Apple Inc.

Business Times - 01 Jul 2011

Investors wary as Apple loses big chunk

4% drop in shares in June caps the tech giant's worst H1 showing since 2008

(SAN FRANCISCO) Apple Inc shares dropped 4 per cent last month, capping their worst first-half performance in three years, as investors await new products and fret that rivalry from Google Inc will slow growth.

The shares, down 8 per cent from a record US$363.13 on Feb 16, haven't performed this poorly in the first six months of a year since 2008, when the worst recession since the Great Depression swamped the stock market.

Investors, already grappling with chief executive officer Steve Jobs' medical leave, say they are wary of the stock amid evidence that Google is gaining ground in smartphones.

It's also been more than a year since Apple introduced the original iPad tablet, and the next iteration of the iPhone isn't due until September. That's left shareholders hankering for new products to propel the stock, even though profit has risen more than 75 per cent in the past two reported quarters.

'They are so successful in their execution that they need the next huge thing to make the stock actually rally,' said Michael Yoshikami, chief investment strategist at YCMNet Advisors, which manages US$1 billion in Walnut Creek, California. 'You've got to know what the next goldmine is going to be.'

Apple, based in Cupertino, California, fell US$1.22 in Nasdaq Stock Market trading on Wednesday, paring the year's gain to 3.6 per cent. The shares have declined 4.1 per cent since Jan 14, the last trading day before Mr Jobs, who's battling a rare form of cancer, said he was taking his third medical leave since 2004.

'There is only one Steve Jobs; there's nobody that can replace him,' said Walter Price, managing director of RCM Capital Management, which owned 2.96 million Apple shares as at March 31, after selling more than 820,000 shares.

Apple, the second-largest company in the S&P 500 behind ExxonMobil Corp, has been one of the surest bets for investors over the past several years.

It nearly quadrupled through the end of last year from Jan 8, 2007, the day before Mr Jobs introduced the iPhone. It's up from a split-adjusted US$5.48 on Sept 16, 1997, the day Mr Jobs returned to Apple after his ouster in 1985.

Large investors that have reduced their stakes in Apple this year include Goldman Sachs Group Inc, Janus Capital Group Inc and Wellington Management Co.

Given the gains in Apple's share price so far, it's inevitable that the pace of increase will slacken, said Giri Cherukuri, the head trader for OakBrook Investments, which manages US$2.5 billion, including Apple shares.

'It's hard for a stock of that size to move a lot at this point,' Mr Cherukuri said. 'For it go up 50 per cent or double would be hard to imagine.'

Steve Dowling, a spokesman for Apple, declined to comment.

Apple's ascent will undoubtedly resume, according to analysts, who on average predict that the shares will climb to US$457.08 in the coming months. At least 50 analysts have 'buy' ratings on the stock, and none of those tracked by Bloomberg recommends selling.

The gap between Apple's stock price and analysts' predictions reached a record US$141.92 on June 20, according to Bloomberg data. So far this year, Apple has underperformed the broader market. The Dow Jones Industrial Average has risen 5.9 per cent, while the S&P 500 is up 4 per cent.

New IPhone Apple may get a boost from the next version of the iPhone, due for release by the end of September, as well as demand for electronics in the year-end shopping season.

Recent stock declines have created an investment opportunity, said Michael Binger, a fund manager at Thrivent Asset Management. -- Bloomberg

Business Times - 21 Jul 2011

Apple shares top US$400 after stellar Q3 results

Profit doubles to US$7.3b driven by iPad, iPhone sales

(SAN FRANCISCO) Apple Inc's stock price jumped to more than US$400 for the first time, after record sales of iPhones and iPads helped third-quarter profit blow past estimates.

Net income in the period more than doubled to US$7.31 billion, or US$7.79 a share, from US$3.25 billion, or US$3.51, a year earlier, Apple said on Tuesday. Sales climbed 82 per cent to US$28.6 billion. Analysts had predicted profit of US$5.87 a share and revenue of US$25 billion.

IPhone sales were buoyed by international demand, particularly in China, where total revenue jumped six-fold to US$3.8 billion. After overcoming supply shortages for the iPad 2 following its March debut, Apple saw sales of the tablet soar. The device is now its second-biggest revenue source - behind the iPhone - less than two years after first being introduced.

'They have the wind at their backs in a big way, and it's being reflected in these numbers,' said Ryan Jacob at Jacob Asset Management. 'They have a unique ability to increase market share and introduce new products.'

Apple shares jumped as much as 7.5 per cent to US$405 in extended trading after the results were posted. The stock, up 17 per cent this year, had closed at a record US$376.85 on Tuesday in regular Nasdaq trading.

The report eased investors' concerns that sales would suffer from the lack of a new iPhone, which isn't expected until September. The company also has been operating without the day-to-day attention of chief executive officer Steve Jobs, who has been on medical leave since January.

'Apple is a juggernaut and they prove it every quarter,' said Mike Binger at Thrivent Asset Management. Apple's expansion into China and other fast-growing economies helped make up for slower growth in the US. Sales in China, Taiwan and Hong Kong have totalled US$8.8 billion in the first three quarters of the fiscal year, Apple said.

'China was very key to our results,' said chief operating officer Tim Cook, who is handling day-to-day leadership in Mr Jobs's absence. 'This has been a substantial opportunity for Apple, and I firmly believe that we're just scratching the surface right now.'

Apple sold 20.3 million iPhones and 9.3 million iPads in the third quarter, which ended on June 25. Mac computer sales were 3.95 million.

The results reinforced the idea that tablets are taking sales from traditional personal computers. Apple said 86 per cent of Fortune 500 companies are testing or deploying the iPad, and that sales of the tablet topped those of the Mac computer among primary and secondary schools. -- Bloomberg

Hmm... its kinda sad, but not totally unexpected that Jobs is leaving Apple...again.. Possibly for good.

Business Times - 11 Oct 2011

Will Steve Jobs win his last bet?

THE late co-founder of Apple Computer, Steve Jobs, made a lot of bets on products that consumers would love, and he invariably won, despite often defying prevailing wisdom. His magic touch built a reputation for Apple that attracted devotees around the world. Poignantly, Apple's latest bet was announced the day before Mr Jobs died last week. While everyone was expecting an iPhone 5 with a bigger screen and the ability to hook on to the super-fast mobile broadband networks known as LTE (long-term evolution) or 4G, Apple announced the iPhone 4S - a 3G-only souped-up version of its iconic phone that has been in the stores for over a year.

Paying tribute to Mr Jobs, film director Steven Spielberg said last week that he was the greatest inventor since Thomas Edison. However, comparisons with Edison, inventor of the light bulb, may be unfair to both luminaries. Mr Jobs' genius was not as an inventor, but as a marketeer and an original thinker with an intimate understanding of consumer behaviour. When the first iPhone came out, it had an indifferent camera, could not do MMS or even SMS forwarding, and was not 3G. But it was aesthetically appealing, could play YouTube videos, was beautifully packaged, intuitively easy to use and didn't need a bulky manual - all of which might help explain why it developed a cult following, which has endured.

At the moment, across the US, Europe and most of Asia Pacific, carriers are busy rolling out super-fast 4G networks which offer massive broadband capabilities for smartphones. Already, Apple's biggest competitors like HTC, Motorola and Samsung (which make Android Operating System-based phones) have started rolling out powerful 4G-enabled phones with big screens. Yet Apple chose to announce a phone which is not 4G-enabled, has a smaller screen, and from the outside looks exactly the same as the current model. Of course, the internal architecture of the new phone has got a massive makeover. By not going with 4G or offering bigger screen sizes - which enable better viewing of videos - Apple has made a bet on what the consumer really wants. In this case, it has assumed that the longer battery life of a 3G phone with a smaller screen (as opposed to the massive power requirements of 4G phones) and user familiarity would be enough to keep iPhone sales moving. It remains to be seen if this happens, but if history is any guide, Mr Jobs' - and, by extension, Apple's - bet will pay off.

Even though he will go down in history as a technologist par excellence, Mr Jobs' lasting legacy will be proving to the world that technology is only a means to an end, and not an end in itself; the end is a delighted consumer. Mr Jobs' greatness lay in being able to repeatedly call correctly what would create that delight. He didn't invent the smartphone; he just made it more desirable. And this not only enabled Apple to sell millions of phones, but also helped competitors do the same.

The Straits Times
Oct 15, 2011
Apple fans snap up iPhone 4S
Many queue to buy latest gadget as tribute to late co-founder Steve Jobs

SYDNEY/TOKYO: Apple Inc's new iPhone went on sale in stores across the globe yesterday, with fans snapping up the final gadget unveiled during Steve Jobs' lifetime, many buying the phone as a tribute to the former Apple boss.

Hundreds queued around city blocks in Sydney and Tokyo to get their hands on the iPhone 4S, ahead of store sales in Germany, France, Britain and North America.

In Hong Kong, Apple fans and resellers jostled to get their hands on discounted earlier models, witnesses said. Tensions were high at Apple's plush new harbourside store in the Chinese territory as people queued to buy up to five iPhone 4 models at a time, sometimes only to hand them over to friends outside and return for more.

In Los Gatos, California, Apple co-founder Steve Wozniak was among those waiting overnight outside the Apple store to be one of the first to get hold of the iPhone 4S, television station NBC11 reported.

The release represents the end of Apple's era under Jobs, who died this month after an eight-year battle with cancer. The iPhone 4S has received mostly positive reviews for its voice-recognition software, speedier processor and improved camera. The device also provides Apple with fresh ammunition in its fight against Google's Android software, which will appear on a host of new smartphones in the year-end holiday season.

'I am a fan, a big fan. I want something to remember Steve Jobs by,' said Ms Haruko Shiraishi, waiting patiently with her Yorkshire terrier Miu Miu at the end of an eight block queue in Tokyo's smart Ginza shopping district.

The new model looks similar to the previous iPhone 4, but comes with highly regarded voice-activated software, which allows users to ask questions.

Australian Tom Mosca, first to buy the phone in Sydney, said he would ask his new white iPhone: 'Where's Steve?' Many Apple fans believe the phone was called iPhone 4S to mean 'for Steve'.

Apple CEO Tim Cook and his executive team hope the first device sold without their visionary leader will protect them against a growing challenge from the likes of Samsung Electronics.

The South Korean company, Apple's arch-rival with smartphones powered by Google's Android software, expects to overtake it as the world's biggest smartphone vendor in terms of units sold in the third quarter.

The iPhone 4S - introduced just a day before Mr Jobs died - was dubbed a disappointment because it fell short of being a revolution in design, but glowing reviews centred around its Siri voice-activated software have helped it set a record pace in initial, online sales orders.

'It is going to easily outpace any previous launch,' said analyst Charlie Wolf at Needham & Co in New York. It helps that the iPhone is available on the three largest United States carriers for the first time, he said.

Apple has also released an update to its iOS mobile operating system, which reportedly experienced glitches when customers tried to download it to their existing devices.

But such problems did not dampen the enthusiasm of most iPhone 4S buyers at the Sydney store, most of whom appeared to be existing Apple customers. Only one out of 10 people surveyed by Reuters was a new Apple customer.

'I have been waiting for the iPhone 5 for a long time. But since Jobs died, I wanted to make sure I had a new iPhone with some advantages over the old,' said iPhone devotee Mark Du, concerned over future Apple gadgets without Mr Jobs in charge.

Apple said it had taken over a million online orders in the first 24 hours of its release, exceeding the 600,000 for the iPhone 4, though that model was sold in fewer countries initially.

Some analysts expect fourth- quarter iPhone shipments to hit over 30 million, almost twice as many as a year ago.

REUTERS, BLOOMBERG

Business Times - 07 Mar 2012

Apple hopes to make a splash with iPad 3

Its stranglehold on tablet market is at stake as it navigates the post-Jobs era

By VICTORIA HO

(SINGAPORE) Apple faces its moment of truth tonight, Singapore time, when it unveils its next major device upgrade - the iPad 3.

How it is received will decide whether Apple can continue to dominate the tablet market - which it revolutionised two years ago with the first iPad.

iPad3 is the first device Apple is launching that isn't under the tutelage of its formidable late CEO, Steve Jobs.

Tim Cook, who became CEO in August last year, took to the stage less than a month later to roll out the iPhone 4S - much to the chagrin of many who were expecting the iPhone 5, a more significant upgrade to the iPhone 4.

This time, Mr Cook will probably bring out the company's next big headline-grabbing device - and take on the competition that Apple's own success has created.

With the tablet becoming the form of choice, PC and cellphone makers alike have flooded the market with competing offerings.

Handset makers such as HTC and Samsung have poured resources into pushing out their own versions of 'iPad-killers', while traditional PC makers such as Dell, Lenovo and HP have come up with tablets over the past year.

Even as the iPad enjoys the top spot with 57 per cent global tablet market share, according to latest figures from research firm iSuppli, Apple is seeing its dominance threatened by the emergence of a whole gamut of Android devices, as well as low-priced gadgets such as Amazon's Kindle Fire. The iPad's market share has slipped from 64 per cent in the third quarter of 2011, iSuppli data shows.

'Apple has no doubt secured the top spot and mind share of the market with its original launch of the iPad,' said Frost & Sullivan senior research manager Phil Harpur. But with Android tablets inundating the market, Apple needs to wow the market with the iPad 3's technology.

Going by Apple's typical rollout schedule, Singaporeans will probably have to wait about a month before they can pre-order their iPad 3s.

Apple typically opens orders to Singapore as part of a second batch of countries, about two weeks after the first batch receive their pre-order requests. The latter usually includes countries such as the US, Britain, Australia and Japan.

Mr Harpur said that a lot will rest on how much the iPad 3's features are an improvement over the iPad 2's. 'The iPad 2 offered only minor incremental upgrades. This time, the market will be expecting a lot more from Apple's new device.'

Still, winning mind share in the gadget space isn't limited to technical features alone. Device makers typically focus on squeezing the latest technology into their offerings, but Apple has often relied on other factors in its go-to-market strategy.

From a technical standpoint, neither Apple's iPod music player nor the iPhone were the most impressive devices at their debut, and critics have often cited competing phones from the likes of Samsung and HTC as having much more powerful processors and capabilities that outshone the iPhone.

Apple's success, pundits say, lies in its marketing might and iconic brand name, as well as the powerful community of developers behind it.

The company often cites its collection of apps - which is about twice as large as the Android library - as a winning factor for its iPhones and iPads.

It said yesterday that the 25 billionth copy of an app was downloaded from its App Store by a user in China. It estimates its library size at about 550,000, of which 170,000 apps are made specifically for the iPad.

Korean firms Samsung and LG, which make screens for the iPad, reportedly had problems mass producing a screen with a corresponding four times the pixel density of the previous iPad screen, and at a workable price point.

This could explain why the iPad 3's screen may be double, instead of four times the resolution increase.

The Straits Times
Mar 20, 2012
Apple to pay dividend, buy back shares

NEW YORK: Apple said yesterday it would pay a dividend of US$2.65 (S$3.34) a quarter from July and buy back up to US$10 billion of its own shares, returning some of its $97.6 billion in cash and investments to shareholders.

The share buyback programme is expected to be executed over three years, starting from Sept 30, with the primary objective of offsetting the impact of employee stock options and equity grants.

'We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building up our infrastructure. You'll see more of all of these in the future,' Apple's chief executive officer Tim Cook said in a statement.

The company said it anticipates using around US$45 billion of domestic cash in the first three years of its programme.

The growing amount of money on Apple's balance sheet followed the introduction of the iPhone and the iPad. The company last week began selling a third-generation iPad, which comes with a high-definition screen and faster processor.

Investors had urged Apple to return some of the huge balance in the form a dividend.

'We are extremely confident in our future and see tremendous opportunities ahead,' Apple's chief financial officer Peter Oppenheimer said.

The company generated US$16 billion in cash in the first quarter of fiscal 2012, which ended in December.

Mr Shaw Wu, an analyst at Sterne Agee & Leach, said Apple would generate about US$75 billion in cash this year.

'This is something that large shareholders have been asking for,' said Mr Wu, who had predicted that Apple would announce an annual dividend of 2 per cent to 2.5 per cent.

Analysts at Morgan Stanley, JPMorgan Chase & Co, and Mizuho Securities USA had also predicted that Apple would institute a dividend.

A dividend would be an added boon to investors who have already seen the company's stock rise 45 per cent this year.

Apple co-founder Steve Jobs, who died in October, long resisted calls to return some of the money to investors.

Apple last paid a dividend in 1995, before Mr Jobs returned as CEO and led the introduction of top-selling products including the iPod, iPhone and iPad.

The final dividend, of 12 cents a share, was suspended amid leadership upheaval and dwindling computer-market share.

REUTERS, BLOOMBERG

Hi,

My very first post here and it will be on the company which represents my largest holding in my personal portfolio due to capital appreciation. I wonder how many of you here at this wonderful forum owns Apple? It is fascinating - a growth company masquerading as a value play. Compounded annual growth rate of 67% for its earnings over the last 5 years, but yet trading at a current PE of 16. Looks to me like a 'too good to be true' Peter Lynch stock or Davis Double Play.

I personally think Apple has a few more years to grow at 15-20% in both sales and revenue as it gears up for a monstrous entry into China. I recognise that China might be having economic troubles and that Apple's plans can ultimately falter. However, these are as yet unknowns (I have never been able to do macro-economic analysis properly). What I do know is that Apple's sales in China grew by 60% for the three quarters of FY2012 compared with the comparable period in FY2011. The facts are quite amazing to be honest.

Now, the story is that Apple is really too big to grow. Is that true? I wouldn't know. What I see is that Macs have a huge potential to occupy more market share in the PC market. Remember, Mac sales have been increasing even though the overall PC market sales have been decreasing. If the PC market sales trend continues, the Mac line will be happy! The tablet market is continually growing and even though I see Android and Amazon tablets gathering more marketshare from iPad, I see the iPad exhibiting great overall sales growth with falling market share (a ballooning tablet market is a big win for Apple, Android and Amazon). I do not personally think that it will be a case of 1 winner and 2 casualties, but rather, a communal prosperity for quality tablet makers.

Any one thinks Apple has run out of steam? Would love to hear a different side to my bullish story. It always pays to listen to quality bear thesis. Sharpens the argument for people on both sides of the fence.

Cheers,
Ser Jing

(11-09-2012, 07:00 PM)serjing Wrote: Hi,

My very first post here and it will be on the company which represents my largest holding in my personal portfolio due to capital appreciation. I wonder how many of you here at this wonderful forum owns Apple? It is fascinating - a growth company masquerading as a value play. Compounded annual growth rate of 67% for its earnings over the last 5 years, but yet trading at a current PE of 16. Looks to me like a 'too good to be true' Peter Lynch stock or Davis Double Play.

I personally think Apple has a few more years to grow at 15-20% in both sales and revenue as it gears up for a monstrous entry into China. I recognise that China might be having economic troubles and that Apple's plans can ultimately falter. However, these are as yet unknowns (I have never been able to do macro-economic analysis properly). What I do know is that Apple's sales in China grew by 60% for the three quarters of FY2012 compared with the comparable period in FY2011. The facts are quite amazing to be honest.

Now, the story is that Apple is really too big to grow. Is that true? I wouldn't know. What I see is that Macs have a huge potential to occupy more market share in the PC market. Remember, Mac sales have been increasing even though the overall PC market sales have been decreasing. If the PC market sales trend continues, the Mac line will be happy! The tablet market is continually growing and even though I see Android and Amazon tablets gathering more marketshare from iPad, I see the iPad exhibiting great overall sales growth with falling market share (a ballooning tablet market is a big win for Apple, Android and Amazon). I do not personally think that it will be a case of 1 winner and 2 casualties, but rather, a communal prosperity for quality tablet makers.

Any one thinks Apple has run out of steam? Would love to hear a different side to my bullish story. It always pays to listen to quality bear thesis. Sharpens the argument for people on both sides of the fence.

Cheers,
Ser Jing

Welcome to the forum!

Hi Ser jing,

I agree aapl is something quite amazing, super products/ecosystem/barrier to entry. And it is not even expensive even as a non growth stock.

That said, much of the value in the company is in its good stuff, and in terms of design capabilities i think they will struggle in the post steve jobs world to beat that.

Cook has done well so far but one will always remember that aapl was once in danger of going under.

I am sadly holding aapl put options (long dated) that dont look too good right now so its understandable im trying to find the bearish angle!