or so in that case. If the company had $1/share in cash you might pay $8, or if it had $1/share debt it might only be worth $6.

But, if earnings growth is at 10%, the company would be worth more, and at 20%, significantly more. The market doesn't have a good sense of what Apple's long term growth prospects are, as revenue approaches some percentage of world GDP.
post #17 of 53
Quote:
Originally Posted by island hermit View Post

I'm not sure how buying 10 shares at $54 makes anyone feel any better than buying 1 share at $540.

If someone can't afford to buy one share then they shouldn't even be considering buying stocks.

jmho
Simple... If they only have one share, what can they do to take some money out but keep the rest in? Moreover, trading in small lots gives you worse prices and higher commissions, limiting your ability to profit. A block of Apple is $55k today; that only helps large investors and options traders.
post #18 of 53

I love when people think there is anything approaching rationality behind stock prices vs. any other metric they can recall. I also love when people think a single stock lives in its own economic microcosm, as if nothing external to the company's performance could possibly affect its stock price.

 

Face it, the stock market is a glorified Kickstarter mixed with a healthy dose of Vegas, ruled by the same emotional and irrational expectations of the masses, except only the high rollers get free drinks.

 

Perhaps I sound a bit more negative than I actually mean to but every word is true.

When a company stops chasing profit and start chasing the betterment of their products, services, workforce, and customers, that will be the most valuable company in the world.
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post #19 of 53
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Originally Posted by aaarrrgggh View Post


Simple... If they only have one share, what can they do to take some money out but keep the rest in? Moreover, trading in small lots gives you worse prices and higher commissions, limiting your ability to profit. A block of Apple is $55k today; that only helps large investors and options traders.

 

Worse prices and higher commissions? I think you should really think about what you are saying or maybe you should stay away from trading stocks.

 

As far as taking some out and keeping the rest in... yes, that applies if you only have $1000 to spend... but then again, if you only have $1000 to spend then you should "really" worry about commissions if you continue to buy and sell... even if the stock is only $10 per.

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post #20 of 53
Quote:
Originally Posted by island hermit View Post


I'm not sure how buying 10 shares at $540 makes anyone feel any better than buying 1 share at $540.

If someone can't afford to buy one share then they shouldn't even be considering buying stocks.

jmho

What if someone has $800 to invest? 1 share at $540 or 14 at $54. Or if they have an investment plan where they invest $400 per month. Or any other scenario. Not to mention that even if they have $2700 to invest. For some people, buying only 5 shares of something seems strange.

I agree that it's not that big a deal, but it certainly keeps some small investors out. And given the way the institutions are beating the stock around, having a larger share of small investors would probably not be a bad thing.
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post #21 of 53
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Originally Posted by silverpraxis View Post

I love when people think there is anything approaching rationality behind stock prices vs. any other metric they can recall. I also love when people think a single stock lives in its own economic microcosm, as if nothing external to the company's performance could possibly affect its stock price.

 

Face it, the stock market is a glorified Kickstarter mixed with a healthy dose of Vegas, ruled by the same emotional and irrational expectations of the masses, except only the high rollers get free drinks.

 

Perhaps I sound a bit more negative than I actually mean to but every word is true.

 

This sums it up as well as I've ever read.

post #22 of 53
Originally Posted by silverpraxis View Post
I love when people think there is anything approaching rationality behind stock prices vs. any other metric they can recall. I also love when people think a single stock lives in its own economic microcosm, as if nothing external to the company's performance could possibly affect its stock price.

 

Face it, the stock market is a glorified Kickstarter mixed with a healthy dose of Vegas, ruled by the same emotional and irrational expectations of the masses, except only the high rollers get free drinks.

 

Perhaps I sound a bit more negative than I actually mean to but every word is true.

 

Since this is the polar opposite of what I was told last night (and told I was a complete idiot for agreeing with), I'm going to have to assume that there isn't a single person on Earth with the faintest idea how the stock market works, and we have placed our entire civilization in the hands of an automated system that isn't smart enough to double check the addition of an extra zero to a number.

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post #23 of 53
Quote:
Originally Posted by jragosta View Post


What if someone has $800 to invest? 1 share at $540 or 14 at $54. Or if they have an investment plan where they invest $400 per month. Or any other scenario. Not to mention that even if they have $2700 to invest. For some people, buying only 5 shares of something seems strange.
I agree that it's not that big a deal, but it certainly keeps some small investors out. And given the way the institutions are beating the stock around, having a larger share of small investors would probably not be a bad thing.


Okay... so Apple does a 10 to 1 split and you have $400 a month to spend... how does buying 7 shares make a person feel if buying 5 shares makes them feel strange.

 

The situation won't change much for that many people unless Apple does a 25 to 1 split.

 

I know what you are saying but, I'm sorry, I think that anyone who doesn't feel that good about buying 1 to 5 shares at $540 each might want to think about investing in mutual funds.

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post #24 of 53
Quote:
Originally Posted by island hermit View Post


Okay... so Apple does a 10 to 1 split and you have $400 a month to spend... how does buying 7 shares make a person feel if buying 5 shares makes them feel strange.

Because I was talking about $400 a month. So they'd be buying 7 shares a month - which for most people would be a reasonable investment. People do understand time payments and time purchases. In a year, they'd have 90 shares. At $540 per share, they'd have 9.
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post #25 of 53
Quote:
Originally Posted by silverpraxis View Post

I love when people think there is anything approaching rationality behind stock prices vs. any other metric they can recall. I also love when people think a single stock lives in its own economic microcosm, as if nothing external to the company's performance could possibly affect its stock price.

 

Face it, the stock market is a glorified Kickstarter mixed with a healthy dose of Vegas, ruled by the same emotional and irrational expectations of the masses, except only the high rollers get free drinks.

 

Perhaps I sound a bit more negative than I actually mean to but every word is true.

 

+1

 

I took a corporate finance class a while back, and the fella running it said more or less the same thing.

post #26 of 53
Quote:
Originally Posted by Tallest Skil View Post

Originally Posted by silverpraxis View Post
I love when people think there is anything approaching rationality behind stock prices vs. any other metric they can recall. I also love when people think a single stock lives in its own economic microcosm, as if nothing external to the company's performance could possibly affect its stock price.

 

Face it, the stock market is a glorified Kickstarter mixed with a healthy dose of Vegas, ruled by the same emotional and irrational expectations of the masses, except only the high rollers get free drinks.

 

Perhaps I sound a bit more negative than I actually mean to but every word is true.

 

Since this is the polar opposite of what I was told last night (and told I was a complete idiot for agreeing with), I'm going to have to assume that there isn't a single person on Earth with the faintest idea how the stock market works, and we have placed our entire civilization in the hands of an automated system that isn't smart enough to double check the addition of an extra zero to a number.

 

Sadly so. And once something becomes entrenched in our civilization, it's near impossible to replace/remove it.

When a company stops chasing profit and start chasing the betterment of their products, services, workforce, and customers, that will be the most valuable company in the world.
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When a company stops chasing profit and start chasing the betterment of their products, services, workforce, and customers, that will be the most valuable company in the world.
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post #27 of 53
Apple's low P/E ratio and stock price doesn't bother me one bit. The type of stock manipulations we've been seeing are one of the major reasons why Steve was so focused on hoarding cash. Companies with plenty of cash care very little about this type of stock price fluctuation and wild movements in market capitalization. Huge market caps are great, even necessary, if a company needs to raise capital to finance day-to-day and long term operations.

Apple, however doesn't need to raise capital through the sale of stock, therefore, these types of shorting strategies do very little to shape how Apple goes about its business. They have over $120bn in cash. They netted over 13bn in quarterly profit for Q1 2012, an increase over the 6bn for the prior year's quarter. Will they more than double y-o-y again? Probably not; but on January 23rd, they'll likely report net profit of over $20bn for Q1 2013.

Cash is king. The cash, not the market cap, allows Apple to focus so much on its own business plan and (largely) ignore Wall Street analysts and large institutional investors.
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post #28 of 53
Quote:
Originally Posted by island hermit View Post

Worse prices and higher commissions? I think you should really think about what you are saying or maybe you should stay away from trading stocks.
Most brokers charge higher fees for partial lot transactions... say $20 instead of $12-15. On prices, a partial lot "market" order will have a significant premium ($0.10 minimum per share, but I have seen as much as $0.50), and non-market orders have a hard chance executing.

None of this is a big deal if you are deciding to buy one share and hold it for a decade, but if you are looking to make a 15% profit on your $1,150 investment in two shares of AAPL, you are going to need the stock to go up 19%. If you invest like the market as a whole, only half your transactions are going to be profitable, so you really need to see an even higher return.

Not a problem for me, and I openly admit to profiting from the current situation. But, back when I bought my first shares of AAPL, the fact that it split when it hit $100 made it easier to invest a thousand dollars here or there.
post #29 of 53
Quote:
Originally Posted by Tallest Skil View Post

 

Since this is the polar opposite of what I was told last night (and told I was a complete idiot for agreeing with), I'm going to have to assume that there isn't a single person on Earth with the faintest idea how the stock market works, and we have placed our entire civilization in the hands of an automated system that isn't smart enough to double check the addition of an extra zero to a number.


And more so, amateurs (like myself) trying to get an edge in a "professional" market only increases my risk.  I'm more like a caveman... Apple make good stuff, Apple sell enough stuff, Apple good leadership, Apple good financial footing.  Play large swings, not small ones...keep skin in the game at all times.   Sell some when absurdly high and pray that it drops, then buy even more using gains from previous sell.  I'll leave the professional moves for the professionals.  I'm just a damn caveman.

post #30 of 53
Quote:
Originally Posted by aaarrrgggh View Post


Not entirely true. The high share price favors bigger players, especially in terms of options. It might not impact the company's financials, but it does impact retail investing.

 

Yeah but retail is what about 7% ownership of AAPL? And the number of people who cant afford $550 a share is minuscule. In reality you are looking to gain a fraction of a percent in extra AAPL owners. So small it would not even register.

 

Plus, who the hell buys AAPL without leverage nowadays? Nobody I know. With leverage you only need to stump up  (minimum of) 15% of the share value ($83 + $10 trading fee).


Edited by monstrosity - 1/3/13 at 10:01am
post #31 of 53
This seems to be the perfect thread for TS to again tell us what a useless, bad, unwanted, stupid product the amazingly well selling ipad mini is.
post #32 of 53
ah, Constable, you seem to believe the stock market is based on rational economic investment, like the P/E ratio. but fact is most market "investors" are in fact really "speculators" who operate mainly on the Greater Fool theory (i just hope someone will pay more than i did), and volume trading is more and more driven by robot programs designed to react to the short term speculative patterns they generate.

so we have stocks with ridiculous P/E ratios, like notably Amazon, that are deemed "good investments" by analysts anyway based on nothing but bullshit "future growth" anticipation - i.e., wishful thinking - because there are enough Greater Fools to prop it up. but Apple stock, with a solid genuine long term investment-grade P/E ratio based on actual current performance, doesn't move up dramatically because that is not the "investment criteria" these "investors" - speculators - care about. they only care about how its price will move very short term - it's always just "in play" for them.

so we will now see the usual speculative pattern: Apple stock will rise 10-20% in the next two weeks leading up to the 23rd earnings report. then, if it is anything less than sensational (therefore "disappointing") it will drop about 5% the week afterward.

folks, the stock market is bullshit. people call themselves "investors," but most are not. they are short term speculators trying to game the set up. don't be another Greater Fool.
post #33 of 53
Quote:
Originally Posted by aaarrrgggh View Post

Quote:
Originally Posted by island hermit View Post

Worse prices and higher commissions? I think you should really think about what you are saying or maybe you should stay away from trading stocks.
Most brokers charge higher fees for partial lot transactions... say $20 instead of $12-15. On prices, a partial lot "market" order will have a significant premium ($0.10 minimum per share, but I have seen as much as $0.50), and non-market orders have a hard chance executing.

None of this is a big deal if you are deciding to buy one share and hold it for a decade, but if you are looking to make a 15% profit on your $1,150 investment in two shares of AAPL, you are going to need the stock to go up 19%. If you invest like the market as a whole, only half your transactions are going to be profitable, so you really need to see an even higher return.

Not a problem for me, and I openly admit to profiting from the current situation. But, back when I bought my first shares of AAPL, the fact that it split when it hit $100 made it easier to invest a thousand dollars here or there.

People for whom commissions are material should probably find a discount broker like Scottrade, who charges $7 per trade.

There is no higher fee for partial lots. Years ago, when prices were quoted in fractions rather than decimals, there was a 1/8 of a dollar premium.

Nobody should ever place a market order. When you do, you are inviting the market maker to overcharge you. Place limit orders. They will either get executed at the price you want (or better) or nothing will happen.
post #34 of 53
Maybe a stock split would help. Some of those stocks you referenced though are grossly over priced. Think about it MS has delivered one blunder after another and is seeing significant slide in sales. I can even argue that Apple is overpriced, especially going into 2013 when cash will become scarce with all the new taxes about to be implemented. 2013 will be a rough year for most businesses as people adjust to far lower wages and try to digest what will be proper and wise investment decisions for the coming years.

So you have the unknown of the economy in 2013 but you also have a massive exposure when investing in Apple. Their product line is stagnate and extremely narrow. At least now they have two different iPhones on the market, but they still are exposed to the risk of debuting a device that isn't well received. The same thing applies to the IPods, Macs and tablets, the lack of diversification in these line ups can lead to extremely bad performance from one quarter to the next if something goes wrong with a product. We will likely see some evidence of this with the iMac release fiasco and Apples inability to ship enough iPhones to meet demand. Currently the only place Apple has a reasonably diversified hardware line is with the Mac Books. So to put it simply Apple is a high risk investment, one screw up, a little trip here or there can significantly impact earnings.

I know I've gotten shot down for this before but Apple really needs to pull head from behind with respect to the product line up, to diversify and address stagnation. They also need to address their pricing structure that still to this day drives more customers away than it attracts. IPod has done some good in addressing the perception that Apples products are for the elite and wealthy but they have turned that good will around with high priced iPhones. This is a third issue that stands on its own, Apples appearance in the publics eye is still one of a seller of high priced items that don't really deserve that price tag. You can argue about that all you want but Apples pricing approach in the last few years has done more harm than good. This is especially the case after the company has recovered from their darker times and have actually become extremely successful. If your customers start to think they are being taken advantage of then loyalty and good will with your customer base goes out the window. Take one good long look at iPad pricing and explain why simple flash upgrades cost so much on these machines, such schemes will lead to customers easily pulled away by competing products.

Now these are just three points, there are probably more but to put it simply Apple is a risky investment. It is an investment that attracts the wrong sorts of investors thus leading to volatility and manipulation. It is not a place to go if you are a conservative investor. Finally P/E isn't everything in an investment. Most people would consider MS to be a terrible investment right now yet as you point out its P/E is higher. So in a nut shell Apples P/E is so low because for many investors it is a terrible playground to be playing in. Basically Apple is a house of cards that can come tumbling down when any one card has a bit of trouble. Combine that with this question; what is Apples underlying value?
Quote:
Originally Posted by Constable Odo View Post

Can anyone explain why Apple's current P/E is so damn low compared to its historical levels? Why should it be lower than Microsoft's and even Cisco's? It's been dropping for years. Isn't there anything Apple can do to reverse that trend. I've owned Apple for years and even despite the introduction of the iPhone and iPad, Apple's P/E keeps getting lower and lower. The more products Apple sells, the lower the P/E gets. What makes it so different from other companies in this respect? I could understand if Apple's sales have stagnated, but they haven't. The P/E should have at least leveled out at some point.
post #35 of 53
Quote:
Originally Posted by island hermit View Post


I'm not sure how buying 10 shares at $540 makes anyone feel any better than buying 1 share at $540.

If someone can't afford to buy one share then they shouldn't even be considering buying stocks.

jmho

No one is going to buy Apple at one share at a time. At least not anybody with a plan for investing in their future. Frankly high share prices means your stock ends up being primarily owned by people that you really don't want owning your stock. That is the people who speculate and have short term goals. When your companies management is driven by investors with short term goals that only care about the next quarter, you have problems. This seems to be a huge problem for Apple right now.
post #36 of 53
Quote:
Originally Posted by wizard69 View Post

Their product line is stagnate and extremely narrow. At least now they have two different iPhones on the market, but they still are exposed to the risk of debuting a device that isn't well received. The same thing applies to the IPods, Macs and tablets, the lack of diversification in these line ups can lead to extremely bad performance from one quarter to the next if something goes wrong with a product. We will likely see some evidence of this with the iMac release fiasco and Apples inability to ship enough iPhones to meet demand. Currently the only place Apple has a reasonably diversified hardware line is with the Mac Books. So to put it simply Apple is a high risk investment, one screw up, a little trip here or there can significantly impact earnings.
They also need to address their pricing structure that still to this day drives more customers away than it attracts. IPod has done some good in addressing the perception that Apples products are for the elite and wealthy but they have turned that good will around with high priced iPhones. This is a third issue that stands on its own, Apples appearance in the publics eye is still one of a seller of high priced items that don't really deserve that price tag. You can argue about that all you want but Apples pricing approach in the last few years has done more harm than good.
Take one good long look at iPad pricing and explain why simple flash upgrades cost so much on these machines, such schemes will lead to customers easily pulled away by competing products.

It is an investment that attracts the wrong sorts of investors thus leading to volatility and manipulation. It is not a place to go if you are a conservative investor. Finally P/E isn't everything in an investment. Most people would consider MS to be a terrible investment right now yet as you point out its P/E is higher. So in a nut shell Apples P/E is so low because for many investors it is a terrible playground to be playing in. Basically Apple is a house of cards that can come tumbling down when any one card has a bit of trouble. Combine that with this question; what is Apples underlying value?

Each of your points have some merit, but definitely not as apocalyptic as you're described.  Damn...any company public or private has similar risks (including banks).  Case in point, give me an example of any other company that has addressed all your 3 points to your satisfaction.  And what's their stock performance over the last 3 years?

 

Seriously, you need to tone it down, or risk losing credibility.

 

I'm very aware of Apple's volatility...but I'm convinced that is has nothing to do with your 3 points.

post #37 of 53
Quote:
Originally Posted by jragosta View Post

What if someone has $800 to invest? 1 share at $540 or 14 at $54. Or if they have an investment plan where they invest $400 per month. Or any other scenario. Not to mention that even if they have $2700 to invest. For some people, buying only 5 shares of something seems strange.
It is a significant problem and certainly keeps many investors away from Apple.
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I agree that it's not that big a deal, but it certainly keeps some small investors out.
Actually it is a big deal! Why; because it skews your investor profile. Let's put it this way, not all large scale investors have a companies best interests at heart. If your owners end up being primarily those that have short term interests they can force you into very very bad business decisions. I've personally have seen this happen at a company I work for, if all your investors are concerned about is short term quarter to quarter results it can dramatically impact the management team. There are a lot of ugly people working on Wall Street that are there only to line their own pockets as quickly as possible. The last thing you want is for the majority of your stock holders to be these people, because without long term planning a company can not succeed.
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And given the way the institutions are beating the stock around, having a larger share of small investors would probably not be a bad thing.

Exactly! Though here institutional investors may not be a bad thing, it depends upon the institution. I don't want to paint a picture here where every investor is evil. This isn't the case, however you don't want the majority of your investors being the evil ones.
post #38 of 53
The problem with this is that just about everybodies retirement is based on the stock market.

As to the greater fool theory, there may be an aspect to that. I do believe that there is a rational element to the stock market that takes ownership in a company seriously. That is as an owner you expect to share in the profits of a company and invest accordingly.

Speculation is a reality though and as I've stated before the last thing a public company needs is for to much of the stock to end up in the hands of speculators. In a nut shell it is really beginning to look like Apple has this problem as there is too much volatility and obvious manipulation going on. This comes back to the issue that high stock prices generate, which can lead to far to much stock being held by the wrong sorts of investors.

In any event this so called greater fool theory is really an explanation for simpletons. Many people have invested in Apple because they believe in their products and services offered up. That is they saw potential and wanted to own a piece of a company they believed had a future. That really has nothing to do with this greater fool theory and frankly such a theory is an insult to any investor that tries to build a respectable portfolio.
Quote:
Originally Posted by Alfiejr View Post

ah, Constable, you seem to believe the stock market is based on rational economic investment, like the P/E ratio. but fact is most market "investors" are in fact really "speculators" who operate mainly on the Greater Fool theory (i just hope someone will pay more than i did), and volume trading is more and more driven by robot programs designed to react to the short term speculative patterns they generate.
so we have stocks with ridiculous P/E ratios, like notably Amazon, that are deemed "good investments" by analysts anyway based on nothing but bullshit "future growth" anticipation - i.e., wishful thinking - because there are enough Greater Fools to prop it up. but Apple stock, with a solid genuine long term investment-grade P/E ratio based on actual current performance, doesn't move up dramatically because that is not the "investment criteria" these "investors" - speculators - care about. they only care about how its price will move very short term - it's always just "in play" for them.
so we will now see the usual speculative pattern: Apple stock will rise 10-20% in the next two weeks leading up to the 23rd earnings report. then, if it is anything less than sensational (therefore "disappointing") it will drop about 5% the week afterward.
folks, the stock market is bullshit. people call themselves "investors," but most are not. they are short term speculators trying to game the set up. don't be another Greater Fool.
post #39 of 53

This article will explain why Apple is being Hammered, It is purely based on the numbers forget the fact that Apple is putting more money in the bank than any other company. They just to do like the fact Apple's margin are dropping, If you compare Apples number to any number of company they are doing far better, but they are not number in market share on phone or PC, Table yes, but there is concern they may not hold up either. Wall Street type only look at Market Share and margin, they will forgive your low margins as long as you are selling more than anyone else. They can no understand company who sell less for higher price unless they have the highest Margin on the block of any of their competitors. So the investment community figure it was time to make Money on shorting Apple and driving it price down, so they made money on the way up and the way down.

 

http://seekingalpha.com/article/1070841-apple-gross-margin-conundrum-explained?source=yahoo

Quote:
Originally Posted by Constable Odo View Post

Can anyone explain why Apple's current P/E is so damn low compared to its historical levels? Why should it be lower than Microsoft's and even Cisco's? It's been dropping for years. Isn't there anything Apple can do to reverse that trend. I've owned Apple for years and even despite the introduction of the iPhone and iPad, Apple's P/E keeps getting lower and lower. The more products Apple sells, the lower the P/E gets. What makes it so different from other companies in this respect? I could understand if Apple's sales have stagnated, but they haven't. The P/E should have at least leveled out at some point.

Edited by Maestro64 - 1/3/13 at 12:31pm
post #40 of 53

I would agree that Apple is owned wholly by the short term mind sets, however, unlike many company who are in the same situation Apple tend not to listen to Wall Street about how to run their business. I too worked for companies who got jerked around by Wall Street telling them they did not like the various ratios and such so each quarter the company had a new plan to fix the ratio. They spent more time fixing ratios than selling products to their customer and it kill the business. I am afraid that if Cook begin doing things to fix the ratios Apple will die a slow death again. He will be the new Scully after Jobs. 

 

I am not sure why people keep thinking spitting the stock will help, it will not, it just devalues the company every time it splits. It just dilutes every share and make it that much harder for each share to increase. Honestly, unless you bought into Apple when it was below $100 it not worth getting in now. You know a stock that is $10 today in a company who is doing well will double to $20 faster than a stock in a similar company at $100 going to $200. Instead of buying more shares of Apple at $550 why not by a stock at $10 you get more and have a better chance of that stock doubling than Apple hitting $1000.

 

Quote:
Originally Posted by wizard69 View Post


No one is going to buy Apple at one share at a time. At least not anybody with a plan for investing in their future. Frankly high share prices means your stock ends up being primarily owned by people that you really don't want owning your stock. That is the people who speculate and have short term goals. When your companies management is driven by investors with short term goals that only care about the next quarter, you have problems. This seems to be a huge problem for Apple right now.
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