Four Drivers to a Blowout 2010

  • Posted: 14 December 2009 09:42 AM

    AAPL often tanks in the first quarter due to the lack of near-term upside prospects.  After the big holiday quarter, there’s often little to be excited about.  Going into 2010, however, there are four huge positives on the near-term horizon, more than I can remember for any prior year:

    1)  The economy is improving, and the first few quarters of 2010 should compare very favorably the Great Recession quarters of 2009.  Even without the next three drivers, Apple’s financial performance should show substantial growth in the first quarters of 2010.

    2)  The tablet.  It may be a dud, but my money is on the launch being bigger than the iPhone.

    3)  End of AT&T exclusivity.  If this oldest of rumors is true, it should generate a spike in iPhone sales later this year.

    4)  End of subscription accounting.  I don’t care if all the pros understand subscription accounting, when E is adjusted upwards substantially next year, PE will make AAPL look like a steal to more investors. 

    Any one of these would likely boost AAPL.  The confluence of all four, probably all happening in the first half of the year, makes it a unique time to own AAPL.

         
  • Posted: 14 December 2009 09:55 AM #1

    5- best first quarter in Apple history coming up with a suggestion of 10 million iPhones in quarter way past any estimate to date….and this morning this

    AAPL Apple: Taiwan smartphone IC shipments grow over 30% in 3Q09, says MIC - DigiTimes (194.67 ) -Update-

    DigiTimes reports Taiwan’s smartphone IC shipments reached 116.97 million units in the third quarter of 2009, up 30.9% sequentially, and market value amounted to US$613.7 million, up 32.0% sequentially, according to Taipei-based Market Intelligence & Consulting Institute (MIC). In the third quarter of 2009, sales of the Apple iPhone 3GS far exceeded expectations, and sales are expected to reach 10 million in the fourth quarter of 2009. iPhone chip suppliers have benefited from this development. Furthermore, other terminal vendors made advance procurements to prepare for the peak season in the fourth quarter.

         
  • Avatar

    Posted: 14 December 2009 10:05 AM #2

    macorange - 14 December 2009 01:42 PM

    AAPL often tanks in the first quarter due to the lack of near-term upside prospects.  After the big holiday quarter, there’s often little to be excited about.  Going into 2010, however, there are four huge positives on the near-term horizon, more than I can remember for any prior year:

    1)  The economy is improving, and the first few quarters of 2010 should compare very favorably the Great Recession quarters of 2009.  Even without the next three drivers, Apple’s financial performance should show substantial growth in the first quarters of 2010.

    2)  The tablet.  It may be a dud, but my money is on the launch being bigger than the iPhone.

    3)  End of AT&T exclusivity.  If this oldest of rumors is true, it should generate a spike in iPhone sales later this year.

    4)  End of subscription accounting.  I don’t care if all the pros understand subscription accounting, when E is adjusted upwards substantially next year, PE will make AAPL look like a steal to more investors. 

    Any one of these would likely boost AAPL.  The confluence of all four, probably all happening in the first half of the year, makes it a unique time to own AAPL.


    On number 3.  I don’t see the near term impact. At best a Verizon Iphone will be added after 4.0 launches on ATT.  ATT will not be punished for supporting Apple.  They will have exclusive thru the summer launch.  My bet is on a late 3rd quarter launch on Verizon to coincide with the likely cycle for a revamped Droid from Motorola.  The rest of the list is a good reason not to jump out before the quarterly results.

         
  • Posted: 14 December 2009 10:15 AM #3

    pats - 14 December 2009 02:05 PM
    macorange - 14 December 2009 01:42 PM

    AAPL often tanks in the first quarter due to the lack of near-term upside prospects.  After the big holiday quarter, there’s often little to be excited about.  Going into 2010, however, there are four huge positives on the near-term horizon, more than I can remember for any prior year:

    1)  The economy is improving, and the first few quarters of 2010 should compare very favorably the Great Recession quarters of 2009.  Even without the next three drivers, Apple’s financial performance should show substantial growth in the first quarters of 2010.

    2)  The tablet.  It may be a dud, but my money is on the launch being bigger than the iPhone.

    3)  End of AT&T exclusivity.  If this oldest of rumors is true, it should generate a spike in iPhone sales later this year.

    4)  End of subscription accounting.  I don’t care if all the pros understand subscription accounting, when E is adjusted upwards substantially next year, PE will make AAPL look like a steal to more investors. 

    Any one of these would likely boost AAPL.  The confluence of all four, probably all happening in the first half of the year, makes it a unique time to own AAPL.


    On number 3.  I don’t see the near term impact. At best a Verizon Iphone will be added after 4.0 launches on ATT.  ATT will not be punished for supporting Apple.  They will have exclusive thru the summer launch.  My bet is on a late 3rd quarter launch on Verizon to coincide with the likely cycle for a revamped Droid from Motorola.  The rest of the list is a good reason not to jump out before the quarterly results.

    Apple could add T-Mobile and Spring immediately, couldn’t they?

    Verizon is not the only fish in the sea; and they may need more humility before getting the iPhone smile

         
  • Avatar

    Posted: 14 December 2009 10:17 AM #4

    macorange - 14 December 2009 01:42 PM

    AAPL often tanks in the first quarter due to the lack of near-term upside prospects.  After the big holiday quarter, there’s often little to be excited about.  Going into 2010, however, there are four huge positives on the near-term horizon, more than I can remember for any prior year:

    1)  The economy is improving, and the first few quarters of 2010 should compare very favorably the Great Recession quarters of 2009.  Even without the next three drivers, Apple’s financial performance should show substantial growth in the first quarters of 2010.

    2)  The tablet.  It may be a dud, but my money is on the launch being bigger than the iPhone.

    3)  End of AT&T exclusivity.  If this oldest of rumors is true, it should generate a spike in iPhone sales later this year.

    4)  End of subscription accounting.  I don’t care if all the pros understand subscription accounting, when E is adjusted upwards substantially next year, PE will make AAPL look like a steal to more investors. 

    Any one of these would likely boost AAPL.  The confluence of all four, probably all happening in the first half of the year, makes it a unique time to own AAPL.

    Apple tanks because the CFO gets up and guides by suggesting that Apple expects to sell 2 macs, three iPhones and if they’re really lucky, six iPods and this sandbagging guidance tanks AAPL every year as investors climb a wall of worry.

    Signature

    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.

         
  • Posted: 14 December 2009 10:24 AM #5

    6. An anticipated Mac Pro refresh.

    7. A continued trend toward holiday season sales continuing into January (gift card redemptions)

    8. Rising iTunes and app store sales (just how many iPhones and iPod touches were sold in the holiday quarter?)

    9. Continuing rise in international sales at a time of a weak dollar (leading to lower overall lower tax rates and favorable repatriation rates - it worked well in the 4th fiscal quarter and should continue into this quarter and next quarter).

    10. An anticipated uptick in interest rates - consider the impact of a 25 to 50 basis point rise in rates on over $30 billion in cash and equivalents in the first two calendar quarters of 2010.  Even a 10 to 20 basis point rise means real dollars to the bottom line.

         
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    Posted: 14 December 2009 10:32 AM #6

    How about spending some of that cash horde grin

    With Google trying to move into Apple’s territory and market pricing for good companies in the doldrums maybe Apple will get on the M&A train.

    I have a couple which I hope Apple is looking at.

    ARM for their processor IP
    TomTom for the TeleAtlas maps
    InterDigital for their mobile baseband IP

         
  • Posted: 14 December 2009 10:52 AM #7

    pats - 14 December 2009 02:05 PM


    On number 3.  I don’t see the near term impact. At best a Verizon Iphone will be added after 4.0 launches on ATT.  ATT will not be punished for supporting Apple.  They will have exclusive thru the summer launch.  My bet is on a late 3rd quarter launch on Verizon to coincide with the likely cycle for a revamped Droid from Motorola.  The rest of the list is a good reason not to jump out before the quarterly results.

    I do see a Verizon deal in the second half of the year. In the first half of the year we’ll all be busy with fascination over the tablet. The Droid can’t carry Verizon to success against AT&T in the smartphone wars. It’s been expensive to introduce and will continue to be expensive in an effort to push sales. As more Android 2.0 OS-based phones come to market the Droid loses its appeal as a flagship product.

         
  • Posted: 14 December 2009 11:42 AM #8

    With the possible exception of number 10 (interest rate changes), the rest of the other proposed drivers are ordinary course.  Every year Apple is firing on all cylinders coming out of the holiday quarter, and there are always product refreshes coming down the pike (note I didn’t include a new iPhone because this is ordinary course). 

    The problem historically for AAPL in the first two quarters is that all this ordinary course goodness is built into the price.  Because investors don’t see any near-term pop opportunities, the first several months of the calendar year are a good time to sell and not particularly a good time to buy, hence more selling pressure than buying pressure, so the price goes down. 

    This time, there are four major pops coming, all outside the ordinary course of business.  Some may not happen at all, some may come later, but as a prospective AAPL buyer or seller early next year, all four of these potential pops have to be top-of-mind.  That’s rare for AAPL for that time of year.