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stock pickApple Computer (aapl) 2/29/00 1/12/00
12/16/99
Eric Yang of AppleInvestors.com has a neat analysis on how much Apple should have in cash and equivalents. The long and short of it is that Apple is going to have an un-Godly amount of money.
12/10/99 Apple Japan is being investigated for unfair trade practices. Also, it appears that stores are starting to receive Apple products in sufficient quantity, although iBook shipments are still constrained. Everything seems to be hitting on all cylinders. I expect the stock will hit $120 by January.
11/22/99
11/12/99 Apple is actually doing quite well. It's moved from being a value play to a momentum play. That's not a bad thing as this market has mostly been a momentum market. That said, this transition makes it impossible for me to figure out how this stock will move. I still believe in Apple, but it's all a matter of execution rather than actual vision--at least for the next quarter. Until the issue once again becomes strategy I doubt I'll update this site more than once every few weeks. The following is a synopsis of the current strategy:
There seems to be a Mac-owned retail move afoot, as reported by Appleinsider. The next generation OS X will be coming out soon and it should help Apple become a choice provider of streaming multimedia. Think of it as the backdoor to the Enterprise. Apple is finally getting serious about marketing Quicktime. The Quicktime Conference was recently completed and everyone seems pretty upbeat that Apple is getting religion on its gem and that more developers and users will come aboard.
10/25/99 update 09/23/99 A picture of the G4, Apple's nightmare and salvation! Yummy. As some of you might know, Apple has gone up to $80 before dropping about $10 to its current levels. The drop stems from what Apple says is the inability of Motorola to supply enough chips for Apple's new line of professional computers dubbed the G4. I don't think this analysis is entirely truthfull. The amount of expected revenue decline seems more than just an inadequate supply of chips for one of four computer lines in the Apple family. I think that iMac sales may be down from analyst estimates. Whatever the case, Apple seems poised to trend upwards for the next few months as sales will grow significantly in the next few months. Let's hope these operational problems are going to be taken care of soon. Here's an amazing graph for the last 6 months or so. If we had invested when I recommended the stock, we would hav been up by over 75% today--even with the $10 drop! That said, I wouldn't recommend this stock at these levels. There are companies out there that are better value plays.
updated 07/09/99 Apple stock has been going gang-busters in recent weeks in anticipation of earnings announcements and Macworld Expo. Earnings are due out on the 14th, while the Expo Job's speech is set for the 22nd. updated 07/02/99 The Apple rumorboards have been going nuts lately trying to figure out when the new portable iMac will show-up. I think everyone is certain that Steve Jobs will present the consumer portable at the MacWorld Expo next month. The question is at what point will the product hit the distribution channels. UPDATE: want to see the iBook? Click here Apple has sued a couple of manufacturers that have shown pc versions of the iMac. As to other rumors adn what-not, I'm gong to simply leave them all alone. updated 05/27/99 So here's the last I know about Apple. Since the time I posted the last article, a number of expected things have happened. One of the most important events is the Goldman Sachs upgrade of Apple from hold to buy. The notebook that I mentioned they were going to release has been released. It starts at $2500 and is selling like hotcakes. In fact, it's selling so well that some distributors are irked they can't get the thing in stock. If you want to see the new portable check out the apple site. The coming few weeks are crucial to Apple stock. In late July, there is going to be a MacWorld Expo in New York. The big news will be the introduction of the P1, the codename for Apple's consumer portable. Think of it as an iMac to go. The portable will sell for about $1500. If it sells as many units as expected, Apple will increase company profits by 15-20% on the notebook sales alone. Excluding one-time gains this year, the profit growth could be double or triple that percentage. Also big for Apple is the rumored release of an update to the iMac. The new iMac although similar in design elements is actually a redesign. The differences will be a larger screen and easily accessible expansion slots. Earnings are due out soon. Posted 4/28/99 All of you know what Apple does. I bet all of you also thought that Apple was dead. But there's a story here. The stock has not been a darling in New York, but I'm a value player and there are so few value plays left. Last quarter, the company made $0.60/share. This beat forecasts by 2-5%, depending on who you believed. They've beaten forecasts for the past 5 quarters now. More interesting is market share growth. Did you know that Apple is the 5th largest retail brand for computers? In the conference call to investors, a couple weeks ago, their CFO said that they were calling their convertible notes. Convertible notes are essentially bonds that can be traded in for stock at a certain price. The notes represented about 6% of equity. The conversionwill not be dilutive to the stock because Apple has been reporting earnings on a diluted basis already--i.e. taking into account the conversion. So here are some reasons to invest in Apple. They have some interesting products coming down the pipeline You all know about the iMac. Last quarter, they sold 350,000 of those units. That was more than some had expected. Their inventory was down to one day. Compare this to the pc leader in inventory, Dell, who has a three day inventory. In regards to this nifty little computer, Apple has upped the speed on the model and not changed the price. It has also reconfigured ordering requirements. Retailers used to have to order one each of the 5 fruity flavors, now they can order a higher number of the most popular color (I think it's grape) and one each of the others. Contrary to criticism, the iMac has not been a flash in the pan. Oh yeah, did I mention that Sears is now going to market the iMac? Yep, they're going for the rednecks. Some of you may know that this summer, Apple will be coming out with a consumer portable. It is almost a sure thing that the new portables will cost less than $1500 and will come in a translucent case. Fruity colors are also in the cards. After the release of the consumer portable, there might be a new high-end desktop. The current workhorse for Apple users with serious business is the G-3, based on Motorola's Power G3 processor. The new G-4 processor is coming out sometime in the fall, and Steve Jobs seems to think that he can get a product to market as early as September (I bet he can't do it, but if he does, woooohooo!!!). And the most iffy thing I've seen is a potential release of a notebook with a detachable screen. Some say that it detaches so that you can attach a visor screen. Too much science fiction? Only time will tell. All in all, they have products coming every quarter, except next. So, Apple stock will definately drop a little in the coming months because there will be a lack of news on the product front. But that just means we can go buy some shares. They're price-earnings ratio is disproportionately low compared to competitors The price-earnings ratio (p/e)compares a company's stock price to it's earnings for the year. For example, if a stock is $10 and it earns $1.50 a year, the p/e will be: $10 / $1.50 = 6.6. The lower the p/e the larger the profit per share. Computer companies typically have very high p/e's compared to other stocks. The S&P 500 has an average p/e of about 20. Let's compare some numbers to see how much more value Apple has compared to others
What do all these numbers tell us? Well, for many (including me), they tell me that Apple is undervalued compared to its peers. Speaking of peers... Did you know that volume growth, that is the growth in the number of units shipped grew faster than the rest of the industry? Some concerns Well, my biggest fear is that Steve Jobs will leave the company. His official title is Interim CEO. He's been interim for a long time now. What makes his stay even more precarious is the fact the he has NO stock in the company. He is also CEO of Pixar (the people who did "A Toy Story"). Beyond that, I can't really see this company failing as long as the economy keeps on rocking. Well, I hope I've given you guys something to consider. Tell me what you think. E-mail me.
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