AAPL

Apple: Capital Allocation Can’t Shake Bearish Sentiment

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Best Ideas Newsletter holding Apple (click ticker for report: ) posted solid results Tuesday afternoon.  Apple exceeded consensus earnings expectations earning $10.09 per share versus an expectation of $10.07. Revenue grew 11% year-over-year to $43.6 billion, exceeding consensus estimates by over $1 billion. Free cash flow totaled $31.6 billion during the first 6 months of the fiscal year, an increase of 10% compared to the same period a year ago. Importantly, the company also announced expanded intentions to repurchase shares and boosted its dividend 15%. The firm’s buyback was raised to $60 billion (from $10 billion), and it will also use $1 billion annually to offset restricted stock grant dilution. Apple sneakily increased its share count 5% over the past … Read more

Strong Headline Results From Apple

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Best Ideas Newsletter holding Apple (click ticker for report: ) posted solid results Tuesday afternoon.  Apple exceeded consensus earnings expectations earning $10.09 per share versus an expectation of $10.07. Revenue grew 11% year-over-year to $43.6 billion, exceeding consensus estimates by over $1 billion. Free cash flow totaled $31.6 billion during the first 6 months of the fiscal year, an increase of 10% compared to the same period a year ago. Importantly, the company also announced expanded intentions to repurchase shares and boosted its dividend 15%. The firm’s buyback was raised to $60 billion (from $10 billion), and it will also use $1 billion annually to offset restricted stock grant dilution. We’ll provide full analysis after the conference call.

Netflix’s Subscriber Growth Remains Fantastic

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Content distributor Netflix (click ticker for report: ) kicked off 2013 with strong growth in revenue, subscribers, and earnings per share. Revenue jumped 18% year-over-year to $1 billion, roughly in-line with consensus estimates. On the other hand, earnings per share generously exceeded estimates, moving from break-even to $0.31 per share. Further, the company added 3.05 million new streaming subscribers while losing only 3% of domestic DVD subscribers. Both domestic streaming and international streaming posted strong improvements in profitability and revenue. Domestic streaming revenue increased 26% year-over-year, with lower content costs driving a 630 basis point increase in operating margins to 20.6%. This resulted in an 82% increase in operating profit. In his candid letter to investors, CEO Reed Hastings cited strong … Read more

iWatch? iTV? Apple’s Innovation Death a Media Construct

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Although it remains very much a head-scratcher to us, shares of Apple (click ticker for report: ) have continued to fall towards Jeff Gundlach’s $425 price target. We’ve been mostly silent on the company’s share slide, because, frankly, we don’t think the fundamental story has changed at all. Recent news regarding the potential of the iWatch and the long-awaited iTV has piqued our interest, as we believe both could add upside to earnings. Apple’s design genius John Ive, known by some to be as integral to Apple’s design as the late Steve Jobs, has spent years dissecting Nike (click ticker for report: ) and other watches. We could speculate all day about the possibilities of an iWatch, but we find … Read more

AT&T Sells Just a Couple of iPhones…8.6 Million!

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Wireless carrier and cable provider AT&T (click ticker for report: ) announced satisfactory fourth-quarter results Thursday afternoon. Revenue grew just 0.2% year-over-year to $32.6 billion, which was stronger than the consensus had anticipated. Earnings, adjusted for significant expenses, jumped 10% year-over-year to $0.44 per share, slightly below consensus expectations. Perhaps the most significant read-through from the quarter came from AT&T’s iPhone (click ticker for report: ) activations. The company activated approximately 10.2 million smartphones during the fourth quarter. Out of those 10.2 million phones, 8.6 million were iPhones, or 84.3% of total smartphones. The activations might suggest the iPhone is gaining popularity in the US. Contrary to the mainstream spin, Apple is doing quite well in the smartphone space. Solid … Read more

Apple’s Fiscal First-Quarter Weekly Revenue Up 27%; Bottom-Line Earnings Beat; Street Is Off Its Rocker

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Legendary investor Warren Buffett was taught by his mentor Benjamin Graham about the mood swings of Mr. Market. Buffett expanded this idea, famously characterizing Mr. Market as schizophrenic. It appears the latest bout of irrationality has been extended to Apple (click ticker for report: ). Apple is the most valuable company in the world, the most widely held, and the most watched. It has possibly more metrics to “meet” than almost any other firm. During its fiscal first quarter, Apple easily exceeded consensus bottom-line estimates with earnings of $13.81 per share, though that number was down compared to a year ago due to calendar timing (the most recently-reported quarter of 2013 was 13 weeks while last year’s quarter was 14 … Read more

Channel Checks at Apple Store Speak to Continued Strength

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This weekend (on the evening of January 19, 2013), we took a trip to a local Apple (click ticker for report: AAPL) store to assess traffic trends and gauge the level of ongoing interest in the iPad maker’s products (post-holiday season). We didn’t see any slowdown in traffic, and the location we visited was very well attended. Though the Schaumburg, IL (Woodfield) locale is one of a large number of Apple stores in the US, we have no reason to believe that it is not indicative of traffic trends and general interest in Apple products at other retail Apple stores across the country. We’ve also included a snapshot of an adjacent, neighboring (and vacant) Radio Shack (click ticker for report: RSH) located just a few feet from the pictured Apple store … Read more

Is Facebook’s Move Fundamentally Driven?

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After bottoming in early September last year, shares of Facebook (click ticker for report: ) have been off to the races, climbing back to over $31 at a rapid pace. The company is still trading below its initial offer price, however. The big jump has been (in part) a result of the company reporting a tremendous jump in mobile revenue, and thus far, we’ve seen Facebook prove to be one of the best companies at profiting from the rapid shift from PCs to mobile. Without question, we think the good news about mobile revenue is a positive shift in fundamental data. However, we do not think such news is worthy of the incredibly positive price action. We continue to believe that fast-money traders and speculators … Read more

Is a Cheaper iPhone in the Works?

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On the iPhone’s (click ticker for report: ) 6th birthday, rumors are swirling that Apple is working on a cheaper iPhone to compete with the dozens of smartphones its competitors release every year. Since shares have fallen nearly $200 from the mid-September peak, investors and other market participants seem worried that Apple is losing its luster, and that consumers prefer the Galaxy SIII and the Note. Plus, market share data out of both Europe and China has been relatively bearish. Our confidence in Apple hasn’t been shaken, as we focus on what’s far more important for a company than market share: profits. We think investors are reaching to explain the recent share price decline instead of acknowledging that the company’s … Read more

Dear Valuentum Member

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In such a short time that you’ve known us, you have seen us do so much: from generating more than 25 percentage points of outperformance in our Best Ideas portfolio since inception (May 2011) to delivering on our high-single-digit return goal of our Dividend Growth portfolio during 2012 to the Valuentum Dividend Cushion score predicting the dividend cuts of JC Penney (JCP), SuperValu (SVU), Roundy’s (RNDY), and others. You’ve seen us identify a triple in EDAC Tech (EDAC) and predict the bankruptcy of the parent of American Airlines (AMR). These are tremendous accomplishments. There’s an old saying in the market that if your winners are outperforming your losers, you’re doing a great job. Through November of last year, 87% of … Read more