DeMark On Apple: Update

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Thomas DeMark, founder & CEO of Market Studies, weighs in on Apple

 

 

ITZ mentioned a possible Island Reversal on Twitter back on January 30th LINK

Apple Stock 'Epic Bounce Candidate'

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Chart technicals show that shares of Apple could be due for big gains, Carter Worth says.

 

Past ITZ Apple posts click here

 

 

Apple (AAPL) Reports Q1 Earnings

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Apple reported Q1 2013 earnings and the stock is selling off in after-hours trading down 10% around $460 a share.

The company reported that it sold 47.8 million iPhones in the quarter, compared with 37 million in the same quarter a year ago. Many investors had hoped that the company would sell 50 million iPhones, which drives Apple's earnings. Sold a "record" 22.9 million iPads in the quarter, compared to 15.4 million a year ago. The company also sold 4.1 million Mac computers, compared to 5.2 million in the same quarter last year.

For the quarter ended Dec. 29, Apple reported a profit of $13.08 billion, up 0.1% from $13.06 billion a year earlier. On a per-share basis, earnings fell to $13.81 a share from $13.87 a share as the latest period had slightly more shares outstanding.

Revenue jumped 18% to $54.5 billion, with 61% of the top line coming from international sales.
In the conference call management stated it will from now on give more realistic earnings estimates, compared to past sandbag (beatable) estimates. Being known for traditionally giving conservative guidance, said it expects second-quarter revenue between $41 billion and $43 billion. Analysts polled by Thomson Reuters forecast revenue of $45.38 billion. Apple didn't provide a per-share earnings estimate for the second quarter.

The company still can boast about the amount of cash it has hoarded: $137 billion or $145 per share.
ITZ has noted numerous times on Apple's ex-cash valuation link

Most expected risks for Apple's ASP/gross margin, slowing growth, evolutionary versus revolutionary steps in innovation, legal disputes, macro and potential for supply constraints.

Expectations are for easier year over year compares, potential positive supply chain data into the next product cycle, & improving gross margin likelihood to help reaccelerate earnings and see the company as well-positioned to continue to take value share in its core smartphone, tablet, and PC markets.

ITZ continues to target $775 read  with $13.81 Q1 reported.... estimates Q2 '13 $11.65; Q3 $11.14 & Q4 $10.91 with FY $47.51 & CY $50 eps estimates.

Apple (AAPL) Update 12-17-12

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Apple Update: Q4 Earnings Report

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Apple reported Q4 2012 earnings Thursday with revenue of $36 billion was right on target, but EPS of $8.76 was lower than the expected $8.81 (although Apple’s own guidance was for EPS of $7.65). Also worrying investors was Apple’s forecast for the next quarter: EPS of $11.75 on revenue of $52 billion, both also lower than had been expected.

The stock peaked at $700 last September and had declined $70 already prior to earnings. Then Friday came within a few points of testing it's 200 day moving average.

Investors are getting worried with two consecutive quarterly misses. Why the slipping profit margins, and why the lower-than-expected revenue in the next quarter despite a slew of new products? Is demand waning for iPhones, iPads and Macs?

For Apple it's not a 'demand' issue but instead a supply problem, which most companies wish they had! Actually, that huge array of new products announced and/or released this quarter is a primary reason behind the slipping numbers. During the earnings call, Tim Cook stated that this has been Apple’s most prolific quarter ever in terms of new product releases. Key Apple gear went on sale in Q4, including the highly anticipated iPhone 5, a collection of new iPods and a class-leading Retina display 15-inch MacBook Pro. As the quarter wrapped up, Apple announced the iPad Mini, another Retina MacBook Pro, a new full-size iPad, an updated Mac Mini and a redesigned iMac that pushes the envelope for a consumer-level desktop PC.

All of these new products entail ramp-up costs, and Apple’s continued focus on cutting-edge design appears to be leading to higher production costs, regardless of any favorable supply and manufacturing terms Apple may have negotiated. Even though the latest round of new products may not go on sale until the next quarter, in most cases Apple has been producing them through Q3, building up a sufficient quantity to meet launch demand.

As the company approaches the final two months of the year, the oldest product for sale in Apple’s mobile lineup will be the 15-inch MacBook Pro with Retina display, which has been on the market for a mere four months. Apple is also selling an iPhone 5 and iPod Touch and nano that are just one month old, and November and December will bring a brand new iPad, iPad mini, iMac and Retina 13-inch MacBook Pro. It’s probably the biggest single product turnover Apple has ever done in such a short amount of time.

Apple is stressing that accepting lower margins and being behind on production is only temporary and that it plans to get its costs down as soon as possible.

ITZ believes Tim Cook has set a low bar on Apple's upcoming quarter as well as the year ahead. They've mastered the art of sandbagging earnings estimates. What Apple is setting up instead is perhaps record sales and revenues, as shoppers find an array of new products to buy and upgrade. While at the same time Apple will see supply issues and cost diminish.

Three weeks ago ITZ gave a pre-earnings outlook LINK bringing down FY 2012 to $44.38, it actually ended up being $44.15. ITZ also called for a test of the 100 ma around $617...we saw a low yesterday of $592 close to it's 200 ma. But rallying and briefly up on the day before closing at $604.

ITZ maintains FY 2013 estimate eps of $57 & revenue of $220B for 2014 $64 eps & revenue of $240B. Let's not forget as noted in the last Apple post... it has $125 per share in cash and with the stock trading around $600 it is selling at 8.4xs ex-cash next years estimated earnings. ITZ maintains a 2013 price target of $850 or 15xs eps. Use this correction to BUY!

 

Apple Forecasts $52 Billion For Holiday Sales

Ahead of Apple Earnings...What To Do?

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Apple reports Q1 earnings after the close today, the stock has had a big move since ITZ suggested entry. >>READ and when ITZ noted an Island Top formation >>READ

Past earnings releases LINK

Here's a current chart and past earnings releases, the yellow are represents following 2 weeks.
Jim Cramer is spot on...if you trade Apple then sell, but as an investor hold and buy any pullback.
ITZ continues to hold to the $555 year end price objective.

Mad Money host Jim Cramer says investors need to be prepared for Apple to selloff when it reports earnings on Tuesday, but then be prepared to buy it the next day, but only if the stock is down.

Apple is out with earnings today after the bell on the same day in 1984 the very first Mac was introduced. Insight on whether the stock will see a correction, with Brian Marshall, ISI Group IT hardware/data networking analyst.