Apple Q2 2008 Financial Results on Wednesday, April 23rd

[davidwarren]

right there with you!!





What do you guys mean history? What are you considering history. AAPL consistently beats earnings and consistently sets a accepted guidance. Last quarter is the only recent exception... so is something so recent considered history? I would say historically AAPL beats earnings and sets acceptable guidance.



The economy does seem in bad shape when you look at C,BAC, BSC, and companies like GE. But what about INTC, GOOG, RIMM, IBM, and SNDK? AAPL is much more correlated with the latter than banks/financials and conglomerates.
Why weren't you buying up on the lower support down in the teens and lower twenties? Once it got that low I knew I would never forgive my self for not taking advantage of the situation... unfortunatly I did not have as much capital around as I would have liked


If they miss there will be a large drop in price AH, but if they beat and set an accepted guidance I am not so sure if the gain is not already priced into AAPL the last few days and today: http://network.nationalpost.com/np/...08/04/21/strong-beat-expected-from-apple.aspx

We have seen this before, since AAPL tends to announce later than other companies, investors get the feel of AAPL report and usually build the price in pre-earnings. If AAPL reports well and is accepted I was thinking maybe a 7% increase in AH? If they miss.... geez who knows atleast a 10% drop?


David, just the last few months I have been studying lots of TA with options. Could you explain further into straddles?

a straddle is simply buying calls and puts above and below the current price. It is good if you think there will be a large move in either direction.

Actually, instead of a straddle, the correct play for someone holding a lot of AAPL stock and worried about a short term plunge would be to buy 1 (option) put contract for each 100 shares you are holding. If AAPL goes way up (and stays up) after the report, the put may expire worthless (yielding up to a total loss of the money you spent on that position). If APPL goes way down, you'll lose value on the stock but gain value on the put. In this latter scenario, the put option acts like relatively cheap, short-term insurance against the falling stock price. It is possible to choose a put position so that you can gain $1 for each $1 you lose on falling AAPL share prices.

So, for those bearish on the stock, there's a cheap solution without having to sell the stock. The put can "cover" your losses in the short-term, and you can simply hang on to your stock until it rises yet again. Do a search for using put options like insurance to find many articles that fully explain this strategy.

The straddle idea is better suited for anyone anticipating a huge move up or down in AAPL (but not necessarily owning the stock right now). It is essentially a (stock price) volatility play. Straddles involves buying both kinds of options- calls & puts- to essentially place a bet on both directions. To win, the move needs to big enough that you can fully recoup the cost of both option positions combined (because when one side wins, the other side loses). With AAPL options priced as they are, there will need to be a very large move in the shares to make this strategy work out very profitably.

All that said, I'm optimistic (or is that hopeful?) on AAPL, thinking the actual may prove a little better than expectations this time. Either way though, as the rumor mill cranks up for the 3G iphone, the stock will probably rise (either further from now, or quickly from some fall after this report).

I only recommended a straddle because the discussion was centered around a large move one way or the other. Anyway, I would probably buy more than 1/100 protective puts if I was concerned about a downside move just so I could profit off the move. You still would get the 'insurance' aspect of the PP, but also would potentially profit.

I own both the stock and calls, so I am expecting a nice upside after earnings.

 

[slapppy]

Conversation looks like sms screen or iChat from that looks of that drawing. Why would this guy know ahead of all the other Apple rumor sites about anything Apple?

 

[kopuschen]

Air

I have been monitoring the sales rank page on Apple.com. Macbook Air sits at the top since introduction without move even one spot. Hint, it'll be a big surprise to investor how well Air sells in this quarter.

see my notes on aapl too: http://kopusinvestmentnotes.blogspot.com/

 

[HobeSoundDarryl]

One other strategy for those of you with AAPL stock who think it might fall after the report: you might consider writing some call options. The last sale price of the May 170 today was $9.89, meaning each call option contract written at that price would put $989 in your account.

To be safe, you should only consider writing 1 call option for each 100 shares of AAPL you are holding at most. But, a guy with- say- 500 shares- could collect $989 * 5 or just under $5K on the call write. Then, you might use those funds to buy some put options for the insurance coverage.

This is called covered call writing because the worst case risk is "covered" by you actually holding 100 shares of AAPL for each call you write. If AAPL is up above 170 late in the day on May 16, you'll have to surrender (sell the call buyer) 100 shares of AAPL at $170 per share for each call you write today. However, if you bought those shares at something less than $170, your loss will only be opportunity loss (the loss in not being able to sell AAPL shares at whatever the price might be above $170 that day).

On the flip side, if AAPL closes below 170 on May 16, you'll keep the money you collected when you write those calls. Those options (and their risk to you) will expire in this scenario in the evening of that day.

So, if you don't see AAPL going up much higher in the next few weeks, but are worried about your AAPL stock falling after this report, a covered call write can be a way to pay for your put option buying. If it works out as designed, you keep your AAPL stock and someone else (the call option buyer) pays for your downside risk insurance.

One very important note to add: if you decide to write those calls, you need to hang onto that AAPL stock until those options expire. Otherwise, you'll be what's called "naked" which facilitates theoretically unlimited risk (if you've sold 170 calls, then sold the stock, and AAPL runs toward infinity by May 16).

 

[arn]

Jim Cramer (I know, I know, I'm not a fan either) is recommending a buy for AAPL based on a new messaging product called Conversation. Anyone else know what he's talking about? Cramer's not exactly a usual source for Mac rumors.

Dave

He was talking about iChat. he was misquoted.

arn

 

[erandall38]

Companies like IBM are showing much of their profits through currency conversion because of the weak dollar, not because of a good economy or tech sales. See http://biz.yahoo.com/ap/080419/wall_main.html

I don't know of a breakout for Apple with respect to sales in the US versus worldwide.



Don't worry, I bought some then too. I'm always looking for more opportunity going forward though.

Apple is becoming known for its over seas sales thought is it? And picking up market share and sales outside the U.S., so the weak dollar works out in their favor as well.

How long have you been invested in AAPL?

 

[samab]

AT&T reports tomorrow so we will know how many iphones were activated by them in the quarter.

 

[erandall38]

He was talking about iChat. he was misquoted.

arn

So was he talking about iChat in relation to the iPhone? I can't see iChat being a big deal with mac since its been around so long.
Anyone have a link?

 

[eastcoastsurfer]

One other strategy for those of you with AAPL stock who think it might fall after the report: you might consider writing some call options. The last sale price of the May 170 today was $9.89, meaning each call option contract written at that price would put $989 in your account.

To be safe, you should only consider writing 1 call option for each 100 shares of AAPL you are holding at most. But, a guy with- say- 500 shares- could collect $989 * 5 or just under $5K on the call write. Then, you might use those funds to buy some put options for the insurance coverage.

This is called covered call writing because the worst case risk is "covered" by you actually holding 100 shares of AAPL for each call you write. If AAPL is up above 170 late in the day on May 16, you'll have to surrender (sell the call buyer) 100 shares of AAPL at $170 per share for each call you write today. However, if you bought those shares at something less than $170, your loss will only be opportunity loss (the loss in not being able to sell AAPL shares at whatever the price might be above $170 that day).

On the flip side, if AAPL closes below 170 on May 16, you'll keep the money you collected when you write those calls. Those options (and their risk to you) will expire in this scenario in the evening of that day.

So, if you don't see AAPL going up much higher in the next few weeks, but are worried about your AAPL stock falling after this report, a covered call write can be a way to pay for your put option buying. If it works out as designed, you keep your AAPL stock and someone else (the call option buyer) pays for your downside risk insurance.

One very important note to add: if you decide to write those calls, you need to hang onto that AAPL stock until those options expire. Otherwise, you'll be what's called "naked" which facilitates theoretically unlimited risk (if you've sold 170 calls, then sold the stock, and AAPL runs toward infinity by May 16).

Heh, if you really want some option fun look at the google $500 April calls that just happened to expire the close of business the day after google announced. Since the time value was so discounted and google was trading ~$450ish, you could have picked up the $500 April calls for 55c/share. So the quick math works out that if you bought $5Kish worth on Thurs. you could've exercised on Fri. and made a cool $400kish.

 

[erandall38]

AT&T reports tomorrow so we will know how many iphones were activated by them in the quarter.

True, but it is defintly key to keep in mind there will be many more that were sold then At&t reports. Consider all the phones that have been bought, unlocked, and sold to Russia and China, and hacked for other carriers.
http://www.bloomberg.com/apps/news?pid=20601109&refer=home&sid=aLut8iOUmjBw

 

[Rot'nApple]

What do you guys mean history? What are you considering history. AAPL consistently beats earnings and consistently sets a accepted guidance. Last quarter is the only recent exception... so is something so recent considered history? I would say historically AAPL beats earnings and sets acceptable guidance.

Like I said... "Get ready for the last few days gains in AAPL to be erased, if history repeats itself"

As in this history...

See "Great News, Stock Tanks"

"Well, of course you've all heard by now that Apple did it again: according to the company's press release, it posted a $430 million profit last quarter on revenue of $3.68 billion, beating analysts' estimates and boosting year-end earnings and revenues to $1.335 billion and $13.93 billion respectively. That's a 384 percent profit increase over 2004, and also makes fiscal 2005 the company's best year ever-- financially speaking, anyway. Overall it can't compare to 2002, when Steve Jobs once won five games of Klondike in a row and also found a whole box of raisins-- sealed-- just sitting in the parking lot of the Circle K, but from a monetary standpoint, 2005 definitely finishes ahead.

As usual, the good news came fast and furious: Mac sales grew year-over-year by a whopping 48 percent, iPod sales were up a bordering-on-obscene 220 percent over the same time period, Apple's cash stockpile keeps growing and is apparently now up to over $8 billion, the company had its best sales in the education market in ten years, its retail effort is doing so well it's planning to open another 35 to 40 new stores in 2006, etc. etc. etc.-- and yet, within 30 minutes of Apple posting its Q4 results, its stock had plunged 10 percent in after-hours trading. What gives? Er, other than the fact that Apple's stock price always dips after the company announces better-than-expected financial results?" - see link

http://www.appleturns.com/

 

[Macole]

Apple must reconsider the price policy for the rest of the world markets and the analysts must take in mind thw global economy situation wich is not so good for many many people , especially in countries where the apple products costs a fortune ... 50-60% more !!!!!!!

 

[IJ Reilly]

Approx: 1.95M macs, 9.7M ipods, EPS of $1.07-$1.09

If this is the consensus number, which I assume it is, then Apple needs to report in the neighborhood of $1.25, or watch out below. They also need to show more confidence in their forward guidance then they did last quarter.

 

[eastcoastsurfer]

Like I said... "Get ready for the last few days gains in AAPL to be erased, if history repeats itself"

As in this history...

See "Great News, Stock Tanks"

"Well, of course you've all heard by now that Apple did it again: according to the company's press release, it posted a $430 million profit last quarter on revenue of $3.68 billion, beating analysts' estimates and boosting year-end earnings and revenues to $1.335 billion and $13.93 billion respectively. That's a 384 percent profit increase over 2004, and also makes fiscal 2005 the company's best year ever-- financially speaking, anyway. Overall it can't compare to 2002, when Steve Jobs once won five games of Klondike in a row and also found a whole box of raisins-- sealed-- just sitting in the parking lot of the Circle K, but from a monetary standpoint, 2005 definitely finishes ahead.

As usual, the good news came fast and furious: Mac sales grew year-over-year by a whopping 48 percent, iPod sales were up a bordering-on-obscene 220 percent over the same time period, Apple's cash stockpile keeps growing and is apparently now up to over $8 billion, the company had its best sales in the education market in ten years, its retail effort is doing so well it's planning to open another 35 to 40 new stores in 2006, etc. etc. etc.-- and yet, within 30 minutes of Apple posting its Q4 results, its stock had plunged 10 percent in after-hours trading. What gives? Er, other than the fact that Apple's stock price always dips after the company announces better-than-expected financial results?" - see link

http://www.appleturns.com/

I didn't read your link, but was that the last time their stock dipped? Keep in mind the stock market doesn't care about what a company just did (earnings are backward looking). They only care about the future. Apple could post stellar earnings, but if they mention slowing iPod sales (their cash cow), the market is going to adjust the stock price to be more in line with the new future revenue targets.

 

[IJ Reilly]

I didn't read your link, but was that the last time their stock dipped? Keep in mind the stock market doesn't care about what a company just did (earnings are backward looking). They only care about the future. Apple could post stellar earnings, but if they mention slowing iPod sales (their cash cow), the market is going to adjust the stock price to be more in line with the new future revenue targets.

It does care, at least some -- since earnings are seen as indictors of future trends. Let Apple miss, or more accurately, not substantially beat, consensus earnings predictions and see what happens.

 

[liven2]

I will watch closely...

I bought over a 100 shares of Apple stock back when it was like 18 bucks a share.. I Have been sitting on it... I am not good at investing nor stock but lets say just before it were to take a dive I sold my shares then bought share back when it leveled out at a much lower level. Is this bad and is there penalties for this. I trade thru eTrade but am curious if this is the totally wrong way to go. Just looking for opinions?

Thanks!

 

[balwx]

Lots of great discussions, especially on the option trades, which I enjoy reading. How about a forum dedicated for apple investors? The Yahoo investor forums are littered with useless junk & constant links to profanity. Is this a possibility? Thanks!

 

[HobeSoundDarryl]

I bought over a 100 shares of Apple stock back when it was like 18 bucks a share.. I Have been sitting on it... I am not good at investing nor stock but lets say just before it were to take a dive I sold my shares then bought share back when it leveled out at a much lower level. Is this bad and is there penalties for this. I trade thru eTrade but am curious if this is the totally wrong way to go. Just looking for opinions?)

Not really. It's actually a good idea (too) if you think the stock might go down. There are no penalties, but tax considerations should come into play. Note however, that sooner or later you will sell and deal with the taxes, so you might not want to let that be in the way too much.

 

[IJ Reilly]

Not really. It's actually a good idea (too) if you think the stock might go down. There are no penalties, but tax considerations should come into play. Note however, that sooner or later you will sell and deal with the taxes, so you might not want to let that be in the way too much.

I have to disagree. Don't try to time stocks -- this is a great way to get burned. Sell when you need the money for something else, want to rebalance your portfolio, or when you have a feeling that the company's long-term prospects aren't good.

 

[Grimace]

I have to disagree. Don't try to time stocks -- this is a great way to get burned. Sell when you need the money for something else, want to rebalance your portfolio, or when you have a feeling that the company's long-term prospects aren't good.

Sage advice. If you don't know enough (or you know enough to be dangerous) - don't play games with lots of hard-earned money. If you like a company's long-term outlook, invest and don't look back. Short-term gaming is not for the faint of hearts (wallets.)

 

[macfan881]

Hopefully we get a date of Firmware 2.0

 

[liven2]

Good Advice

Thanks for you advice on stock stuff... I agree and was leaning that way as I am really in it for the long term. I just thought selling high and buying back low when it drops like 20 or 30 bucks a share like it is notorious for doing after their announcements. I think the Tax stuff would nullify in gain of shares when selling high and buying low.

 

[Maclarny]

Thanks for you advice on stock stuff... I agree and was leaning that way as I am really in it for the long term. I just thought selling high and buying back low when it drops like 20 or 30 bucks a share like it is notorious for doing after their announcements. I think the Tax stuff would nullify in gain of shares when selling high and buying low.

Roth is your friend

 

[Eric1285]

The golden rule to trading Apple stock - buy on rumor, sell on news. If you watch mashups of Jobs' keynote speeches (especially the WWDC ones) you'll notice that Apple stock peaks when the new products are (or aren't) announced.

As long as it's rumor and hasn't been confirmed, buy buy buy! Soon as the word's out, sell!

Not responsible for your losses.

 

[Dave00]

I bought over a 100 shares of Apple stock back when it was like 18 bucks a share.. I Have been sitting on it... I am not good at investing nor stock but lets say just before it were to take a dive I sold my shares then bought share back when it leveled out at a much lower level. Is this bad and is there penalties for this. I trade thru eTrade but am curious if this is the totally wrong way to go. Just looking for opinions?

Thanks!

You would get hit with an enormous capital gains bill on your taxes. Let's say you sold it for $168, and bought for $18. That's a gain of $150/share, x100 shares, = $15,000. Capital gains of 15% = $2,250. Plus, if you'd want to buy it back after it dropped (within 30 days of selling), you'd run into wash sale rules. You're much better off buying and holding (for years) than trying to time it. Not only is it nearly impossible to predict, you'll get burned on taxes. And filling out your taxes becomes a nightmare, as you have to calculate for each buy/sell your cost basis.