Saturday, October 1, 2011

Apple Drops Below 50-Day Average (Chart, News) *iPhone 5 to be unveiled Tuesday* AAPL


Apple is expected to unveil the iPhone 5 on Tuesday, October 4, 2011 at the "Let's Talk iPhone" media event


Apple Inc. AAPL closed the week, month, and quarter at $381.32 on Friday, September 30, 2011 and was down -5.68% for the week, was down -0.91% for September, was up +13.60% for the quarter, is up +18.22% for 2011, and is up an incredible +358.81% 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 -7.71% below this peak.

Benchmark $376.18 Apple continues above the benchmark $376.18, which was the close before Co-Founder and now Chairman of the Board Steve Jobs announced his resignation as CEO on August 24, 2011. We are watching this benchmark price of $376.18 as an indicator of buyer conviction and confidence in AAPL now that Steve Jobs is no longer CEO. Previously, we had monitored the then all-time closing high of $348.48 on January 14, 2011. That all-time closing high was on a Friday. Apple Inc. announced the next Monday, January 17 (market was closed), that Co-Founder and then CEO Steve Jobs was taking a medical leave of absence. This price, $348.48, is still significant as there was considerable interaction after that day as a benchmark.

S&P 500 By comparison, the overall market, the S&P 500, was down -0.44% for the week, was down -7.18% for September, was down -14.33% for the quarter, is down -10.04% for 2011, and is up +67.24% since the March 9, 2009 market cyclical low. SPX closed at a multi-year closing high of 1363.61 on April 29, 2011, the highest close since the June 9, 2008 close of 1404.05, and is now -17.03% below that peak. AAPL is outperforming the overall market long-term since the March 9, 2009 market bottom, outperformed the market in 2010, and is outperforming the market in 2011. A review of the S&P 500 is here, S&P 500 Closes Quarter Down -14.3% (Chart) *USA recession ahead?*.

Apple Fundamentals Apple will report calendar Q3 2011 financial results this month. Apple 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 of $315.32 to illustrate recent price interactions.

Noteworthy Closing Prices
Current Close: $381.32
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 ascending 25d avg greater than mostly level 50d avg since 7-18-11, AAPL < both, tenuously bullish
Long Term Trend AAPL greater than ascending 10 month ema = 351, has been overall bullish since April 2009, bullish
Key Resistance 50d avg 386, 20d avg 393,  400 benchmark
Key Support benchmark 376.18, 100d avg 364, 200d avg 353
Moving Averages now below 20d, 50d avgs, continues above 100d, 200d, 400d avgs
Uptrend Line above since 8-23-11; line from 1-20-09 closing low 78.20 up thru 2-4-10 close 192.05
Downtrend Line none of significance, below recent all-time high 413.45
RSI 14 Day = 50.98 is reasonable, descending
RSI 28 Day = 58.63 is reasonable, descending
MACD (12,26,9) = -2.20, descending
Volume low 19.6M latest day, 50 day avg = 22.5M
Price Earnings Ratio (ttm) lower 15.09, historically in low 20s


Conclusion After 3 consecutive weekly gains and an all-time closing high, Apple worked off a short-term overbought condition and closed down for the week. Apple should bounce upwards this month during earnings season and the announcement of the iPhone 5 on Tuesday, October 4. Some of the drop this past week was the Amazon announcement of the Kindle Fire, which will most likely negatively impact the iPad tablet PC market share. AAPL has relinquished all of the gains from the solid Q2 financial performance reported on July 19 and subsequent gap up (from 377 to 403). The fundamentals of Apple continue legendary 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 bullish and the long-term trend continues bullish.

Disclosure We currently have no position in AAPL, but continue bullish on Apple for 2011.

Apple News A summary of recent news & announcements; others are posted on this blog
● Apple is expected to unveil the iPhone 5 on Tuesday, October 4 at the "Let's Talk iPhone" media event. The iPhone 5 is expected to have a larger display and faster processor.
● 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 is to be launched this year. 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. Steve Jobs is now Chairman of the Board, 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".
● All await the unveiling of the iPhone 5 and even a lower-priced iPhone which may be launched in Q3 2011.
● 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 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 Data 
AAPL's market capitalization is #2 worldwide at $352.63 billion, compared to #1 Exxon at $357.78 billion. IBM is #4 at $211.80 billion and Microsoft is #5 at $209.89 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 15.01% 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 Steve Jobs Steve Jobs is the Chairman of the Board of Apple, which he co-founded in 1976. Apple is leading the consumer technology world with its revolutionary iPhone and App Store, its family of iPod media players and iTunes media store, and its Mac computers and iLife and iWork application suites. Apple recently introduced iPad 2 which is defining the future of mobile media and computing devices. Steve also co-founded and was the CEO of Pixar Animation Studios, which created some of the most successful and beloved animated films of all time including Toy Story, A Bug’s Life, Monsters, Inc., Finding Nemo, The Incredibles, Cars and Ratatouille. Pixar merged with The Walt Disney Company in 2006 and Steve now serves on Disney's board of directors. Steve grew up in the apricot orchards which later became known as Silicon Valley, and still lives there with his family.

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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