Saturday, October 8, 2011

Apple Drops -3% for Week (Chart) *A Legend Leaves Us* AAPL


A Legend Leaves Us: Steve Jobs Died on October 5, 2011


Apple Inc. Apple closed at $369.80 on Friday, October 7, 2011. AAPL was down -3.02% for the week, month, and quarter to-date, is up +14.65% for 2011, and is up +344.95% from the market cyclical low on March 9, 2009. AAPL set an all-time closing high of $413.45 on September 20, 2011 and is now -10.65% below this peak, which results in Apple being in a correction.

Benchmark $378.25 Apple closed at $378.25 on October 5, before the announcement that Co-Founder and Chairman of the Board Steve Jobs died. This begins the Post-Steve Jobs Era and is the benchmark price to determine buyer conviction and confidence in AAPL now that Steve Jobs is no longer with us. Previously, we had monitored the August 23, 2011 close of $376.18 before Steve Jobs resigned as CEO. Prior to that, we had monitored the then all-time closing high of $348.48 on January 14, 2011 before Steve Jobs took a medical leave of absence. Both of those previous prices are still significant as there was considerable price interaction afterwards.

Apple Fundamentals Apple will report calendar Q3 2011 financial results on Tuesday, October 18 and previewed hereApple reported calendar Q2 2011 financial results on July 19, 2011 and are reviewed here [Apple Earnings Soar to All-Time High in Q2! (Financial Charts) *Astounding financial performance and position*]. Previously, Apple reported near-record calendar Q1 2011 financial results on April 20. This was after Apple reported calendar Q4 2010 financial results on January 18 which were a record and legendary. 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 Q2 2011 results reported on July 19. A review and analysis of the Q2 2011 earnings call has been posted at the Apple Earnings Conference Call page. Our updated calendar Q2 2011 valuation and target price of AAPL stock is posted at the Apple Stock Valuation page. International sales accounted for 62% of Q2 2011 revenues, up from 59% of revenues in Q1 2011, the same as 62% in Q4 2010 and up from 52% in Q3 2010.


Apple Daily Chart Below is the AAPL daily chart since the June 20, 2011 closing low to illustrate recent price interactions.

Noteworthy Closing Prices
Current Close: $369.80
2011 and All-Time High: September 20 $413.45
2011 Low: June 20 $315.32
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 descending 25d avg > descending 50d avg since 7-18-11, AAPL < both, leaning bearish
Long Term Trend AAPL > ascending 10 month ema = 355, has been overall bullish since April 2009, bullish
Key Resistance  benchmark 376.25. 50d avg 383, 20d avg 392, benchmark 400
Key Support 100d avg 365, 200d avg 354
Moving Averages continues below 20d, 50d avgs, continues above 100d, 200d, 400d avgs
Uptrend Line below since 10-7-11; line from 1-20-09 closing low 78.20 up thru 2-4-10 close 192.05
Downtrend Line none of significance since recent all-time closing high 413.45, beginning to develop
RSI 14 Day = 16.23 is oversold, descending
RSI 28 Day = 42.17 is reasonable, descending
MACD (12,26,9) = -3.91, descending
Volume low 19.1M latest day, 50 day avg = 23.4M
Price Earnings Ratio (ttm) lower 14.64, historically in low 20s


Conclusion What a sad week for Apple. Co-Founder, Chairman of the Board, and Tech Legend Steve Jobs died on Wednesday, October 5, 2011. The Post-Steve Jobs Era began. This was after the introduction of the iPhone 4S the previous day. AAPL is now in a short-term oversold condition and has closed -2.23% lower in the Post-Steve Jobs Era. Apple should bounce upwards this month during earnings season and the announcement of Apple's earnings on Tuesday, October 18. AAPL has relinquished all of the gains, and more, from the solid Q2 financial performance reported on July 19 and subsequent gap up (from 377 to 403). The fundamentals of Apple continue extraordinary with record calendar Q2 2011 total revenues, net income, earnings per share, cash flow per share, operating margin, gross margin, and total assets of $106.76 billion. Current and noncurrent cash and investment reserves are an amazing $76+ billion. The remainder of 2011 appears positive for Apple and we are forecasting Q3 to outperform Q2, and the holiday Q4 quarter setting another record peak. We project quarterly total revenues to 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 has been raised to $440. The intermediate-term trend indicator is now leaning bearish and the long-term trend continues bullish.

Disclosure We are long AAPL.

Apple News A summary of recent news & announcements; others are posted on this blog
Co-Founder, Chairman of the Board, and Legend Steve Jobs died October 5, 2011.
● Apple launched the iPhone 4S and refreshed iPods plus reviewed services at the "Let's Talk iPhone" media event on October 4.
● Apple will report calendar Q3 2011 financial results on Tuesday, October 18, after market close.
● Apple opened its first Hong Kong store on September 24, which should benefit from the surge in demand for Apple products in China.
● iPhone 4 sales are estimated as "surprisingly robust" by analyst Shaw Wu of Sterne Agee, considering the iPhone 5 was expected to be launched. Unit sales estimates were raised from 15.7 million to 18.5 million and other analysts have raised estimates. However, Mac sales may be weaker than projected.
● Apple topped Exxon as #1 in USA market capitalization at the close of the week ended August 26, 2011. See commentary further below.
● Steve Jobs resigned as CEO on August 24, 2011. Tim Cook is CEO.
● The WSJ reported Sprint would be selling the iPhone 5 beginning in mid-October, along with AT&T and Verizon.
● The iPad 3 is rumored to be in testing and component manufacturers are being readied for an early 2012 launch per a Wall Street Journal report.
● Apple's market capitalization was near or matched the 32 largest Eurozone banks - in total! - during the week ended August 19, 2011.
● Apple passed Nokia as #1 in smartphone sales in Q2 2011, with 18.5% of all shipments worldwide.
● Apple has more cash than the U.S. Treasury in late July 2011. Apple's cash, cash equivalents, and marketable securities of $76.2 billion exceeded the U.S. Treasury cash on hand of $73.8 billion.
● Fake Apple Stores in China: If imitation is the highest form of flattery, the fake Apple stores in China are the ultimate in illegal replication. These stores imitate the complete Apple store experience and attempt to be an exact reproduction including the employees and their badges and uniforms!
● The new MacBook Air was launched and the OS X Lion became available the week ended July 22.
● Hyper Apple: Ticonderoga Securities analyst Brian White on July 12, 2011 raised his estimates for Apple (AAPL) based on rising iPhone and iPad projections, while reiterating a Buy rating and a $612 price target on the stock, and throwing some language the stock’s way that’s akin to a big tent revival: "we believe Apple is a beacon of hope in an increasingly concerning world".
● Apple held the annual Worldwide Developers Conference (WWDC) June 6-10 with CEO Steve Jobs presenting the keynote speech and introducing iCloud. Also previewed were Mac OS X Lion and iOS 5.
● An explosion at a Foxconn plant on May 20 in Chengdu, China which produces the iPad 2 created uncertainty over manufacturing disruption. There already has been concern the demand for iPad 2 is much greater than Apple's production abilities. Cirrus Logic earlier reported production problems with an audio device and 50% of its business is supplying components to Apple. Components of the iPad 2 (at least five) from Japanese suppliers may be delayed due to the March earthquake.
● The new 27-inch all-in-one iMac was announced May 3.
● 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 Data AAPL's market capitalization is #2 worldwide at $341.98 billion, compared to #1 Exxon at $362.36 billion. Microsoft is #3 at $221.36 billion and IBM is #4 at $220.91 billion. Apple Inc. first surpassed Exxon as #1 in USA and worldwide market capitalization for the week ended August 26, 2011. AAPL 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. Apple Inc. has managed to continue above $300B market capitalization after the announcement of Steve Jobs medical leave of absence in January 2011 and Steve Jobs resignation as CEO in August 2011. Apple reported calendar Q2 2011 total revenues of $28.57 billion and net income of $7.31 billion. Microsoft reported calendar Q2 2011 total revenues of $17.37 billion and net income of $5.87 billion. Microsoft continues to have higher gross and  operating margins than Apple, but Apple has surpassed Microsoft on net margin. 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 14.14% of the NASDAQ 100 index, as measured by the PowerShares QQQ 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 is compared to other large technology companies here [Largest USA Tech Companies: Financial Performance & Position Review].

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 has reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced iPad 2 which is defining the future of mobile media and computing devices."

About Tim Cook Tim Cook is the CEO of Apple and serves on its Board of Directors. Before being named CEO in August 2011, Tim was Apple's Chief Operating Officer and was responsible for all of the company’s worldwide sales and operations, including end-to-end management of Apple’s supply chain, sales activities, and service and support in all markets and countries. He also headed Apple’s Macintosh division and played a key role in the continued development of strategic reseller and supplier relationships, ensuring flexibility in response to an increasingly demanding marketplace. Prior to joining Apple, Tim was vice president of Corporate Materials for Compaq and was responsible for procuring and managing all of Compaq’s product inventory. Previous to his work at Compaq, Tim was the chief operating officer of the Reseller Division at Intelligent Electronics. Tim also spent 12 years with IBM, most recently as director of North American Fulfillment where he led manufacturing and distribution functions for IBM’s Personal Computer Company in North and Latin America. Tim earned an M.B.A. from Duke University, where he was a Fuqua Scholar, and a Bachelor of Science degree in Industrial Engineering from Auburn University.

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