Tags: Apple | iPhone | analysts | earnings

Apple Results Ignite Debate About Future of Tech Giant

Wednesday, 22 July 2015 09:03 AM

The U.S. is virtually an Apple Inc. republic. Apple reported earnings this week, and analysts were mostly supportive and admiring, as usual. The first two clips represent some interesting comments, admittedly a small sample.

Ian Dogan, of Insider Monkey, reiterated what investors know, which is that companies “lowball” estimates, and then 70 percent of companies “beat” the estimates. He might have added that they often beat them by a penny or two, and then sell-side analysts dutifully chalk up the earnings as a “beat.” He noted that Apple failed to meet its stated goals, and then the stock “tanked” 7 percent after hours. By the way, the graphic showed that Apple beat the earnings estimate by $1.85 to $1.81. An interviewer asked Dogan why he doesn’t like Apple, and he responded that Apple is a single-product company, and he is “skeptical about the sustainability of their iPhone sales and profit margins over the long term.” An interviewer countered that Apple is selling at a below-average multiple that is even larger than a year ago, and Dogan repeated that the issue is the sustainability of profitability. He expressed concern over the potential for sales to drop if there is a recession and for lower-cost competitors, some with better products, to eat into Apple’s profits.

Daniel Ives, of FBR, said declining sales figures for the iPhone “are sending shivers down the spines of investors.” John Petrides, of Point View Wealth Management, added that the market has been “under a lot of pressure post the report” because of “disappointing forward guidance on gross margins” and the lack of comment by Apple on disappointing sales of the iWatch. Ives doubts that people will be eager to upgrade their iPhones, and he sees slowing sales as the cycle proceeds. He called for Apple to ramp up its service business.

Fred Tomczyk, CEO of TD Ameritrade, said his and competing firms are among the most interest-sensitive in the market, therefore positioned to benefit from a hike in rates. A 100-basis-point rise would add 38 cents per share, but expects the rise to be gradual, doesn’t know when it will start, and doesn’t think the yield curve will move as much as people might think. Tomczyk reported that customers are fully invested and margin trading is high due to the bull market. Also they are staying short in bonds, and Apple is “clearly the most widely held stock.” Finally, he predicted that whenever Chair Yellen does move to raise rates, it will increase market volatility.

Finally, top technician Ralph Acampora, of Altaira Limited, who this writer thinks of as always bullish, told Jackie DeAngelis of Futures Now he sees this market as “locked in a trading range” over the past five months, with good but narrow leadership. Asked about Apple before the earnings report, he anticipated favorable earnings and stressed that he thinks the market needs to continue to make new highs. His estimate for the S&P is 2250-2300 by the end of the year.


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Robert-Feinberg
The U.S. is virtually an Apple Inc. republic. Apple reported earnings this week, and analysts were mostly supportive and admiring, as usual. The first two clips represent some interesting comments, admittedly a small sample.
Apple, iPhone, analysts, earnings
498
2015-03-22
Wednesday, 22 July 2015 09:03 AM
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