Category: Financial

Financial data and analysis

The end of exclusivity doesn't change the price operators pay for the iPhone

AT&T does not pay a higher price for iPhone exclusivity | asymco.

At the risk of repetition, there are three instances in conference calls that Apple management has stated that the iPhone has a fixed price for all operators and resellers.

The first was in October 20, 2009:

“So when you go from exclusive to multiple, you don’t change the charge to the carrier?”

Cook answered: “Correct.”

The second was a year later, October 18, 2010: Continue reading “The end of exclusivity doesn't change the price operators pay for the iPhone”

65% of Apple's sales came from iOS powered devices

The iPhone and iPad generated $15 billion of revenue last quarter. In addition, iPod touch generated about $2.3 billion, implying that iOS based devices were responsible for sales of $17.3 billion.

To put that in perspective I drew this chart which shows not only the sales by products but a rough representation of share of the two OS variants Apple uses to power its products.

Continue reading “65% of Apple's sales came from iOS powered devices”

Apple's Growth Scorecard: 63% average earnings growth over 16 quarters

In the last quarter Apple’s top line grew by 70% and the bottom line by 75%.

For a historical perspective, the following table shows year-on-year growth for products[1] and sales/earnings color coded with an arbitrary scoring range.

Continue reading “Apple's Growth Scorecard: 63% average earnings growth over 16 quarters”

A new era in financial analysis is dawning

The story of amateur out-performance has been getting more attention lately and that’s a good thing. Success emboldens more amateurs to try their hand at financial analysis. Transparency of methods and data demystifies a practice that is not as complex, and a skill that is not as hard to obtain, as it’s often assumed.

While, quarter after quarter, the gap between the two cohorts is calibrated, what we haven’t heard much of is a defense from the professionals.

That’s a bit strange given the negative impact some of the attention must be having on their reputations. This is why I was glad to see that Adam Satariano’s well-written piece finally got some reactions from the professionals. Continue reading “A new era in financial analysis is dawning”

Having added $20 billion last year, Apple's cash growth suggests total could top $100 billion next year

The following chart shows the value of Apple’s cash and cash equivalents for end of 2010:

Continue reading “Having added $20 billion last year, Apple's cash growth suggests total could top $100 billion next year”

The Cook Doctrine

We believe that we’re on the face of the Earth to make great products, and that’s not changing.

We’re constantly focusing on innovating.

We believe in the simple, not the complex.

We believe that we need to own and control the primary technologies behind the products we make, and participate only in markets where we can make a significant contribution.

We believe in saying no to thousands of projects so that we can really focus on the few that are truly important and meaningful to us.

We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot.

And frankly, we don’t settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when we’re wrong and the courage to change.

And I think, regardless of who is in what job, those values are so embedded in this company that Apple will do extremely well.

– Tim Cook, Acting Apple CEO, January 2009 FQ1 2009 Earnings Call

See also: Apple vs. Exxon-Mobil

Remembering January 14, 2008: The day the market lost faith in Apple

In a recent but recurring lament I asked why Apple shareholders are not being rewarded for the company’s growth. I pointed out that there is no fundamental reason why the company should receive such a low P/E multiple (about 18 ex-cash trailing and 10x forward while maintaining 70% earnings growth for over a year).

There were many objections in the comments. Most of them dealt with recent reasons why doubts might have arisen among investors: Android hegemony or some perceived lack of competitiveness leading to margin compression or some macro hangover from the recession.

In this article I argue that none of these objections hold water. My argument hinges on the fact that there is a precise date when Apple ceased being seen as an exceptionally valuable company and that date precedes any of the causes being suggested.

The day of disillusionment was almost exactly three years ago: January 14th, 2008.

Continue reading “Remembering January 14, 2008: The day the market lost faith in Apple”

Apple now trading at 10.5 times Deagol's fwd EPS estimate ex cash

Apple now trading at 12.9 times Deagol’s fwd EPS estimate (10.5x after excluding cash).

Deagol’s AAPL Model: Fiscal 1Q 2011 Final Estimates.

The revenue growth rate is expected to continue at 66% (following 61% and 67% for previous two quarters). Earnings growth is also expected to be maintained at 70% as it has been over the full calendar year.

Apple continues to be one of the cheapest stocks in the S&P 500 when measured by growth multiples.

After years spent thinking about it, I can only conclude that the company’s depressed valuation is due to the uncertainty surrounding the CEO succession plans.

Apple trading even with the S&P 500

From the Apple 10K:

The following graph shows a five−year comparison of cumulative total shareholder return, calculated on a dividend reinvested basis, for the Company, the S&P 500 Composite Index, the S&P Computer Hardware Index, and the Dow Jones U.S. Technology Index. The graph assumes $100 was invested in each of the [securities].

In other words, if you had invested $100 in the S&P 500 in September 2005, you would have $103 now. If you invested $100 in Apple in September 2005, you would have $529 now.

Apple investors should rejoice!

However, in terms of reward for earnings, consider the following graph: Continue reading “Apple trading even with the S&P 500”