“TheStreet.com has always believed that offering a wide variety of opinions and viewpoints — rather than a monolithic ‘house view’ — helps readers make better-informed investment decisions. In that spirit, we bring you ‘360 Degrees.’ Today’s subject, Apple Computer (AAPL), was chosen by the readers; please see our poll at the end of this column to help determine the next stock to get the ‘360 Degrees’ treatment,” TheStreet.com reports.
Cody Willard writes about the iPod Halo Effect, ” iPod is definitely not going to match its ‘growth’ from last year, but Apple’s not going to be sitting still (and it’ll still sell tens of millions of iPods this year). The halo effect will be in overdrive throughout 2006 and into 2007. And I’m going to keep holding the stock for the foreseeable future.”
Steve Birenberg writes, “Apple is one of the only really big-cap stocks that offers the prospect for sustained 20%-plus earnings growth over a multiyear period, which is sustained on top of the huge earnings gains being driven recently by the success of the iPod… Apple hasn’t introduced a cell phone yet, but many investors and analysts think that the company is going there next. According to Strategic Analytics, in 2005 global handset sales grew 19% to 810 million units. Handsets outsold MP3 players like the iPod by more than 15-to-1 last year.”
“I would sell Apple as it bounces into the Jan. 19 gap at $82, in anticipation of a breakdown below this week’s low at $70.87,” Alan Farley writes. “Apple Computer rallied strongly from $70 to $86 in December, the latest leg of its long-term uptrend. Following its Jan. 18 earnings release, it retraced 100% of that rally, before finally bouncing earlier this week. This decline completed a “first failure” early warning signal that predicts the uptrend has finally ended.”
Full article here.
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Considering this is a 360º view of Apple and looking at all sides from the investor point of view, I would say the outcome looks very positive. To the nay-sayers, one thing… “Buy-buy!”
“I would sell Apple as it bounces into the Jan. 19 gap at $82, in anticipation of a breakdown below this week’s low at $70.87,” Alan Farley writes. “Apple Computer rallied strongly from $70 to $86 in December, the latest leg of its long-term uptrend. Following its Jan. 18 earnings release, it retraced 100% of that rally, before finally bouncing earlier this week. This decline completed a “first failure” early warning signal that predicts the uptrend has finally ended.”
Alan Farley is a classic technical investor. He relies on trends to predict the futur4e. That’s like driving a car, using your rear view mirror as a direction finder.
The problem with ‘charting’ is that it comploetely ignores new product introductions and management guidance. The effects of those real factors to stock appreciation aren’t seen until three or four days later, and then,to explain the shift in direction the chartists coin cute phrases such as, “first failure”, or “head and shoulders”.
AAPL is down because management guided significantly lower during the January conference call. AAPL guided lower because they weren’t able to introduce a complete line of Intel Macs.
Guidance in April should be impressively upbeat as all Macs, excepting PowerMacs and Xserves, will have transitioned to Intel, and Apple will have strong sales reports to make about the new iMac and MacBook Pro.
Bottom line is that Alan Farley uses a forecasting tool that is as dependable as tea leaves. Come to think of it, I prefer tea leaves.
Good analysis Gregg. I think he said it all.
Is it just because we Mac fanatics study every trend that so-called analysts seem like they are missing the primary factors in Apple trends? It is shocking to me that laziness in reporting these days. MDN, aside from being a bit too bullish on Apple, seem to have very accurate analysis.
I guess that’s the result of an enthusiastic and communicative readership. Maybe my judgement is clouded by the splendor that is MDN.
Magic Word: Clearly. Clearly my mind is clouded.
Hmm. It says that cell phone handsets outsold MP3 players last year. So? I believe cheeseburgers outsold MP3 players too. What the hell does that have to do with anything. Unless the claim is that all those cellphone buyers intend to use their phone as their primary music player. That’s just idiotic.
Headline: Apple to start selling cheeseburgers! Would you like that in white or black?
Cody Willard writes: “iPod is definitely not going to match its ‘growth’ from last year”
Well, that’s what everybody said last year too.
We hear this quite often, and everybody seems to accept it as fact, but i have to ask: Why?The justification seems to be the old adage: A good thing can’t last forever. Maybe so, but forever is an awfully long time. I think iPod sales will continue to grow in 2006 because Apple is going to continue to improve and refine the product.
Cody Willard writes: “The halo effect will be in overdrive throughout 2006 and into 2007. And I’m going to keep holding the stock for the foreseeable future.”
Right on target here.
Stunned by the violence of the sell-off in AAPL today. I’m sure earnings for this quarter will be pretty much on the nail (Apple’s own guidance that is) – and I expect guidance for the following Q2 to be strong. By then, all new then-announced MacIntels (MB Pro and iMac) will be in full circulation, and inventories of the G5/G4 models will be all but depleted. There should be at least one new iPod model (Shuffle replacement) and probably an upgrade of the Nano to a 6-gig version. This should allow Apple to guide for a strong Q2, which don’t forget also encompasses the Developer Forum in June at which there are always huge product announcements likely including a beta copy of OSX 10.5
Analysts are beginning to forget what a huge year this is for Apple’s product lines outside of consumer Macs. There’s the Vista Killer (OSX 10.5). There’s the whole desktop line (I’m predicting a 4-core, or even 8-core desktop Mac Pro top-ender) to come, new iBooks, Mac Mini, and likely a new product line on top of that in the form of large-format living-room screens and/or a media streaming device, and/or the fabled iPhone ( /drum roll please/ ). Do people really think that Apple is going to have a problem with its growth story?
I wish people would just think a bit and learn to look beyond the nearest quarter. This obsession with earnings guidance and matching analysts’ estimates is killing the market and dissuading longer-term investors from getting back involved. And its not being helped by the fact that analysts are still not giving earnings estimates based on the same calculations as the companies themsleves, often leaving out tax costs, stock expensing, restructuring charges, and suchlike which creats the illusion of a big shortfall when earnings are released, from which the stock takes weeks to recover, if it does. Its this sort of cowboy behaviour that disgusts most ordinary investors, and is keeping them out of the market through a fear of being ripped off by Wall Street again.
Companies themselves need to take part of the blame for this, and ensure that they give earnings/guidance which is less cryptic, and which offer a quicker and easier method for being directly comparable with the basis on which analysts come up with their own forecasts. Currently the numbers rarely seem to be calculated on a like-for-like comparable basis, and this gives rise to unnecessary volatility and large violent sell-offs when there’s a so-called “miss” which in reality turns out to be nothing more than an on-the-button number after items. Admittedly not all data likely to affect a report is known to analysts, so they can encouter problems in allowing for these unknowns.
Is the answer for strict guidelines to be issued on how companies should structure their reports, and conversely also for how analysts should calulate their forecasts? Perhaps using wider bands than the few cents that their estimates usually spread would help. Do they have to nail the exact number? Is it absolutely vital that stocks fall exactly within the middle of the range, to the cent, so as not to cause a 10% sell-off?
There’s a disconnect between companies, and analysts, which is proving just as dangerous as the collusion in the 90s which allowed the .com boom to be fueled by crazy speculative analysts’ calls – except this time it threatens to take stocks just down, not up and then down. Its time this was addressed.