“Apple Computer offered a disappointing earnings outlook on Wednesday, but don’t expect investors to throw in the towel quite yet,” Troy Wolverton reports for TheStreet.com. “Wall Street seemed willing to excuse the company’s guidance — which was significantly below the Street’s earnings and revenue targets for the current quarter — as simply an example of management being conservative. In recent quarters, the iPod maker’s results have consistently topped the company’s own outlook and Street expectations, most notably in its just-completed holiday period, when Apple’s results exceeded sales guidance by more than $1 billion. ‘I’m taking a five-year view,’ says one portfolio manager at a major financial services firm who is long Apple. ‘Each miss to me looks like an opportunity [to buy the stock],’ the portfolio manager adds.”
Wolverton reports, “In their reports today, sell-side analysts generally reiterated their optimistic ratings on Apple. Piper Jaffray analyst Gene Munster’s reaction, for instance, was typical: ‘We would be buyers of AAPL shares on the pullback today as we believe March-quarter guidance will prove to be conservative given that Apple’s strategic plan, competitive position, new product roadmap and market opportunity remain unchanged,’ Munster wrote, reiterating his outperform rating on Apple shares and his $103 year-end price target. Piper Jaffray has not done recent investment banking business with Apple.”
“Apple forecasts that things will slow down in the current first quarter. Company officials predicted that sales will be 7% and earnings 13% below analysts’ estimates,” Wolverton reports. “The company blamed the disappointing outlook on a seasonal slowdown in iPod sales and potential softness in shipments of its Macintosh computers. Apple recently updated two of its computer lines with chips from Intel. However, one of those lines won’t ship until sometime next month and the company indicated that it may not be able to meet demand for either of the two Intel-based lines in the short-term.”
“But not everyone is convinced that Apple’s best days are ahead. Invictus Funds recently sold off its long position in Apple, and partner David Schamens is looking for the right opportunity to short the stock,” Wolverton reports. “The company’s guidance is the first indication that things are slowing down at Apple, Schamens said. While acknowledging the company’s recent success, Schamens argues that its computer and iPod sales are both going to ‘hit a wall.’ Corporate computer users have standardized on Microsoft’s Windows platform, and Apple is going to have a tough, if not impossible, time cracking that market, which will limit the amount of share the company’s computers can claim, he says.”
Full article with much more here.
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