Apple Computer (AAPL) closed at $37.26, down $3.78, or 9.21%, on massive volume of 97,863,155, making the Cupertino Mac and iPod maker the second most actively-traded stock on the NASDAQ today after the Nasdaq-100 (QQQQ) volume of 154.43 million.
Currently in After Hours trading shares of Apple Computer have shed 6-cents and stand at $37.20.
MacDailyNews Take: Good thing they didn’t report a loss yesterday. Or maybe it’s a bad thing. Who knows?
Related MacDailyNews articles:
The Motley Fool: Apple shareholders have got to be shaking their heads today – April 14, 2005
Apple’s great quarter not good enough for some analysts and investors – April 14, 2005
BofA: Apple had ‘good’ quarter, but we’re ‘very disappointed in iPod unit demand’ – April 14, 2005
Analysts weigh in on Apple Computer’s second quarter 2005 earnings and future outlook – April 14, 2005
Analyst: Apple needs to get some exciting products out there or else the Street’s appetite will wane – April 14, 2005
Apple shares drop after company says earnings this quarter may trail analysts’ highest estimates – April 14, 2005
Investment advisor: Apple’s after-hours selloff ‘perplexing’ after ‘incredible’ earnings results – April 13, 2005
I smell a buying opportunity
Lets face it they were overhyped and overvalued anyway – it is good that the market adjusts now rather than continues to baloon and then burst later on.
“overvalued?”
“overhyped?”
Are you even aware of the numbers Apple has been putting out, the record beating, market beating, sector beating results of the last 2 years?
They haven’t even begun to be hyped enough. This is the end of the beginning of AAPL’s rise, not the beginning of the end. People are only just realising, just starrting to become aware, how big a story this could be if the Mac platform takes off the way it has started to in the last two quarters. Coupled with music-download and player domination, Apple haven’t even begun to touch the sides of their growth story.
30m iPods out there by the end of this year. You think their next player won’t be an iPod too, when they buy a new one, seeing as all their music is in AAC or AAC protected format?
And with 30m+ ipods/year due to be sold after that, imagine if, following Piper Jaffray’s estimate of 10% of iPod users buying a Mac for their next PC, that’s potentially an extra 3 million macs in a year sold – on top of regular sales of approximately 4m/year, if this quarter is anything to go by.
That represents almost a doubling of Apple Macintosh sales per year pro rata over the next 18 months.
It probably also represents a trebling of music downloads to 1.5 BILLION tracks/year.
Over-hyped? Underhyped more like. Once investors realise “its about the computers, dummy, not just iPods,” they’ll pile back into THAT growth story.
Ironically, the Mac is going to be the iPod of the next year, if you get my meaning
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Did this really need to be covered in the last FOUR article postings? So what? There’s no news here. At least it’s not another Thurrott tirade, but I’m sure there’s other things going on to report today than a blip in a stock price.
From the CNN website… everybody’s getting slammed, not just Apple. Happens all the time. Let’s move on….
Stocks get slammed
Market slumps for a second session as investors worry about corporate earnings, economic growth.
April 14, 2005: 4:13 PM EDT
INVESTOR RESEARCH CENTER
NEW YORK (CNN/Money) – Stocks slumped for a second session Thursday, with the Dow industrials and Nasdaq composite falling to five-month lows on worries about the pace of corporate profits and economic growth going forward.
The Dow Jones industrial average (down 123.63 to 10,280.30, Charts) lost around 1.2 percent, the broader Standard & Poor’s 500 (down 11.35 to 1,162.44, Charts) index lost 1 percent and the Nasdaq composite (down 25.70 to 1,948.67, Charts) lost 1.4 percent, according to early tallies.
General Motors (down $1.69 to $26.64, Research) tumbled nearly six percent, dragging down the Dow. The Securities and Exchange Commission subpoenaed GM on documents related to transactions with its former parts unit Delphi, the Wall Street Journal reported.
In addition, GM was under pressure along with a variety of transportation issues, including truckers and railroads as part of a broad selloff of economically sensitive sectors.
Railroad stocks Burlington Northern Santa Fe (down $3.19 to $48.20, Research) and Norfolk Southern (down $1.64 to $31.84, Research) both slumped after J.P. Morgan downgraded the stocks to “neutral” from “overweight.”
Weakness in transportation sent the Dow Jones Transportation Average (down 107.49 to 3,440.85, Charts) down 2.5 percent.
Tech was hit hard as well, with investors focusing on the negative in earnings and forecasts from Apple Computer and others.
Someone made the point that the P:E ratio for aapl is too high.
Currently it stands at 66 because the earn per share is at 0.62. Estimates of EPS for this year are 1.15 and given that Apple earnt 0.35 in the slowest quarter of the year that seems easily doable.
So this bullshit that the PE ratio is too high doesn’t factor in the obvious fact that Apple are easily going to double their earnings this year which in turn will reduce the ratio to 33. That’s in line with Dell and M$.
I understand that there are market fluctuations, what I gets me annoyed is irrational behavior by brokers who clearly in my opinion have colluded to dump Apple stock.
Citing warnings by the Apple CFO is ridiculous – Oppenheimer has to give the lowest guidance otherwise Apple could be in trouble with the SEC for hyping the stock.
Funnily enough the MDN magic word was “economic”!!
The numbers don’t lie, but analysts do.
However, both UBS and Piper Jaffrey reiterated their price targets today (with UBS setting a price target of $54).
The dip in Apple’s stock price should be seen as a prime buying opportunity to pick up shares on the cheap. Some of the sell-off can be attributed to nervous investors with only a tenuous grasp of reality, some of it drive by short-sellers trying to capitalize on the general nervousness of the market.
But take a look at what Apple is doing, and the stock is now a deal to pick up. More investors will realize this in a few weeks, but the early movers will reap the benefits on this one.
All the major brokerage houses have “buy” ratings on AAPL so who’s doing all this selling? The trading volume in Apple shares today alone is almost 100 million shares. Yikes!
Wall Street (and their motives) never makes sense!
I’m not sweating it though, Apple is doing just fine either way.
It’s usually not good for your short term stock price when you exceed analyst expectations because the immediate reaction is that the momentum can’t be maintained. You see less dips when a company hits it’s analyst target than you do when they handily exceed it.
Coupled with the market dipping as a whole, this isn’t a big deal.
I’m more than willing to put my money where my mouth is…everyday doesn’t have to be an “up” day to make a profit… looks like a big buying opportunity to me! I love buying merchandise at sale prices!
High P/E? How could anybody claim that? Each $37.26 AAPL share is backed by over $7 cash. And even if AAPLs earnings growth were to very suddenly, unexpectedly stop, over the next year earnings would be $0.35×4, or $1.40. That comes out to a P/E of $(37.26-7)/1.4. That’s an after-cash P/E of 21.6. That’s not high for a company whose earnings increased more than six-fold over the past year, that is “firing on all cylinders,” that has some of the best management in the world, that has little to lose and everything to gain in personal computer market share, that is poised to make big gains in the server, scientific, and supercomputer markets, and that is the darling of the tech world.
The problem must be all those off-books partnerships full of massive losses hedged with company stock. The snowball has started to roll, and now the company will implode in a wave of accounting scandals.
Whoops, sorry, I’m in the middle of reading “Conspiracy of Fools” and got confused for a moment.
It’ll come back!
Buy low, Sell high!
Sum Yung needs to be congratulated for doing some decent analysis, which is a far more precise version of my back of a cigarette packet calculations in another story.
It needs to be recognised that Apple is likely to sell between 14 and 18 million iPods of various types between now and the end of the financial year at around $175. My personal bet is around 7 million units for Q3 (the quarter we’re now in) and around 10 million in the quarter ending September 30th.
So, Apple could reasonably expect nearly $3 billion in iPod revenue for the second half of the year on top of the $2.2 billion already earned in the first half: So, $5.2 billion in sales at an average of $193 per unit against 2004’s $1.3 billion at an average of $295. In other words, Apple is buying total market dominance at the cost of reduced income/sale – doing the thing that analysts have always said Apple needed to do in the personal computer space.
It’s worth pointing out here that when iTMS sales are added in, along with warranties and ancilliaries, Apple’s music operations will bring in more revenue in FY2005 than the entire company generated as recently as FY2002.
Extending to the end of the calendar year, Apple could reasonably expect to shift another 18 million iPods for the holiday quarter this year meaning that Apple could move around 40 million units for the calendar year, quintupling the number of iPods in circulation and – importantly – broadening the franchise to the young who will return to purchase larger, higher value iPods in years to come as well as become potential Macintosh customers.
Even at that point, Apple will only have sold some 50 million iPods which, given that Sony managed to sell 350 million cassette Walkmans over the product’s lifecycle, strongly implies that there is still a considerable amount of space to continue selling the product for some time to come.
My personal thought is that Apple could sell between 80 and 100 million iPod class devices in calendar 2006 at around $180/unit – potentially including new high-end iPods with enhanced gaming and video playback/camcorder capabilities as well as iPod minis that are cheaper to manufacture as Hitachi bring in their new Microdrives that are not dependant on CF enclosure. To save you the maths, that’s around $14.5 billion in sales and still Apple would still only have reached a cumulative 130 million units in a world where some “new” consumer economies – most notably China and India – are enlarging the marketplace that was available to Sony in the Walkman era each and every month.
In any case, within three years, Apple is likely to have cash and other short-term assets of around $12 billion and be generating nearly $2 billion in profits which could easily justify a valuation at that time of around $78 billion. Now, if you expect your investments to grow at between 20%-25% annually, that would mean that Apple should be trading at between $48 and $55 about now, which makes $38 a bit of a bargain all things considered.
Today, Amiga inc. said it would produce an “add on”,computer. The computer will come with a G5 3GHZ chip! But the best part, is not the 3GHZ, the best part is it uses the transputer concept!!! You can add up to 16 3GHZ chips, to the psx-2 slots. That’s 4 chips PER BOARD. Using 4 chips per board, that’s a total of 17 chips, on ONE computer. For more info check out ATARI TRANSPUTER.
Dammmm that would be good! ‘course I made that up, but… Noone had anything to say ’bout a computer with 17 chips? (late April fools) Hey, but what will Apple do if the ps3 “core” chip is ten times as fast as an intel p4? Then what? And what will Intel do? Much thanks to the people who talked-up the idea of a headless mac, before it existed. They may well have helped it come into reality. Now gimmie a G5 mini/cube.
MCCFR and Sum Yung Gai,
Thanks for your thoughts. I’m still bullish on Apple but because of Tiger and I suspect, new Macs models around the corner, and something more related to HD. The hint here is that Cook said in the call that Apple will incur about the same amount of air freight charges this quarter as they did last quarter during which they were ramping two hot products. Why would it be the same unless they are about to introduce new models (or new product)? And I can understand Apple holding off on new iMacs and eMacs until Tiger was released so that they could save effort on testing, altho the new PowerMac was simply just not ready.
But on the issue of iPod, I am becoming a bit wary. The iPod shuffle is doing great. But the new iPod minis and iPod photos have not made a dent in the Amazon chart; I don’t think supply is more of an issue with the new ones vs the old ones as it’s been over a month. The 20GB, shuffle, and 4GB minis still hold sway, and plenty of non-iPod products have squeezed past into the Amazon top 10. If this is true, then Apple is not getting much of the $50 upsell to 6GB mini and 30GB photo. Which makes me wary that the “fad” purchases of the iPod is fading. And those entering the MP3 market are focused on cost, which except for the shuffle, makes Apple’s competitors more competitive. What do you think?
SPJ must be dumping his 10,000,000 shares.
HD iPods are selling fine. It’s estimated that 1.8 M shuffles were sold, leaving the remaining 3.5 M being HD ipods. That’s not bad considering it’s a slow quarter.
Sooner or later ipod sales will level off, once all the markets are filled and you’re only looking at repeat buyers.
I’ll be in the market for an ipod photo next year. My 3G is out of space and the color screen is soooo cool.
Anybody that has followed the rise of Apple knows that most of the ‘analysts’ and ‘experts’ have LAGGED the growth of the company and the stock. Piper stands out as a rare exception.
Remember the old saying about ” if everyone … would you?”. When my Federal return comes in I will be buying more Apple stock. Thanks to all of the lemmings for making it possible for me to pick up more shares for the same price.
I agree with Jalex and the similar posts. This is going to be Apple’s year and I’m annoyed that I haven’t any spare cash to buy more shares (to add to the modest 180 I already have).
There’s another positive factor which gets overlooked.
Here in Berlin iPods are just beginning to be seen in any numbers – i.e. they’re catching on, and Germany is a large and prosperous market!
Apart from the U.K., where they’re already well established, it’s a similar story in the rest of Europe.
Sales are going to get really big in Europe, so don’t worry about sales levelling off yet.
Strategy:
Charko’s post above is an indication of why using Amazon’s US Top 10 as the arbiter of demand is likely to be an inaccurate way of gauging Apple’s future prospects with this generation of iPods.
In the USA (and to a slightly lesser extent, here in the UK), the iPod is getting close to the tipping point, where it is no longer the “pet rock” cult item and is instead just something you buy throughout the year because it has become a de facto standard. Before the tipping point, you see massive peaks in demand as the early adopter audience has its needs fulfilled, whilst – after the tipping point – you get steady demand fulfilled to a wider audience through a broader distribution channel.
But end-markets like Germany, France, “New” Europe, Japan and many more are still a long way from the tipping point. For the next 18 months to two years, Apple is probably going to exploit these markets more completely, and – as likely as not – HP is probably going to help in markets where Apple has no appreciable presence. And, of course, within two years the US/UK/Australia audience that already has iPods will start to come back for their next revision.
This is where the HD player market has an enormous advantage over Sony’s Walkman cassette player of twenty years ago: the improvements in audio quality/compression efficiency are virtual and will not necessarily precipitate a format war as we saw with DAT (failed as a consumer format) or DCC (just failed), as the iPod and its rivals will be upgradable through firmware.
This advantage means that the lifecycle limitations of Sony’s Walkman simply don’t apply to the HD player market which, in turn, means that Apple could get to a steady state where it shifts 80-100 million iPod-type devices/year every year from 2007 onwards, either to upgraders or new customers. So now, all Apple has to do is keep making evolutionary upgrades (that are relevant to the marketplace) to the functionality of the iPod family and customers will keep coming back for the upgraded models.
So, prepare yourself for the camcorder iPod, the video iPod (designed to play out content on external monitors more than on an internal screen), the game iPod, the GPS iPod, the wristwatch iPod and whatever else Apple can dream up.
The bad news for the sector was that Apple’s profit margin jumped due to price cutting (oversupply) of components. Gross margin nearer 30% than the expected 27%, it’s a big difference.
Look for poor figures from all the industry players. Apple announces first so their stock gets hit first (and hardest)