“Stifel Nicolaus’s Aaron Rakers this morning reiterates a Buy rating on shares of Apple, and a $150 price target, writing that the company used an ‘extremely well-timed FX hedging program’ in 2015 to hold onto $4.1 billion in revenue and 70 cents per share in net income, by his estimates, that it otherwise would have lost as the U.S. dollar rose against other world currencies,” Tiernan Ray reports for Barron’s.
“Apple, in effect, managed better than some companies the dollar effect that crimped many tech results,” Ray reports. “However, as those hedges roll off, Rakers cautions investors to keep in mind that Apple will see less benefit offsetting currency effects in coming quarters.”
Exiting the September quarter, Apple noted an expectation that at current exchange rates over the course of F2016 the protection from its hedging program will be diminished – we believe most significantly looking into the June and September 2016 quarters. [Emphasis Rakers’s] Exiting F4Q15, Apple’s FX hedging contract asset values totaled $1.442 billion, or representing a consistent decline from the $3.561 billion peak exiting the Dec ‘14 quarter – a trend leaving us to consider a continued decline from the $1.409B and $806M gains recognized during the F3Q15 and F4Q15, respectively. — Stifel Nicolaus analyst Aaron Rakers
Read more in the full article here.
MacDailyNews Take: Apple CFO Luca Maestri, October 27, 2015:
The guidance that we’re providing for the first quarter that 39% to 40% it actually an incredible level of guidance given the foreign exchange headwinds that we’re dealing with. How do we deal with that? We continue to hedge, so our program continues on an ongoing basis and we will continue to provide some level of protection to foreign exchange movement. In some cases we have realign prices particularly when we launch new products. We tend to do that in a number of countries where the foreign exchange moves have been particularly extreme, and so we tend to recover that through pricing. And then finally, of course we are putting in place a number of cost initiatives that would allow us to deal with the foreign exchange situation. So, overall we feel very strong guidance for the first quarter. And beyond the first quarter as you know we’re not guiding and so we’ll see over the course of the year.
[Thanks to MacDailyNews Reader “Arline M.” for the heads up.]
Didn’t General Motors start getting into trouble when they started to make more money as a finance company than an automobile company?
Apple makes $4B from financial vs…..what is it now….around $200B from products. How is that anywhere close to making more from financials than from products?
I also would guess that maybe GM had things like factory infrastructure that they still had to pay for. Apple has no chip foundries and it uses Foxconn as its assembler. It does have quite a few employees though. But they can be easily re-configured to the financial side and, let’s not forget, can be made redundant too.
GM Finance was not all about hedging, it was about making loans to customers to buy cars. Entirely different animal.
Just because it has the word “finance” in it doesn’t mean it’s the same financial operations.
All great… Hats off to Luca and Tim..
But when is the damn stock going to make its move up….when are the stiock holders going to get rewarded.
When will we see the effects of the massive buyback?
Pe of 12 .. Absurd ! And msft 30+? Amzn 1000 ish
Its disappointing and bewidering
Any non-troll comments and thoughs ?
It just doesn’t make any sense.
The only time during the last 7 years that I have been invested in Apple, the only time it makes sense is when the stock goes up. 🙂
I’m equally frustrated, especially when you see the stock price drop about 5% in the last two days. Someone once wrote that Apple the company and AAPL the stock are two different animals. I don’t see why whatever has been depressing the stock will suddenly change given the great results Apple has achieved recently without even a moderate “bump”.
I’m looking to sell a sizable portion of my holdings in January if it gets above $120 while setting a stop-loss at $110. Apple may well reach $150 or more next year, but it may also hover at its current price +/- $10. Even if Apple goes gangbusters next year it’s not wise to be overinvested in it unless you can afford the inevitable dips in the future.
teach, see my comments below. You need to remember a few simple rules.
Never sell Apple stock at a price LOWER than what you bought it at.
Use your head when buying, not your pocketbook or your greed.
You will be more successful sometimes rather than others, but if you never sell for less than you bought, you will always make money.
If you have over 750 shares, make sure you are in when dividend times comes around (hopefully in an IRA act).
PS, I once bought in at 645, watching Apple zoom up. People said it will never pass 700…. and they were right. My stock dropped to about 500ish. But I waited. after rising and splitting 7-1, Apple is now at about 800$ a share pre split. so I really did make money waiting. 🙂
Yo, Interesting questions but it looks like you do not really understand the stock market.
Are you asking why Apple has not personally made you rich???
Are you asking why Apple makes products and services for its customers rather than hype stuff to pump and dump its stock price?
Its disappointing and bewidtering (?) because you do not understand how the Market works.
If you want to make some money with Apple quit sitting on your duff.
Watch Apple stock looking for peaks, then sell!
When Apple seems to have hit a bottom and starts back up, buy! The profit you just made is due to anal…ysts and marketeers pumping and dumbing Apple stock. Get on and ride the train.
To never lose money, use this simple rule. After you buy Apple stock, NEVER sell it at a loss. It will rise at some time in the future. I have been there (am there now – after making a nice profit selling at 132 and then buying at 124, I am now waiting for Apple to rise above 124 before selling again).
The stock market is not for the timid, who cannot stomach that any stock, even the great ones, will go down.
A famous investor once said that the market moves in the short term on psychology, in the long term on bottom line profits. In the long run Apple stock will be just fine and make a handsome profit for investors.
But in the short term, there are all sorts of extraneous factors at play. Also, Apple is a company in the tech sector, and the tech sector is notoriously volatile.
When you own a stock, you literally own a piece of the company. If the companies long term prospects look good, then hold the stock and wait patiently for it to go up. Eventually it will.
Don’t watch the stock day in and day out; invest for the long run.
WS is a shell game and if you own stock, you will always loose unless some other sucker thinks your stock is worth more than the paper it is written on.
WS is an enemy to Apple.
WS is a shell game and if you own stock, you will always loose unless some other sucker thinks your stock is worth more than the paper it is written on.
WS is an enemy to Apple. WS is an enemy to America.
The value of the fiat money “increases” and it is a benefit to Apple? It should be a benefit to all US companies – unless you believe a weak $ is bad for business.
As the market collapses under worldwide deflation, Apple has the cash to scoop some bargains, especially a foundry and AI companies… He who has the gold makes the rules….Apple will also be a first mover on the upside….. Downside is around 92 area… It will be fun to see how all of this works out over the next six months… All technical indicators are now negative and it could rally be a rough six months….