Saturday, April 30, 2011

Apple Flat for Week as NASDAQ Re-Balancing Concludes (Chart) *Q1 2011: Tot Revs $24.67B, Net Inc $5.99B* AAPL


With CEO Steve Jobs on medical leave, Apple reported near-record Q1 2011 financial results on April 20, 2011

Apple Overview

Apple Inc. AAPL closed at $350.13 on Friday, April 29, 2011 and was down a mere -0.16% for the week, was up only +0.46% for April, is up +8.55% for 2011, and is up +321.29% from the market cyclical low on March 9, 2009. AAPL set an all-time closing high of $363.13 on February 16, 2011 and is -3.58% below this peak.

Benchmark $348.48 Apple continues just above the then all-time closing high of $348.48 of January 14, 2011. That all-time closing high was on a Friday and Apple Inc. announced the next Monday, January 17, that Co-Founder and CEO Steve Jobs was taking a medical leave of absence. We are watching this benchmark price of $348.48 as an indicator of buyer conviction and confidence in AAPL with Steve Jobs on medical leave.

S&P 500 By comparison, the overall market, the S&P 500, at 1363.61, was up +1.96% for the week, was up +2.85% for April, and is up +8.43% for 2011. SPX is up +101.56% since the March 9, 2009 market cyclical low. SPX closed at a multi-year closing high of 1363.61 on Friday, April 29, 2011, the highest close since the June 9, 2008 close of 1404.05. AAPL is outperforming the overall market long-term since the March 9, 2009 market bottom, outperformed the market in 2010, and is barely outperforming the market in 2011. A review of the S&P 500 is here [S&P 500 Rises to Highest Close Since June 9, 2008! (Chart) *VIX continues near June 2007 lows*].

Apple Fundamentals Apple reported near-record calendar Q1 2011 financial results on Wednesday, April 20. This was after Apple reported calendar Q4 2010 financial results on Tuesday, January 18 which were a record and legendary. Calendar Q1 is historically the weakest quarter for Apple. These financial results are reviewed and analyzed on this blog.. Current Apple financial  data, charts, and review is at the Apple Financial Performance page, updated for the latest calendar Q1 2011 results reported on April 20. A review and analysis of the Q1 2011 earnings call has been posted at the Apple Earnings Conference Call page. Our updated valuation and target price of AAPL stock is posted at the Apple Stock Valuation page. International sales accounted for 59% of revenues for Q1 2011, down from 62% in Q4 2010 and up from 52% in Q3 2010.

Apple Product News 2011 A summary & review of 2011 & 2010 major announcements are posted on this blog.
Cirrus Logic reported production problems with a audio device and 50% of its business is supplying components to Apple. There are concerns that components of the iPad 2 (at least five) from Japanese suppliers may be delayed. The international launch of the iPad 2 in 25 countries was March 25 to long lines of customers at Apple stores. The iPad 2 went on sale on Friday, March 11 and promptly sold out online, pushing delivery dates from days to weeks. Lines at Apple stores in the USA were long and the only way to have any hope of purchasing an iPad 2 and taking immediate delivery. Apple launched the iPad 2 and iOS 4.3 on March 2. Steve Jobs also announced 1) 100 million downloads from iBooks store, 2) Random House will begin distributing their 17,000+ books on iBooks, 3) 200 million accounts with credit cards and one-click purchasing on iTunes, App Store, and iBooks, 4) over $2 billion paid to developers from selling apps on the App Store, 5) 100 million iPhones have been shipped, and 6) almost 15 million iPads were sold in 2010. Apple launched the new MacBook Pro on February 24. Steve Jobs met with President Barack Obama at a dinner on February 17. This was the first "semi-public" appearance of CEO Jobs since the announcement of the medical leave on January 17. Apple announced an App Store subscription service for magazines, videos, music, and videos on February 15. The Apple iPhone 4 officially is on the Verizon Wireless network and available at stores effective February 10. Verizon Wireless announced on February 4 record first day launch sales (online pre-order) of the iPhone 4. The record was broken in 2 hours. On January 22 Apple announced the App Store had surpassed 10 billion downloads in about 2.5 years. The online Mac App Store opened on January 6, 2011, increasing Apple's cloud presence, and Apple announced there were 1 million downloads in the first day.

Economic and Market News Information about the USA and world economies plus the USA financial system are posted at Boom Doom EconomyFinancial Controls, and Baidu Planet. Additional current commentary on both the overall stock market and economy is posted at Matrix Markets.

Apple Daily Chart

Apple Daily Chart Below is the AAPL daily chart since January 3, 2011 to illustrate recent price interactions.

Noteworthy Closing Prices
Current Close: $350.13
2011 and All-Time High: February 16 $363.13
2011 Low: January 21 $326.72
2010 High: December 28 $325.47
2010 Low: February 4 $192.05
YE December 31, 2010: $322.56
YE December 31, 2009: $210.73
Cyclical Low: January 20, 2009 $78.20

Apple Chart Review
Intermediate Term Trend ascending 25d sma < descending 50d sma, neutral/bearish
Long Term Trend AAPL > 10 month ema = 314.51, bullish since April 2009
Key Resistance 353-354, sub peak 360.00, all time high 363.13, all time intraday high 364.90
Key Support at support benchmark 350, benchmark 348.48, 50d avg 345, 20d avg 340, 100d avg 340
Moving Averages above 20d, 25d, 50d, 100d, 200d avgs; 20d is about to drop below 100d
Uptrend Line closed above since 9-2-10, pinned through 4-18-1; line from 1-20-09 closing low 78.20 up thru 2-4-10 192.05
Downtrend Line currently above, been testing last 6 trading days; line from 2-16-11 all-time closing high 363.13 to 3-4-11 peak 360.00
RSI 14 Day = 64.10 is reasonable, continues ascending
RSI 28 Day = 56.20 is reasonable, descending
MACD (12,26,9) = +1.85, descending
Volume very high 35.9M latest day, 50 day avg = 17.6M
Price Earnings Ratio (ttm) 16.69, historically low 20s

Conclusion NASDAQ rebalancing the NASDAQ 100 Index effective May 2, 2011 created an short-term excess supply of AAPL shares. Apple dropped from 20.49% to 12.33% of the weighted Index. This is already reflected in the Powershares QQQ ETF portfolio holdings as of April 29, 2011. That resulting selling pressure should ease beginning this next week. The fundamentals of Apple continue amazingly strong with Q1 2011 near-record total revenues and earnings per share, total assets of $94.9 billion, and cash and investment reserves of $65+ billion. The remainder of 2011 looks positive for Apple, with Q2 outperforming Q1, Q3 outperforming Q2, and the holiday Q4 quarter setting another peak. Total assets will probably exceed $100 billion this calendar quarter, Q2 2011. Quarterly total revenues should reach $30 billion by Q4 2011. The fundamentals of Apple Inc. have been stellar, as discussed above and reviewed on this blog. Our AAPL target price short-term remains $370 - 375. The intermediate-term trend indicator is neutral/bearish and the long-term trend continues bullish.

Disclosure We are long AAPL.

About Apple Inc.

Apple Inc. achieved a milestone the week of January 7, 2011 when total market capitalization surpassed $300 billion. Previously, the week of May 24, 2010, Apple surpassed Microsoft in market capitalization to become the largest technology company, and second overall largest company, in the USA. Apple Inc. has managed to continue above $300B market capitalization after the announcement of Steve Jobs' medical leave of absence. AAPL's market capitalization is #2 at $323.78 billion, compared to #4 Microsoft's of $218.58 billion. #1 Exxon leads with $436.26 billion (Exxon surpassed $400 billion in market capitalization the week ending February 4, 2011). Apple reported calendar Q1 2011 total revenues of $24.67 billion and net income of $5.99 billion. Microsoft reported calendar Q1 2011 total revenues of $16.43 billion and net income of $5.71 billion. Current Apple financial  data is at the Apple Financial Performance page. Current Microsoft financial data is at the Microsoft Financial Performance page. Apple is now 12.34% of the NASDAQ 100 index, as measured by the PowerShares QQQQ ETF portfolio holdings, weighted by market capitalization, but rebalanced effective May 2, 2011. AAPL is one of the most traded stocks in the USA. Per the SEC Form 10-K, Apple had 46,600 full-time employees and 2,800 temporary full-time employees and contractors as of September 25, 2010.

Apple's Mission Statement and as described in press releases, "Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices."

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