#1 – Certainty of cashflow, profit revenue
#2 – Certainty of non-debt exposure
#3 – Certainty of currency stability
Against the backdrop of
#4 – Diverging macro policies of global central banks.
#5 – Escalating geopolitical unrest and tension.
#6 – Escalating regulatory restrictions and risks on capital and banking deposits.
#7 – Dollar safe haven theme.
Market yet to fully priced in Apple earnings drivers.
In FY2014Q1 (2013Q4),Apple reported $57.6b revenue, and sold 51m iPhones.
On 20th Oct 2014,Apple gave revenue guidance of $63.5b to $66.5b for FY2015Q1 (2014Q4).
Against $57.6b, $66.5b is difference of 15%.15% is roughly what the market is pricing in now.
- Higher marginal profits from 128GB vs 64GB vs 32GB models.
- iPhone 6 will outperform.
- iPad will outperform.
Concerns of iPhone cannibalising iPad or declining sales are unfounded.
- First iPad was launched in 2010, the lengthier upgrade cycle is coming full circle.- Growing user base, 50% of iPad buyers are new comers.- Accelerating corporate adoption and commercial applications.- Post Steve Ballmer, Microsoft Office now available on iOS for free.- Forget Surface, forget Android tablet. Fragmentation impedes Critical Mass.
- iMac will outperform.
- Growing market share, users abandoning Windows in droves.- Platform of choice among content creators.- Required by iOS Apps developers.
- Appstore will outperform
- China Mobile
- Beats Electronics, LLC
- Misc – iCloud, Apple Pay, Apple TV
#1 Bottom Line
Same P/E; Different Earnings
#2 Top Line
Not Velocity, but Acceleration.
Not Growth, but ‘Change in Rate’ of Growth.
#3 Include or Exclude?
Factoring NET ‘Cash’ out of P/E.
$175.3B Cash, Investments, Receivables
Less $101.6B Total Liabilities
= $ 12.30 ‘Cash’ per share.
#5 Dollar Theme
Divergent monetary policies between FED, ECB and BOJ.
Divergent spreads between T-Bonds, Bunds and JGBs.
Divergent FX between US, Euro and Yen.
#6 AAPL Technicals
#7 Apple or Alibaba?
Earnings Calendar Arbitrage
Apple — Oct, Jan [iPhone6, Christmas] vs. Alibaba — Nov, Feb
Any final word?
Yes, hope for earnings disappointment tonight.
PDF file: Revisiting AAPL v1.03 20141020