Posts filed under ‘AAPL shares’
Apple reported record fiscal 2Q 2008 financial results ending March 29, 2008. While profits rose across all company divisions, margins were less than previously expected. Apple reported a gross profit of of $7.51 billion and a net profit of $1.05 billion. Last year for the second fiscal quarter, Apple made a gross profit of $5.26 billion and a net profit of $770 million, however gross margin was 32.9 percent this year down from 35.1 percent last year.
Apple sold 10,644,000 iPods, 1,703,000 iPhones, and 2,289,000 Macs during the second quarter. Revenue growth for the Mac division was exceptional with 54 percent compared to the same quarter last year. Apple reported an overall revenue growth of 43 percent with over $17 billion in revenue and $4 billion in cash flow for the first fiscal half of the year. Apple’s CEO Steve Jobs added in a press release: “we have strong momentum to launch some terrific new products in the coming quarters”. Apple stock closed at $162.89, up $2.69 for the day.
Jason Schwarz, an Options Strategist for Lone Peak Asset Management, writes for SeekingAlpha:
“Recent data is suggesting that Apple is on the verge of breaking out in a major way…The Apple market share story begins with the reemergence of the Mac, in a recent interview Apple COO Tim Cook indicated that during fiscal 2007, Apple sold 7 million Mac computers; still just a fraction of the 260 million units market estimated by IDC…The recent release of the ultra-thin MacBook Air seems to be getting Apple into the hard-to-reach business user segment…Any one of the +100 million ipod owners are potential iphone owners as the halo effect expands from ipod now to iphone. Bank of America analyst Scott Craig also feels that current estimates of iphone sales are too conservative…By selling 45 million phones Apple would generate in excess of 5 billion in profit…The market share story insulates Apple from typical consumer slowdown worries and gives investors conviction to buy and hold…Pre-3G iphone is a great time to enter a long position…It might just take you to $300.”
Kabateck Brown Kellner, LLP press release on March 31, 2008:
APPLE SUED FOR iMAC DECEPTION
Inflated Claims, Concealed Inferiorities of New 20-inch iMac
Los Angeles – Apple deceptively marketed its new 20-inch iMac in a way that grossly inflated the capabilities of its monitor, which is vastly inferior to the previous generation it replaced, according to a federal class action lawsuit filed today by Kabateck Brown Kellner, LLP.
According to the suit, filed in the U.S. District Court, Northern District of California in San Jose, Apple is deceiving consumers by concealing that the new 20-inch iMac monitors are inferior to the previous generation’s and those of the new 24-inch iMac. In addition, the monitors are incapable of displaying “millions of colors,” despite Apple’s marketing claims.
Apple’s newest iMac – an “all-in-one” desktop computer that combines the monitor into the same case as the CPU – was unveiled in August 2007.
“Apple is duping its customers into thinking they’re buying ‘new and improved’ when in fact they’re getting stuck with ‘new and inferior,’” said Brian Kabateck, Managing Partner of Kabateck Brown Kellner. “Beneath Apple’s ‘good guy’ image is a corporation that takes advantage of its customers. Our goal is to help those customers who were deceived and make sure Apple tells the truth in the future.”
Apple told consumers that both the 20-inch and 24-inch iMacs displayed “millions of colors at all resolutions.” Indeed, the new 24-inch iMacs display 16,777,216 colors on 8-bit, in-plane switching (IPS) screens, as did the previous generation of 20-inch iMacs. But the new 20-inch iMac monitors do not even come close, displaying 98% fewer colors (262,144).
While Apple describes the display of both the 24-inch and 20-inch iMacs as though they were interchangeable, the monitors in each are of radically different technology. The 20-inch iMacs feature 6-bit twisted nematic film (TN) LCD screens, the least expensive of its type.
The 20-inch iMac’s TN screens have a narrower viewing angle, less color depth, less color accuracy and are more susceptible to washout across the screen.
Apple’s Web site tells consumers that “No matter what you like to do on your computer — watch movies, edit photos, play games, even just view a screen saver — it’s going to look stunning on an iMac.”
In fact, the inferior technology of the 20-inch iMac is particularly ill-suited to editing photographs because of the display’s limited color potential and the distorting effect of the color simulation processes.
“Apple is squeezing more profits for itself by using cheap screens and its customers are unwittingly paying the price,” Kabateck said.
Kabateck Brown Kellner, LLP is one of the nation’s foremost consumer law firms. Its clients have won more than $750 million against Google, Farmer’s Insurance, Eli Lilly and other major corporations. As a plaintiff’s-only firm, Kabateck Brown Kellner is always on the consumers’ side.
Thanks to Yusef K. Robb for the heads up.
Apple CFO Peter Oppenheimer offered a rare glimpse into Cupertino’s product development roadmap during his company’s Q3 conference call in mid 2007 by referring to an ongoing “product transition”. Evidence is mounting that the iPod roadmap is what he specifically had in mind. According to my sources close to the iPod product division, Apple may reveal no less than 5 models this Fall in an effort to facilitate the iPod transition to the touch platform, only to consolidate iPods into the traditional 3-tier lineup a year later. It seems that the problems Apple is facing centers around the saturating iPod market penetration in the US and lower consumer confidence due to the looming prospects of a major economic slowdown. Apple is concerned that the sharper than expected fall in the sales of digital media players during the fourth calendar quarter of 2007 could spell the same for its iPods resulting in significantly lower revenues from the profitable unit. Apple is expected to counter these problems by introducing new lower end models based on the touch platform, hence enticing new buyers and necessitating an upgrade for the existing iPod user base. What follows is a description of iPod’s future based on tips provided by my sources reflecting the roadmap as of late January ’08.
My sources tell me that the 1GB Shuffle will be discontinued once the current inventory runs out. A razor thin profit margin due to the recent price cut is apparently the culprit. The 2GB version will appear in the Fall ’08 lineup but no major redesign is expected. A new 2 and 4GB iPod model featuring a screen and a smaller profile than current nanos will be introduced. Nanos will sport the same design plus the usual yearly feature improvements and a new 16GB model is expected, alongside the existing 8GB unit. The exciting news for the nano, however, is a new generation of Click-Wheel Apple is working on which offers improved usability comparable to the jump from third to fourth generation models. The nano is expected to be discontinued in 2009 paving the way for a similarly sized touch based model, although both nano and its replacement may be offered side by side in order to gain traction for the newer model ( similar to Classic and Touch last year ). The 80GB Classic will be discontinued and the 160GB model will get the ax in ’09. A Touch 64GB model will appear this Fall along with the existing 32GB version. I was also told the sharply lower demand for flash chips so far this year and the consequential drop in their lot prices will mean more iPod price cuts are on the way and it may facilitate Apple’s plan to introduce higher capacity flash models earlier than expected. Stay tuned as I’ll have more details on specific models a little later.
According to an Apple news site, refurbished iPod nanos are selling at sharply lower prices than expected and that could mean price cuts across the iPod lineup is on the way. Checks with online retailers show that current generation 4GB and 8GB refurbished nanos are selling $50 less than their full retail prices. The online Apple Store is also selling the refurbished 80GB and 160GB Classics $40 and $50 less than their full retail prices respectively. Prices for previous generation refurbs are even lower. Lower than expected current quarterly sales and last months’ Shuffle price reduction may signal the same for the rest of the lineup.
The hot debate on whether Apple can meet its own projection of 10 million iPhones sold in ’08 continued on Monday when Banc of America ( BAC ) analyst Scott D. Craig reported his estimate of 7.96 million units for calendar ’08. In a research note to clients, Craig cited softer than expected short term demand for both iPhones and iPods, following checks on Asian suppliers. Craig added that iPhone “demand in the U.S. may have been impacted by the anticipation of a new 3G phone and that European demand for a non 3G iPhone remains lackluster.” Craig cut his price target on Apple ( AAPL ) stock from $180 to $160.
In a separate downgrade on Monday, Mike Abramsky of RBC Capital Markets also lowered his price target on Apple stock from from $200 to $175 based on “economic and growth concerns”. Abramsky nonetheless believes that the 3G version of the iPhone, expected by mid ’08, will sell briskly with wide overseas adoption of its high end video features on fast 3G networks. Abramsky estimates Apple will beat its projection of 10 million iPhone units sold by a wide margin of 1 million.
The downgrades by the two had a combined negative effect on Apple resulting in the stock closing at 121.73, down by more than $3 on the day.
Apple chief operating officer Tim Cook reiterated his company’s confidence in the projected number of iPhones shipments in 2008. Speaking at the Goldman Sachs Investment Symposium, Cook calmed investor nerves by restating that Apple is ‘on track’ to sell 10 million iPhones by the end of 2008. In recent days, Apple’s bold projection on total iPhone units shipped in ’08 had been disputed by Wall Street analysts. Citing softer demand and a higher incidence of unlocking for iPhones, several analysts had lowered their projected iPhone shipments in ’08 by a wide margin and had dropped their share target price as a result.
A number of analysts are highlighting weaker than expected iPod and iPhone sales numbers. Toni Sacconaghi of Bernstein Research calls Apple’s 10 million iPhone sales target as “optimistic” without “significant price cuts or new model introductions”. Sacconaghi expects Apple to sell about 7.9 million units, far short of Apple’s own announced target. The Bernstein Research analysts also calls attention to cutbacks in first calendar quarter iPhone production as further evidence that Apple will likely miss its sales target. Sacconaghi says “higher than expected” iPhone unlocking has also cost Apple hundreds of millions in lost revenue. BMO Capital Markets analyst Keith Bachman is also skeptical on Apple’s target of 10 million units and cuts his target price from $160 to $140 per share.
Piper Jaffray analyst Gene Munster writes in a note to clients that initial analysis of the March quarter iPod NPD data point to a 6% year-over-year decline in iPod sales. While Wall Street expects Apple to sell about 10.8 million iPods in the March quarter, the data suggest 9.5-10.3 million units for the quarter. Munster reiterated his belief that Apple plans to make the iPod into wireless mobile units “capable of running mobile applications”.
Morgan Stanley is more positive on Apple by saying “new product announcements and margin expansion will drive AAPL shares higher in 2008″. Morgan Stanley points to strong Mac shipments, favorable component pricing, and expansion outside US as “positive influence on revenue growth”. The firms also predicts that Apple is slowly “preparing for meaningful product launches.”
Please read an update to this story here.
Gene Munster of Piper Jaffray has reiterated his buy rating on Apple stock and his estimated price target of $250. He made the announcement in a note to clients Wednesday after Apple introduced a new 2GB Shuffle model. Munster’s bullish outlook is a reaffirmation of the direction Apple is taking amidst unrealistic market expectations in recent months, which have driven the price of the stock down by more than 35 percent.
According to NYPost, former US vice-president and current Apple board member Al Gore has exercised an option to buy 1000 Apple shares at $7.48 each. As a part of his contract to sit on the Apple board, Gore was originally given the option to buy 60,000 Apple shares. Gore could make a potential profit of about 7.4 million dollars if he were to buy all 60,000 allotted shares at the reduced price of $7.48 and sell them at current market price of about $131 per share.