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AAPL’s Strong Post-Earnings Moves

01 Aug

AAPL closed July 31st over $610 a share, erasing most of its loss after earnings release.   There’s a few important catalysts moving the stock:

  • Macro economic factors have subsided a little.  Greece isn’t leaving the Euro and Europe itself isn’t failing this week.  China is likely to offer up some stimulus to keep its economy up a bit.   There’s been little talk of Iran/Israel.   While Syria is a mess, the general state of things is calm  and that helps ease overall pressures on AAPL’s P/E.
  • iPhone 5 launch rumors abound.  September 12th has been pegged as the date of a media event where AAPL will release the next gen phone.  I previously suggested September 7th as being exactly six months after the iPad release.  If I had looked at the calendar, I would have seen that was not a realistic date as AAPL always holds events on Tuesdays.   Tuesday in this case would be September 11th and I think they chose wisely in bumping it up one day.
  • The shipping date for the next iPhone is said to be September 21st (Friday as usual), giving the company about 9 days in the quarter to squeeze out sales.  Analysts have talked about 5 million sale opening weekend.  With the follow up days, I’m guestimating AAPL could push out about 9 or 10 million phones, if they’ve got them done and ready to sell.
  • Rumors for the iPad mini are also heating up.  There’s some suggestion it will happen this fall, possibly with the iPhone event.  That would be great and change a lot of estimates.  I’m still not entirely convinced it will be there.
  • There’s some suggestion a stock split would lead to a listing in the Dow.  People just love talk of a stock split, but that type of news can’t produce a long term move in the stock.
  • Ex-dividend for AAPL’s first ever dividend is August 9th.  At $2.65 a share, it’s a mere 1.7% on today’s close.  Still, it offers to bring in a new class of investor and new institutional funds as it becomes a dividend payer.

 

I’ve used profits from Sprint (S) calls to fund new AAPL calls since the earnings disappointment.   These are now performing well, however, more “fast” upside is needed in order for me to capitalize on some of the far OTM September calls.  To move out longer, I added 1 Feb $800 call today as this would include the January earnings release.  Investors looking to play that after the iPhone launch should help move the premium up in this call.

AAPL reached a 3 month high of around $613 prior to earnings release.  With no new macro issues, it should move through that tomorrow.  If the current world picture holds together, it AAPL should work to test the spring (and all time) high of $644 as we head towards the iPhone 5 launch.

I’m still holding $675, $690, $760, $775  & $800 September calls.  The $760′s and above were purchased pre-earnings, but I’m not giving up on them just yet.   I was mostly out of AAPL from April through May.  I moved back into it around June and, at this moment, I feel like I’ve hit the timing pretty good.  The momentum has switched to AAPL’s favor.  I’m glad to be on this freight train as it picks up speed, not running behind it try to catch up.

 
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Posted in Long Trades, Options, Technology

 

Where’s Waldo? At Dreamworks, Of Course

28 Jul

Read on Seeking Alpha: Where’s Waldo? At Dreamworks, Of Course

Dreamworks Animation SKG (DWA) recently announced the acquisition of Classic Media and its many properties. For the $155 million price tag, Dreamworks quickly builds its stable of characters and gains thousands of hours of content.  Here’s short term options play and long term outlook. [Read More]

 
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Posted in Long Trades, Options

 

“Like” It Or Not, a Facebook Phone Is Coming

26 Jul

Bloomberg is reporting that a Facebook phone is coming, but not until mid 2013.  HTC is said to be the maker.  In an article I wrote about the fail that Android is for Google, I noted how I hoped this would not happen.  Unfortunately, it seems Zuck skipped out on reading my article.

Facebook is a platform, the company is not a device maker (even though they’ll be branding an HTC device).  Their platform should be available on any and all devices, meaning they should not compete with any of the hardware makers.  They should maintain good relationships the likes of Apple, Samsung and perhaps even Amazon.  They should take advantage of Google’s mistakes not by making another Android handset, but by making the best social apps on any device;  iOS, Android, Window 8, etc.

Facebook’s been well criticized for the poor performance of it’s mobile apps for the devices that exist.  Anyone who’s had this experience isn’t likely to jump ship to Facebook.  Plus, this is a big nut to crack.  Existing providers are well along into building their media ecosystems.  While Facebook has some of the app thing going on, movies and music are not their thing.

With all of its privacy fiascoes, this is probably one of the last things they need to be doing.  I don’t know anyone clamoring to give Facebook more information or wanting them more involved in their private lives… let alone have a branded Facebook GPS tracker attached to their hip at all times.

Though I’m generally a Facebook fan, I really do hope this doesn’t work out for them.  I fear the day I am peer-forced into trading my iPhone for an fPhone.  It just can’t happen.

 
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Posted in Technology

 

AAPL Earnings Recap

25 Jul

In the most simple evaluation of my prediction, I was wrong.   I’ll take some solace knowing I was only one among many wrong parties.  Still, now it’s time to figure out why I was off, pick things up and move along, deciding how to best find benefit in the failure.

  • 32 Million iPhones; Actual = 26 Million
  • 18 Million iPads; Actual = 17 million
  • 6 million iPods; Actual = 6.8 million
  • 4.4 million Macs; Actual = 4 million
  • Revenue:  >$41 billion; Actual = $35 billion
  • Margin:  >46.5%;  Actual = 42.81%
  • EPS:   $12.79  (TTM $46);  Actual $9.32  (TTM $42.53)

 

I was actually close on iPads.  The huge failure of the iPhone number, however, hit the Revenue, Margin and EPS predictions hard.

Overall, the conference call yielded some illumination that changes to the channel inventory account for some portion of the iPhone miss.  In the future, we’ll all have to pay far more attention to what’s going on there.   Given VZ and T’s activations, the iPhone number took more of a hit from the inventory changes and Asia as the 15% decline at the 2 carriers would have carried through to well higher than 26 million.

On the conference call there were various notations of the “fall transition”, their nice way of talking about the iPhone 5.  With that release pending, I’m curious to see actually how far and deep this sell-off on earnings miss could be.  Macro issues aside, certainly not that many really want to be out of AAPL when that phone hits the market.

The dividend is going off as planned and the previously announced buy back begins in September.  I was a little disappointed there wasn’t any talk about enhancing the dividend as cash grows.  It also concerns me a little that they’re not looking to extend the buy back plan to take advantage of the low P/E on the stock.  If there was confidence in the forward goings, they should be buying back with more of that cash.

 
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Posted in Earnings, Technology

 

Earnings are upon us!

23 Jul

The Q3 2012 AAPL numbers come out in about 18 hours.   By this point, it’s been hashed and rehashed up and down the road.  The whisper is a little over $11 EPS.  Most professional analysts are predicting < 30 million iPhones sold.   Here’s my rough prediction for the period from March 1st thru June 30th 2012:

  • 32 Million iPhones
  • 18 Million iPads
  • 6 million iPods
  • 4.4 million Macs
  • Revenue:  >$41 billion
  • Margin:  >46.5%
  • EPS:   $12.79  (TTM $46)

I will not predict their guidance for Q4 since I still stand by my previous prediction that we’re likely to see the iPhone 5 in early September.  Their guidance won’t include new products, so it’s really “faux guidance” more than ever.

AT&T’s (T) earnings report in the morning could be an early predictor.  I’m estimating 3.6 to 3.7 million iPhones, a slightly less than 16% seen at VZ.   AT&T reporting iPhone sales > 3.8 million should be bullish for the overall iPhone numbers and would move my estimate a bit higher.    If AT&T reports sales < 3.5 million would likely indicate a lower total sale of the device than my 32 million.

Good luck to all!

 
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Posted in Earnings, Technology

 

Thanks For The BOND, Bill

20 Jul

Read on Seeking Alpha: Thanks For The BOND, Bill

A month after Bill Gross opened the Pimco Total Return ETF (BOND) this past Spring, I was looking to safely store some cash from my Apple (AAPL) option success. My investment in his new ETF is up over 4.5% since April for a better than 15% annualized return. [Read More]

 
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Posted in Long Trades, Technology

 

An Amazon Earnings Option Play For $100

20 Jul

Read on Seeking Alpha: An Amazon Earnings Option Play For $100

Just before last quarter’s Amazon (AMZN) earnings, I purchased May and July $225 calls on the cheap. Thanks to April’s blowout results and immediate pop, those options paid off in a big way, having exited most of them shortly after. This quarter might be a different story. [Read More]

 
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Posted in Options, SA Articles, Technology

 

What Earnings From VZ and QCOM Might Say About AAPL

20 Jul

Over the past few days we’ve seen data from two important parties when it comes to figuring out Apple’s upcoming quarter:  Verizon (VZ) and Qualcomm (QCOM).

Qualcomm makes chips that are used in iPhones, iPads and a slew of other high end devices.  They reported on Tuesday and missing earnings estimates while being completely sold out.  The company basically didn’t earn enough because they couldn’t make their chipsets fast enough.  That’s not a terrible problem, just a temporary set back.

Some are looking at this as constraint on Apple.  To the contrary, there’s been numerous reports of how Apple manages its supply chain.  They use their size and huge cash hoard to secure contracts and capacity well in advance.  Therefore, if anyone is facing supply constraints, it’s probably not Apple — it’s because of them.

Next, Verizon reported sales of 2.7 million iPhones in Q2 compared to 3.2 million in Q1.  That’s a decline of just 16%.  Many people have been talking about a huge halt to iPhone sales due to the coming iPhone 5.  16% doesn’t show that to be the case.  One must also consider that Verizon is heavily marketing it’s 4G LTE Android phones, not the iPhone.

Taking 16% off Apple’s entire Q2 iPhone sales, we get 29.4 million.  It’s probably safe to consider that AT&T and Sprint (who is still very new to the iPhone) will have better numbers than Verizon.  Meanwhile, China Telecom only had the iPhone for 3 weeks of Q1, but they had it the entire 3 months of Q2.

I can reasonably see at least a 32 million iPhones for Q3.  Meanwhile, the “street” is somewhere between 26 and 29 million, with Gene Munster currently around 29.5 million.

AT&T (T) reports earnings before the bell on Tuesday, just hours before Apple.  There won’t be too much time to dissect the data before we hear the official word on the quarter.

Trade On!

 
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Posted in Technology

 

The “Mayer May” $100 Yahoo! Long Call

19 Jul

Read on Seeking Alpha: The “Mayer May” $100 Yahoo! Long Call

Yahoo! (YHOO) is making yet another attempt to salvage itself. This time, with a new board calling the shots, Marissa Mayer has been snatched from Google to right the ship. There’s plenty of commentary on the move pretty much everywhere. [Read More]

 
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Posted in Options, SA Articles, Technology

 

Prediction: iPhone 5 Launches In US And China Simultaneously

19 Jul

Read on Seeking Alpha: Prediction: iPhone 5 Launches In US And China Simultaneously

With the announced updates to iOS 6 to include “New Features for China”, Apple (AAPL) is clearly making a big push into the huge market. Rumors have been circulating for some time that China Mobile would finally get the iPhone officially. I want to map out and explain my prediction that Apple will move China up to the top tier of its launching schedule for the new iPhone. [Read More]

 
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Posted in SA Articles, Technology

 
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