1 year price target - June 1, 2013

The Braeburn group, which I am an active member of, is publishing a 1 year price target average..  This will be an average of the participants that want to participate in the PPS projection..  The following is my post within that group.

Here’s my projection…  I’m basing my numbers on a 13.5 PE assumption.  The following numbers are starting Sept 1, 2012..  The pattern that I am projecting for each quarter is for PE expansion before and after earnings, followed by compression at the 2/3 quarter mark - down to 13.5. 

13.5 PE might be conservative, but recent history has shown this to be the case, especially with the heavy manipulation by the institutional investors.. the big boys if you will.  The reason I claim manipulation is simple:

The stock ran like hell all the way up to 644 / share.. before earnings.  Then it drops to 530..  All in a short span of time.  644 = a PE of 18…  Then the stock falls all the way down to 530 for a PE of just over 12 bucks..  I don’t see the stock moving like that for any other reason than institutional investors getting involved in a big way.  Mainly because, there is absolutely nothing wrong with Apple.. With my earnings projections, I see Apple at $931.77 on June 1, 2013

Here is the earnings breakdown, quarter by quarter, beginning on Sept 1, 2012, followed by the price with a multiple of 13.5, and finally in parenthesis my quarterly earnings target.

Sept 1 - $46.24 = $624.24 (13.02)
Dec 1 -  $54.69 = $738.31 (15.50)
Mar 1 -  $63.32 = $854.82 (22.50)
Jun 1 -  $69.02 = $931.77 (18.00)

$530.12 is the "post earnings" low this quarter.. (12.9 PE) I’m saying that the same type PE compression will happen each quarter, of course it won’t happen exactly like that, but this is what I’m using as a guideline. As I write this on May 29th, we are sitting on $572.27 with a 13.94 PE ratio..  I’m using this formula for each quarter to come up with my final 1 year target of $931.77 on June 1 2013.

Additional highlights:  I’m projecting 55 million iPhones, and 33 million iPads for Q1 13…  Revenue comes in roughly at 71 b, when you add 12 million iPods and 6.5 million macs.
I’m counting on the usual catalysts that are discussed all over the web.

Mac refresh and continuing to grow at a 17% average for a full year

Continued iPad domination
An Amazing iPhone 5 rollout - (Oct 1)
China / Asia Pacific explosion.
No TV in 2013, but I believe it will happen by mid 2014..

I will post the Braeburn group average for PPS on June 1 2013, right here, just as soon as it's published. Come back around June 5th or so..

I will have my June quarter estimates up by Friday, June 29th.

I will post the Braeburn group June quarter consensus as well, when that is published..  Look for that in early July. 

Thanks for reading,

      Dennis Hildebrand

Preliminary Q2 numbers



iPhones - 38,500,000
Macs - 4,750,000
iPads -13,750,000
iPods - 7,500,000

Total Revenue: 44,065,000,000

EPS: 13.11 


Gross Margin: 44.4%


Apple will be reporting the numbers again around the 3rd week of April as usual.  We at the Independent AAPL analysts are getting our spreadsheets ready.  This is my second go round this quarter.  I started with iPads at 12 million a month ago, but I just bumped that up to 13.750 based on the aggressive rollout, and the Tim Cook factor. I also bumped up my iPhones estimates by 1/2 mil.


Now that Tim Cook is unabated by Mr Jobs - I mean that respectfully - I believe that we are going to see even more aggressive growth.  Mr Cook, in his own words, will continue to "make big bets" on the ramp up to product launches. It seems that even the mighty Mr Cook can't bet high enough for the mass hysteria to an Apple product launch.


In going through the numbers in Q2: 

• At 38.5 million iPhones shipped the YOY growth comes in at 106% and sequentially up 4% - Last years growth percentages were 113% and 13%.  The Q1 numbers this year, were such a massive blowout, that I'm taking the sequential percentage number down a skosh.  Last year in this period, we sold 18.6 million iPhones.  For FY 12 - I'm at 150 million iPhones shipped (+108%)
• MACs at 4.750 million is 26% YOY growth, and -9% sequentially. Last years total in this time frame was 3.760m.  For FY 12 - I'm at 20.45 million MACs shipped (+21%)
• iPads at 13.750 mil - thats 193% YOY and -11% sequentially. For FY 12 - I'm at 62 million iPads shipped (+92%)
• iPods at 7.5 mil.  Thats -17% YOY and -108% sequentially. For FY 12 - I'm at 34.5 million iPods shipped (-18%)
• Revenue at 44.065 billion is up 79% YOY and down 5% sequentially.  For FY 12 - I'm at 182 b (+68%)
• EPS at 13.11 is a 105% increase YOY and down a mere 6% sequentially. For FY 12 I'm at $56 (+102%)

Be aware  - The last time I made yearly predictions like this, in my commentary, my feeling was that I was being very aggressive..  well I got the MACs and iPads right on, but missed to the downside on everything else. Especially iPhones, revenue, and EPS.  Its here, if you want to check it out.  

I will update my estimates and post the final numbers before I ship them off to PED for the quarterly smack down.

Dennis Hildebrand

Some great information for Cancer patients

I'd like to take a brief time out from Apple talk to send those that are interested in some great information about cancer recovery or people that are engaged in any type of cancer battle.  This is from David Haas, he is a fellow blogger that has contacted me, and asked if I would publish some of his great stuff.  I checked it out, and this guy definitely has some good information..

Please check it out


Why exercise is important for cancer patients

You will find more links to his various blogs on this page

Thanks,
        Dennis

Apple's Blowout Q1 - How I did

This is what I sent into Fortune.com (PED)

 
   Dennis prediction                 Actual

iPhones - 34m       37.04m -  missed by 3million - (killed me)                                                                    

iPads - 15m           15.4m   -  missed by 400k
iPods - 15m           15m      - dead nuts
Macs - 5.25m         5.2m    - missed by 50k
Rev - 43.36b          46.33b  - missed by 3b! (iPhones)
EPS - 11.59          13.87    - missed by $2.28 (iPhones and GM)

GM - 42.3%           44.7% - missed by 2.4%  

My iPhone estimates missed by 3 million and change, which of course is why I missed the revenue by 3 billion.  Also, my gross margin was off by a couple of percentage points which really affected the accuracy of my EPS number.  My iPads / iPods / and MAC numbers were VERY close.  In fact, I hit the iPod number right on the money - Last time that I happened I saw my name on CNBC..

This was really an amazing quarter - I really thought my iPhone number was going to be close..  It just goes to show how true it is that Apple is the true master of pent up demand.  I like what Tim Cook says about Apple's iCloud being a strategy, as opposed to just posting a number.

For me - Apple's cloud has changed my life for the better.  The auto synch and back up has convinced me that I need look nowhere else for my digital needs.  I like things that make my life simple - not complicated.

These numbers are proof in the pudding that this strategy for the Apple eco-system is just going to grow and grow and grow.  iCloud in China?  with 300 million users.. my gosh.. imagine the sheer volume of IOS devices over there, and we are just in the beginning stages of this thing.

Congratulations to all Apple users and investors

Dennis

                                                 

Wisdom

I'll post about Apple's latest quarter in a day or 2, but I just stumbled on this nugget, which has nothing to do with Apple or investing..  Or does it?

The Dalai Lamai, when asked what surprised him most about humanity, answered:


"Man. Because he sacrifices his health in order to make money. Then he sacrifices money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live in the present or the future; he lives as if he is never going to die, and then dies having never really lived."

4th quarter projections for Oct 18th

Hello Folks,

It's that time again..  Apple reports numbers on October 18th which is next Tuesday.  It will be somewhat somber without the presence of Steve Jobs, but Timmy boy will be his usual non-chalant self while the numbers speak for themselves.  There has been much concern in the media and the blog-o-sphere about the delay of the much rumored iPhone 5.  As it turns out, there was no iPhone 5 - Apple launched the iPhone 4s and sold a million of them on launch day.  Another record, another day in the life of Apple.  Of course, this is not news.. I'm merely repeating what everybody else has already said..

So how does a blogger write anything new about Apple?  It's practically impossible. I mainly enjoy reading these bloggers:  Andy Zaky  (Bullish Cross) / Horace Deidu (Asymco), and Robert over at Posts at Eventide.  Andy now charges for his opinions (rightfully so) and Robert is a wealth of statistics, and objective information that he freely posts for the world to consume.. A repository of information as he calls it.  Horace is a guy that assimilates vast quantities of data, then draws these incredibly creative charts, which are accompanied by his equally creative commentary.  Horace (Asymco) is a little more broad, he talks about the mobile industry, but Apple is usually a big part of his subject matter. Also - over at the Apple Finance board, there are a whole slew of intelligent opinions bantied about.  This board has long term members that are experienced traders whether it be options, day trading, or buy and hold..  I check into these places on most days.  Of course, I have to mention Apple 2.0 and Phillip Elmer Dewitt, at Fortune - If you are looking for info on Apple - PED's blog is the place to be.

There is a guy that cruises most of these sites by the name of Falkirk that writes very creative and interesting opinions on Apple as a company.. he's really insightful - you will see him comenting in most of these destinations.  All of these websites are a click away from this blog.

My opinion on Apple stock is buy as much as you can, and hold as long as you can.. 

The weird thing about Apple is this:

Everybody waits and anticipates Apple's next big move.  There are arguments on both sides bullish and bearish.. People go back and forth for months, but Apple never reveals their hand until the day they say they are going to announce something - Then they do just that.  They take one hour or so to make a presentation, then they shut down and let the world argue over what they just presented for 3 or 4 months..  Usually the quarterly earnings calls get the most hoopla.

Consistent through all of this is one big thing.  Apple keeps exceeding expectations when REAL numbers are published.  We can argue all day long about the recent announcement of the iPhone 4s being not good enough.. They still sell a million in 24 hours and break another record.  They just keep doing it over and over again.  I don't see that trend stopping anytime soon.  I've been saying this since I first started this blog.  We've still got all of 2012 for this type of growth.. it won't start tapering off until end of 2013 / beginning of 2014 - there's just too much momentum, and market share to grab.  I'm not saying the growth will stop at the end of 2013, you just won't see the 80% YOY growth in revenue / 100% growth in EPS anymore.

Ok - here's my prediction for Q4 - I sent these numbers to PED on September 24th, also at that time submitted to the AAPL independent analysts group that I belong to.

YOY in parenthesis

Revenue - $36,419,000,000   (79%)
EPS ----- $9.94    (114%)

iPhones - 26,750,000  (90%)
iPads - -  14,800,000  (261%)
Macs - -    4,750,000  (22%)
iPods - - -  7,450,000 (-18%)
Gross margin - 42.6%
Int'l sales - 66%


Of the 47 or so analysts polled on Fortune, my revenue is third highest..  The rest of my numbers have a similar rank.  The gross margins will be that high because they have NOT changed the basic form of the iPad or iPhone.  They changed the guts of the iPhone, but they did not create a case re-design. 

For the record - I came in 4th place overall last quarter, 12th place prior quarter, and 8th the quarter before that.  Like I said, there's 47 or so analysts in the smackdown now.

Q1 preliminary numbers..

Revenue - 46 b
EPS - 11.30
iPhones - 30m +
iPads -  - 20m
Macs - - - 5.5m (33% growth)
ipods --     9m
GM -  -  -  42%
Int'l sales - 70%

Finally 2010 - 2011 YOY stats (with my Q4 numbers added in)

Revenue - 78%
EPS -  -  102%
iPhones - 105%
iPads -  - 389%
Macs -  -   22%
iPods -     -15%
GM 2010 = 40.00%
GM 2011 = 40.80%


Astounding!

Thats it - see you online on the 18th during the conference call on one of the many live blogs..

Preliminary numbers for the June quarter

Greetings,

We are about a month and a half away from the July news conference that Apple reports their Fiscal Q3 earnings.  Here are a few statistics that might be interesting and my predictions.

Revenue - The last 5 Q3 year over year percentage increases and consecutive quarter increases are as follows: (YOY in blue)

2006 - 24% - 0%
2007 - 27% - 5%
2008 - 36% - 0%
2009 - 29% - 7%
2010 - 61% - 14%
2011 - 77% - 11% - projected..


27.830 billion is the number - driven by international sales of the iPhone and the full ramp up to fulfill "the mother of all backlogs" on the iPad.

EPS will be at 6.95 which is a 98% YOY increase
iPhones - 18.900 million - 125% YOY increase
iPads -  - - -9.810 million - 200% YOY increase
Macs - - - -  4.337 million -   25% YOY increase
iPods - - - -  9.000 million -     4% YOY decrease
GM - 40.7%
International sales - 65%

I know that the macro economic view right now is quite bearish with the US job growth numbers in the tank, coupled with the woeful real estate market. You also have the Japan disaster and concerns about the Euro, Greece, and the rest of that quagmire.  I do not believe that any of these factors restrict Apple's ability to grow their sales. They continue to build stores all over the US and the world.  They are expanding every day, and will continue to expand until they reach world dominance.  It's the international sales that are fueling the massive growth right now, and this will continue at this pace until they have reached saturation in China.  What's crazy is that Apple is no where near China saturation.  They're working on it, but they have a ways to go.  What will it look like when China has half as many stores that the US has?  USA has roughly 236 Apple stores, and there are another 87 spread out around the rest of the world with only 5 stores in China. Can you imagine 118 stores in China?  We've truly got a couple more years of this type of growth.

Speaking of international sales - here is the history since 2006 in quarters from Fiscal Q1 to fiscal Q4:

all numbers are percentages

2006 - 40 / 43 / 39 / 40
2007 - 42 / 43 / 40 / 40
2008 - 45 / 44 / 42 / 41
2009 - 46 / 46 / 44 / 46
2010 - 58 / 58 / 52 / 57
2011 - 62 / 58 / 65....

Just look at the pattern - In all of 2010, international sales said good bye to the 40% range, and in Q1 of 2011, broke through 60% for the first time ever!   At this rate, we'll break through 70% in 2012 by Q2 or Q3...  because of the China dynamic.

Here's another thought -

I invested in Apple back in 2004 because I wanted to bet on who would win the battle of media convergence.  Of course, there will be more than one winner, but I wanted to pick the one company that had the vision to converge television and internet with movies and everything else, and find a way to deliver it seamlessly to us consumers.  I picked Apple because of the way that they entered the music business with the iTunes store, and of course the ipod.  It looked to me at that time, that Apple had a long term vision, and I thought that they had the biggest head start by designing world class software with the usual excellent hardware designs. In addition to that, they already had ALL those people used to buying media through iTunes.  It just looked like they were the ones to do it.

Now enter the iPhone in 2007.  Apple decides to give you the ability to make phone calls and access your media all in one device.  Add the app store with 300,000 choices of tools and games to use, and I'm starting to see this convergence thing unfold before my eyes..

The iPad is next in 2010 - Facetime and TV with movies, and everything else - all on a 10" screen..

OK - while this is happening, the majority of people are still hooked to cable and satellite.  But guess what?  People use their DVR's and watch shows at their own convenience, in the time that is available to them.  My wife and I do that..  We DVR the shows we like and watch them later for all of the conveniences that we all enjoy.  You can plan your life the way you want to - Exercise and play whenever you want.. your shows are waiting for you.

The problem with all of this is - how do you manage all of this? It's too expensive and It's all scattered on different devices, and I don't know about the rest of you, but my hard drive fills up fast.

Tomorrow - Enter the iCloud - Another giant leap towards full convergence.

Imagine this.... 3 years from now:

You come home from work after a a hard day..  You throw on your running / walking shoes, and run/walk around town for 45 minutes or so.. That's done, now you want to sit down with your family, eat and watch your favorite show.

Right next to your chair is one of your iPads.  You check out your iCloud service and see that you have a couple of your favorite shows that have been automatically downloaded.  (Of course, you already knew this - you were expecting it, because YOU set it up)

You tell iCloud that you want to watch this show on iTV - Yes, that's right - your iTV. It looks just like your iPad, except it's 40" and is hanging on the wall like any flat screen TV. So you put your iPad down, and turn on your iTV to watch your show.  Junior doesn't like to watch Justified, so he goes in the other room, and watches what he wants on his iPad, or maybe he wants to do some gaming.

This is the future of our world, and Apple is winning big.

Dennis Hildebrand