Unwarranted Q1 concerns weigh on Apple shares

Posted:
in General Discussion edited January 2014
Analysts for ThinkEquity Partners said Monday shares of Apple Computer appear to be suffering from unwarranted investors concerns over the company's first fiscal quarter of 2007, which runs through the holiday shopping season.



Analyst Jonathan Hoopes, who recently increased his price target on shares of the Cupertino, Calif.-based company to $100, noted in a research report that the stock has surprisingly underperformed relative to the major indices over the last week.



"In the five trading days after our price target raise, Apple shares handily outperformed the Dow Jones Industrial Average, the S&P 500, and the NASDAQ Composite Index," he wrote. "That said, Apple shares have since underperformed these indices."



In raising his price target on Apple shares two weeks ago, the analyst noted several fundamental milestones affecting the company, including strong high-end retail segment performance in September due to lower gas prices, high demand for notebook systems and a easing of concerns related to the stock options scandal.



"Given the three fundamental milestones mentioned above, we believe Apple's share price underperformance during the last five days is unwarranted," Hoopes wrote. "Moreover, we believe investors are overly discounting concerns about Apple's performance in the December quarter."



The analyst believes Apple is presently leveraging its core underpinnings in world-class software design. He expects the company over the next several quarters to significantly increase market share, experience above-industry unit shipment and revenue growth, and improve earnings power.



"Never, in the history of the PC, has a company been better-positioned than Apple is at this time to both gain share and improve profitability, in our opinion," he said. "In our opinion, Apple stock is positioned to outperform based on a series of potential quarterly catalysts we highlighted two weeks ago."



For the December holiday quarter, Hoopes is modeling Apple to report 16.8 percent yearly growth to $6.7 billion in revenue, compared to the 12.4 percent growth and $6.5 billion in revenue consensus estimates tallied from analysts who were polled by Thomson First Call.



Hoopes reiterates a "Buy" rating on shares of Apple.
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Comments

  • Reply 1 of 34
    bdj21yabdj21ya Posts: 297member
    Dang it. Just let the stock fall for a bit to a point where I'm comfortable with another short term investment
  • Reply 1 of 34
    backtomacbacktomac Posts: 4,579member
    "Never, in the history of the PC, has a company been better-positioned than Apple is at this time to both gain share and improve profitability, in our opinion,"



    Given Apple's product mix, ie lack of 15" Macbook and mid range tower, I don't see how this possible. Yes I think Apple will continue to rack up nice profits but I don't see a big increase in market share.
  • Reply 3 of 34
    backtomac: wait till people realize what a heap of BS vista is.
  • Reply 4 of 34
    backtomacbacktomac Posts: 4,579member
    Quote:
    Originally Posted by akerman


    backtomac: wait till people realize what a heap of BS vista is.



    If they swallowwed XP what makes you think they won't swallow Vista?
  • Reply 5 of 34
    Quote:
    Originally Posted by backtomac


    "Never, in the history of the PC, has a company been better-positioned than Apple is at this time to both gain share and improve profitability, in our opinion,"



    Given Apple's product mix, ie lack of 15" Macbook and mid range tower, I don't see how this possible. Yes I think Apple will continue to rack up nice profits but I don't see a big increase in market share.



    I agree and I disagree.

    I do think we will continue to see growing market share, especially after the launch of Vista and Leopard. Many buyers are in a holding pattern until these come out.



    However I agree with you that we would see greater market share gains with a broader line-up of portables. One of Apple's strengths has been their simplicity.

    Their line-up is simple to understand compared to DELL's dizzying array of products.



    What I would like to see are:

    13", 15" & 17" MacTablet

    13", 15" & 17" MacBooks

    13", 15" & 17" MacBook Pros



    An easy line-up to understand but 3X as many choices for the consumer.
  • Reply 6 of 34
    Yes bdj21ja,



    if AAPL go down a bit more before the 18th of October I'm going to overdraw on my account, buy a few shares, and sell on the 19th or shortly thereafter.



    I can only afford a few, but it's an easy way of making a few hundred €'s. I've done it before, and I'll do it again.
  • Reply 7 of 34
    bdj21yabdj21ya Posts: 297member
    Quote:
    Originally Posted by Charko


    Yes bdj21ja,



    if AAPL go down a bit more before the 18th of October I'm going to overdraw on my account, buy a few shares, and sell on the 19th or shortly thereafter.



    I can only afford a few, but it's an easy way of making a few hundred ?'s. I've done it before, and I'll do it again.



    Why the 18th/19th? Something special you know? A little insider trading?
  • Reply 8 of 34
    jasenj1jasenj1 Posts: 909member
    And AAPL falls $1.00 on a day when some analyst pontificates that they're under priced, Google announces their love for Apple, and Google buys the biggest web video archive around. Makes sense to me.



    - Jasen.
  • Reply 9 of 34
    melgrossmelgross Posts: 31,335member
    Quote:
    Originally Posted by backtomac


    "Never, in the history of the PC, has a company been better-positioned than Apple is at this time to both gain share and improve profitability, in our opinion,"



    Given Apple's product mix, ie lack of 15" Macbook and mid range tower, I don't see how this possible. Yes I think Apple will continue to rack up nice profits but I don't see a big increase in market share.



    I disagree. I don't believe that a lack of a 15" Macbook is of any concern. The price would have to be too close to the low end MBP.



    I also don't feel, at this time, that a mid range tower would make much difference, even though I've been one who, since the beginning, has been calling for one.



    Apple has been in a strange position from the very beginning.



    It isn't the machines that have held them back, as much as it's been the OS.



    If Apple was selling XP on the very same machines, I'm sure they would have captured at least double the marketshare they have, possibly three times.



    Almost all people I have spoken to over the years on this subject have stated that as the reason. It will continue to be the reason.



    I have gone to both Apple stores here in NYC with PC users over the years, and they have all, without exception, liked the iMacs, regardless of the generation. But, it's always been the OS that has stopped them.



    To pretend otherwise is to be very naive about the world as it really is.



    Apple's OS has to fight for every 0.1% marketshare they can get.



    The Mini is proof of that. At first it was thought, even by the majority here, that it would lead the resurgence of Apple's marketshare. But it hasn't. At best, the sales are "ok".



    I'm no longer so sure that a fairly weak $995 tower would do much better. And Apple could do no better than that any longer. They can no longer call on a "secret" formula. Their machines are now the same as everyone else's. They would have to offer more, and how can they do that?
  • Reply 10 of 34
    melgrossmelgross Posts: 31,335member
    Quote:
    Originally Posted by jasenj1


    And AAPL falls $1.00 on a day when some analyst pontificates that they're under priced, Google announces their love for Apple, and Google buys the biggest web video archive around. Makes sense to me.



    - Jasen.



    As I type this, the NASD market is up $3.66, and Apple is down $0.82 as seen in my real time streaming quote account.



    So, we'll see as the week goes on.
  • Reply 11 of 34
    jeffdmjeffdm Posts: 12,946member
    Quote:
    Originally Posted by Johnny Mozzarella


    However I agree with you that we would see greater market share gains with a broader line-up of portables. One of Apple's strengths has been their simplicity.

    Their line-up is simple to understand compared to DELL's dizzying array of products.



    What I would like to see are:

    13", 15" & 17" MacTablet

    13", 15" & 17" MacBooks

    13", 15" & 17" MacBook Pros



    An easy line-up to understand but 3X as many choices for the consumer.



    I think that would be great, but I also think that Apple would expand their line slowly. As you've noted, there was a contraction of their product line (no 13" MBP) so the chances of expanding as far as you hope any time soon would seem slim. Whether they would introduce a tablet would depend on whether their creative users would buy enough of them to make up a worthwhile fraction of their sales.
  • Reply 12 of 34
    Quote:
    Originally Posted by melgross


    I also don't feel, at this time, that a mid range tower would make much difference, even though I've been one who, since the beginning, has been calling for one.



    Apple has been in a strange position from the very beginning.



    It isn't the machines that have held them back, as much as it's been the OS.



    If Apple was selling XP on the very same machines, I'm sure they would have captured at least double the marketshare they have, possibly three times.



    Almost all people I have spoken to over the years on this subject have stated that as the reason. It will continue to be the reason.



    I have gone to both Apple stores here in NYC with PC users over the years, and they have all, without exception, liked the iMacs, regardless of the generation. But, it's always been the OS that has stopped them.



    To pretend otherwise is to be very naive about the world as it really is.



    Apple's OS has to fight for every 0.1% marketshare they can get.



    The Mini is proof of that. At first it was thought, even by the majority here, that it would lead the resurgence of Apple's marketshare. But it hasn't. At best, the sales are "ok".



    I'm no longer so sure that a fairly weak $995 tower would do much better. And Apple could do no better than that any longer. They can no longer call on a "secret" formula. Their machines are now the same as everyone else's. They would have to offer more, and how can they do that?



    OK you've got a point but how would you use it to explain the advertised increase to 12% notebook market share in the US? - surely if they had the products they should be able to replicate that increase on the desktop line - unless you want to argue that it's another demographic where the cool/new/young MacBook/OS X momentum doesn't translate to desktop buying crowd...
  • Reply 13 of 34
    melgrossmelgross Posts: 31,335member
    Quote:
    Originally Posted by JeffDM


    I think that would be great, but I also think that Apple would expand their line slowly. As you've noted, there was a contraction of their product line (no 13" MBP) so the chances of expanding as far as you hope any time soon would seem slim. Whether they would introduce a tablet would depend on whether their creative users would buy enough of them to make up a worthwhile fraction of their sales.



    I just don't see the fascination with tablets. Tablets have been a failure in the PC world, where they have been promoted heavily. So far, the market penetration of tablets has been 0.5%. No matter how wonderful, a Mac tablet won't change that. It's a product looking for a market.



    Tablets have been tries at least three times during the history of the personal computer, and have failed each time. This time doesn't seem to be much different. We can be pretty sure that Apple has, at least, looked at this idea, and has found it wanting.



    As for larger Mac Books, I really don't see that either. Mac Books are cheaper, smaller, lighter that their MBP counterparts. A 15" MB would come too close to the price of the low MBP, and a 17 would cost even more.



    What would be the purpose of that? None. No purpose at all.



    People have to stop thinking of what they would want, and instead think of what the overall market would want.
  • Reply 14 of 34
    jeffdmjeffdm Posts: 12,946member
    Quote:
    Originally Posted by melgross


    As for larger Mac Books, I really don't see that either. Mac Books are cheaper, smaller, lighter that their MBP counterparts. A 15" MB would come too close to the price of the low MBP, and a 17 would cost even more.



    Isn't that because Apple's pricing is out of wack? I can get two 17" Toshiba Core Duos plus some upgrades for the price of Apple's 17".
  • Reply 15 of 34
    kickahakickaha Posts: 8,760member
    Comparably speced, or stripped down machines?



    Because I'm pretty sure I could get a dozen or so PowerBook 180s for the same price, y'know...
  • Reply 16 of 34
    melgrossmelgross Posts: 31,335member
    Quote:
    Originally Posted by OfficerDigby


    OK you've got a point but how would you use it to explain the advertised increase to 12% notebook market share in the US? - surely if they had the products they should be able to replicate that increase on the desktop line - unless you want to argue that it's another demographic where the cool/new/young MacBook/OS X momentum doesn't translate to desktop buying crowd...



    Marketing is tough. But, don't believe the rumors that Apple doesn't do any, and just depends on Steve's opinions.



    As I said, Apple is stuck in an odd position. They have to convince people to change OS's, not computers as machines. Once they do that, the machines follow.



    But, you really do have to ask yourself what Apple can offer in a mid priced tower that everyone else can't. That's the problem Apple has. Everyone does the mid priced tower. No one does the all in one the way Apple does. It's a niche product for IBM and Gateway, but a major one for Apple.



    Apple's desktop sales have been falling steadily, while their laptop sales have been increasing. Why?



    One major reason is because students are buying computers when going off to college. They prefer laptops. That's a change from the past.



    Where is Apple's market? Exactly who is buying their machines? If we had good numbers on that we could better evaluate the market.



    Apple's sales in the pro markets have been at replacement levels for a couple of years now. That may continue until sometime next year.



    Exactly who would buy into a line of towers in the $995 to $1,495 range? What would Apple have to offer in that line to get people to buy them?



    There is simply not enough graphics selection for gamers to be interested. Some here think that Apple's somewhat lame selection of cards is just dandy, but it's not. There are over 330 cards available to the PC buyer from under $50 to several thousand. We have just a few. And not the best in the categories. Or at the cheapest prices, which PC buyers care about muchly (sic).



    PC's can be tweaked for best performance. Mac's can't. We can't buy performance memory.



    The point I'm making is that Apple can offer a line of good looking good performing machines that don't offer the potential buyer anything that the buyer for those class machines might want.



    Business isn't waiting for those machines either, though they wouldn't hurt.



    It always comes back to the OS. If that can be sold, the hardware will follow.



    Apple was criticized severely in the past for having too many lines of machines. Now some here are criticizing them for having too few.
  • Reply 17 of 34
    melgrossmelgross Posts: 31,335member
    Quote:
    Originally Posted by JeffDM


    Isn't that because Apple's pricing is out of wack? I can get two 17" Toshiba Core Duos plus some upgrades for the price of Apple's 17".



    Apple builds everything expensively. More expensive metal, more expensive plastic, etc. The camera doesn't help either. The magnetic latch, the magnetic power cord connector.



    If you want to give up on all of those differences, then you could pay less.



    I am willing to bet that if Apple dropped all of that, the price could drop by at least 25%, perhaps more.



    Is that what you want? For an Apple machine to be like the Toshiba?
  • Reply 18 of 34
    jeffdmjeffdm Posts: 12,946member
    Quote:
    Originally Posted by Kickaha


    Comparably speced, or stripped down machines?



    Because I'm pretty sure I could get a dozen or so PowerBook 180s for the same price, y'know...



    I don't remember the specs, but I think they were similar enough save the standard differences, no iSight or Firewire 800. I thought it was 1GB memory, 100 or 120GB hard drive. The CPU was slower. Compared to the vast price difference, the difference in features didn't seem so bad. I'll have to check the specs again next time I visit the store. But my basic point was that it's not that hard to make an affordable consumer notebook. If Dell can offer a 17" notebook with integrated graphics for $1000, I don't see why Apple can't make one for less than $2000.
  • Reply 19 of 34
    melgrossmelgross Posts: 31,335member
    Quote:
    Originally Posted by JeffDM


    If Dell can offer a 17" notebook with integrated graphics for $1000, I don't see why Apple can't make one for less than $2000.



    Because Apple isn't Dell. How many times do we say that here?



    Apple makes a reasonable profit on every machine sold. Dell does not. That is why they are having the problems they are having now.



    For Apple to do what you want, they would have to change their comcept of just what a Mac is. Many people here won't like that.
  • Reply 20 of 34
    kickahakickaha Posts: 8,760member
    Agreed. Look at Dell's markup on their units sometime - the low-end units are damned near loss-leaders. They make up the difference by padding the high-end machines *horribly*. Take a look at a Mac Pro /Dell comparison sometime - the Mac is a consistent $700 or so cheaper, on every comparable model.



    Dell makes all of their money on the high end - where suddenly Apple is going to give them pressure. (A small bit, but it's got to be embarrassing for them, and they have to respond somehow.)



    So now, where do you think they're going to have to make up that money? Raising prices on the low end.



    I don't think there's going to be such a price differential in the next couple of years.
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