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Apple Reports Best Quarterly Results Ever in Q1 2013: $13.1 Billion Profit on $54.5 Billion in Revenue [Call Ended]
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If you think lower iMac sales were "unexpected", you weren't paying attention. Tim Cook said in plain English at the last quarterly analyst meeting that iMac sales would be down for the quarter. They KNEW that would not be able to meet demand, and said so.
HobeSoundDarryl
macrumors G5
5 years is a long time. Anything can happen. If one can look forward 5 years and see "screaming buy" profits in a "what if", one should be able to also look backwards 5 years and see AAPL under $100/share. The past is hard reality. The future is speculation.
This could indeed be a "screaming buy" or it could be a "screaming sell" or anything in between. I've seen similar posts from guys in the slide all the way down from north of $700/share. That's how it always is. Sometimes they guess a bottom right, often they guess wrong. Was it a screaming buy at $650? $600? $550? $500? That didn't work so well. But it will be different this time?
If someone believes this is a screaming buy right now, consider buying cheap call options rather than stock. If you are right, you make almost as much as owning the stock with much less money at risk. If you are wrong, you can only lose the money you spend on the call options at most.
If I had lots of AAPL stock with paper profits right now but I couldn't bear to sell now, I would put in a trailing stop below the point where I just can't imagine it falling (further). Then, if that stop gets executed, I'm out with only the additional loss between here and there. If AAPL does rise from here, the trailing stop will rise along with it, ready to automatically take me out at a higher level should AAPL take another surprise plunge in the future. For any high-flying stock, put on a trailing stop to automate your downside exit. Failing to take profits off the table costs investors an awful lot of profit every year.
The big mistake is having no downside protection beyond just hope. Hope never makes a falling stock go back up, only buyers can do that. Waiting ("I'm giving it another year") never makes a falling stock go back up either; only buyers make stocks go up. If you own a home, do you have insurance should that home burn down? If you own a car, do you have insurance should that car be totaled? If you own a bunch of AAPL, do you have insurance against a sudden loss of value? If the answer is not yes to all of these, you are doing it wrong.
Here's my take on Apples current situation and future.
Apple's revenue shows that they are having more and more of their eggs in the iphone basket. Its 56% of their revenue, and the next highest item is the iPad.
iPhone is stagnant. The design changes are mostly minor tweaks to the same design they've done for years, and the iOS software has lagged behind Android significantly. Couple that with the missteps in Maps, and the general over-saturation of the iphone and you have a product that is rapidly becoming nothing special.
If the product no longer commands a premium that supports their margins, they really only have few options. Either they can move it downmarket (as they have done with the 4(s) and let margins collapse (although their revenue will increase greatly), they can release a revolutionary phone that again recaptures the desirability crown (considerably tougher without Steve, and with a more mature smartphone market), or they can try moving to different markets /creating new markets.
The biggest change for Apple is dealing with the consequences of being mortal once again. They aren't going to beat estimates every single quarter for eternity, and the stock has re-adjusted to reflect a company that makes good / great products but operates in markets with strong competitors which offer equally compelling products.
For Apple to thrive, they need to be first to market. Without Steve, that's not guaranteed, and they will need to be aggressive to keep their edge.
IMO, Tim Cook has to go. He was known for being a good COO, in charge of operations, and he's not an innovator. He couldn't even sell enough iPad Mini's, and that's not foxcons fault either. I don't know why he's sitting on $140 billion in cash either.. I'm not saying give it to shareholders, but at least do something..
Unit growth for iphone each year is around 70%, this year it will probably be like 20%. Mainly because the market has been saturated for those high end costumers who have subsidized phones. It doesn't help when the carriers tighten up their upgrade requirements either.
This isn't about analysts being too negative, apple came out and directly said the next quarter will have a 17-25% decline in earnings. This is huge for a company that hasn't had a decline in earnings in almost a decade.
I wouldn't touch this stock right now. Don't get fooled by the low multiple. The market has a higher multiple and that makes apple look cheap, but it looks like the market will increase earnings, unlike apple.
