Apple Fans Begin To Face Reality

by StockJockey

Monday, June 30, 2008 - 2:58 pm

Finding sensible commentary among the MacTard's who opine nearly daily on the fate of Cupertino can be a hopeless endeavor. While Apple, Inc (AAPL-NASDAQ) exemplifies the best of American style capitalism (despite options backdating and a lack of transparency, understandable given the competitive climate) the relentless ramp in the stock and cult of Steve turned the stock into a crowded long heading into the recent WWDC.

Pandering websites are loathe to write negative pieces, or even pose tough questions to their faithful readers, who rush like lemmings to the latest scoop or rumor posted on the internets.

And while iPhone 3G hype continues to spin out of control, Mac sales trends get very little ink. But there are some good things going on, fersure:

Over the last three years, Mac sales have been increasing around 50 percent YOY, approximately doubling for the same quarters in 2006 and 2008. 1.236 and 1.112 million Macs for the first two quarters of 2006 became 2.319 and 2.289 million Macs for the same quarters in 2008. If this trend continues, it means approximately 2.5 and 3.0 million Macs for the current and upcoming quarter. This would be unprecedented in the history of the company and would certainly distract from what has happened to the iPod. ars technica

But Apple's stock is on the verge of cracking important technical support levels, and the Apple faithful might want to consider that much of the good news in priced in, and the punk economy might at least temporarily slow the revenue ramp, or at least give investors a chance to pause on the way to Apple's eventual world domination.

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are technica
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iPhone 3G sales remain anyone’s best guess; RBC’s Mike Adamsky is looking for big things, but his bullish note today is being ignored:

3,600 respondents of RBC’s Technology Adoption Panel indicate unprecedented advanced demand for iPhone 3G. 56% of those who plan on buying a Smartphone in the next 90 days intend to purchase iPhone 3G, a massive jump from 35% in Mar survey. Firm previously raised their iPhone Q4/F08 shipments to 5.1M and 6.5M Q1/F09, up 181% Y/Y. They continue to estimate AAPL ships 14M units in CY08, 24M CY09. RBC Research Note

At times ars technica is as guilty as the rest of the MacTards, in terms of piling on the bull thesis, but Charles Jade today is showing some restraint, and deserves kudos for at least considering the fact that Apple’s stock is not immune to the sea of red swamping nearly everything on traders screens:

Apple likely sold somewhere between 600,000 and 1,800,000 iPhones in the second quarter. Let’s say one million iPhones were sold this quarter. That means 2.7 million would have been sold in the calendar year so far, and that means Apple must sell 7.3 million iPhones—more than have been sold in the past year—in less than six months to meet the goal of selling 10 million iPhones in 2008. While analyst predictions are from 9 to 15 million iPhones, no one really knows; there are too many variables and no past data.

Finally, what will this mean for AAPL? That’s a lot easier to predict. Despite being somewhat insulated from economic doldrums by an affluent demographic, the troubled economy has nonetheless had an impact on Apple’s stock price. Currently, AAPL is around $170 a share, off from its high of $200 six months ago, but up from a recent low of $120 four months ago. Assuming the larger economy continues to struggle, it will likely take some really good news to drive the stock to a new high. While Q3 will almost certainly be another record quarter for Apple, it won’t be until October when the first iPhone 3G sales numbers are reported that we see that happen.

I hope.

And while the iPhone 3G should easily outsell the Blackberry Bold, Apple’s earnings report on July 21st is not the main event. By the fall we should see the whites of Steve Job’s eye, and by late September or early October the stock might finally sniff out the extent of the iPhone and Mac’s success.

Marking time is not the strong suit of ADD-addled MacTards; but if the stock takes out $165 the rally is more likely to restart from $150 than $185.

Will the phone be a hit with women and Europeans? If they don’t win them over new 52-week highs might have to be tabled into 2009.

Apple’s stock has offered up an embarrassment of riches, but the objectivity of many MacTard’s is downright embarrassing.

Good company? Yes.

Good stock? Not recently. Talk is cheap; will the bulls make their stand? With the quarter ending and the stock testing two month lows, it is time to put up or shut up. Fading the WWDC was predictable. Is trading the stock long here, with a tight stop, the flipside?

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No time like the present...if you believe it will hold $165

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Update: Is Apple working on iPhone with a keyboard?

The move would likely increase their addressable market, overcoming one of the main objections many RIM users have to switching. Makes perfect sense to me, but not to MacTard’s.

This is a reason to buy the stock, but some people think it is a step backward.

Is Apple working on an iPhone with a physical keyboard? I hope not.
Venture Beat
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AT&T is trying to manage the deluge.

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What to expect from Apple’s 3rd quarter earnings report
ars technica
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Position

Comments:

mactards? seriously is this piece written by a monkey? i could think of a few names for you pseudo-analyst-bloggers as well.

Posted by on 06/30/2008 at 05:15 PM

MacTards, huh? Nice to see some good unbiased reporting there. Do you seriously think women and Europeans aren’t represented in the Apple fan base? Have you even been to an Apple Store lately? Check out the mall on a Tuesday at 3pm and the Apple Store will be the only store full of people. You don’t have to be a fan to see that. Spend some time in there, talk to the people, take a free class. They didn’t get where they got by looking at the business one quarter at a time. They built an inviting, friendly place, they built an inviting, friendly staff, and they sold inviting, friendly products that even 80-year-olds wanted to use and became emotionally attached to. People told their friends, and wanted more. iPod begat iTunes begat Mac begat iPhone. It took more than a couple of quarters to take the stock from $11.50 pre-splits (opening day of the iTunes Music Store) to where it is today.

Posted by on 06/30/2008 at 05:17 PM

Lines out the door, yes. Remarkable.

But this stock is where the Valley meets Wall St, and neither side really understands each other.

What is wrong with putting out a keyboard version?

Geeks know little about Wall St, and vice versa.

Unbiased? Venture Beat and SAI are unbiased?

Please. I might buy the iPhone, but the fawning stories don’t exacting provoke a vigorous debate over the stock’s merits.

I hope it holds and trades higher here, however.

Good company, good stock.

Ia a rarity in this market.

Posted by on 06/30/2008 at 06:02 PM

MacTard’s? StockJerkey? There is nothing wrong with Apple the company. The stock moves because stupid ANALS and Jack-a-butts like CitiDiti and Godfather Goldman. The SEC can’t monitor their own insider trading so why would they bother to look how the GODFATHER trades within. ANALS on one side of the building and HEDGE funds on the other - with a tin can with wire attached to communicate with each other so the NSA can’t record their honest behavior.

Apple will stink for a week (like the rest of the market) until the news about how they will surpass 20 million in iPhone sales this year. Once oil comes down the market will adjust - so I recommend buying Apple this week and also build a position in DTO - ultra short oil ETF.

Posted by HardHead on 06/30/2008 at 09:39 PM

HardHead

No nothing wrong with Apple the company. I will tune out Frommer and Siegel if that is ok.

How about some derivative plays on 20 million iPhones.

MRVL and BRCM should win big if AAPL gets to the 17 million FBR was talking about, or the 20 million u throw out. SNDK might be good long again...someday soon. NAND supplies should tighten if you are right.

SNDK and T have been no way to play iPhone long…

Stock needs to hold 200 day, and I will take it from there.

MacTard in Training,

StockJerkey

Posted by on 06/30/2008 at 11:06 PM

I am absolutely sick of bloggers and analysts alike screwing up the really important number. Steve Jobs’ original goal was to sell 10 million iPhones by the end of 2008 (from when it went on sale in June ‘07). He NEVER EVER said he would sell 10 million iPhones IN 2008. In any case, I still think he’s going to satisfy everyone, but get your damn numbers right!!

Posted by on 07/01/2008 at 08:44 AM

Screwing what up? I hope they sell a bunch of iPhones, but nowhere do I make an estimate. Some of these “pro” bloggers who write everyday about it are and these sellside analysts are running wild with estimates. The numbers above were ars technica.

These FBR and RBC numbers are out of control; nobody has a grip here.

And we have not heard from Gene Munster lately either.

There is a global bear market on, if any stock can trade in a vaccum it is Apple but things look dire again today.

Goo luck to you Sir, it looks like to 200 day moving average will get a stern test on the open.

Posted by on 07/01/2008 at 09:26 AM

Hey Mr Stock Jerkey - you are ok! At least you reply to us idiots. There is a HUGE audience here in Asia waiting for the iPhone. Every time I travel and play with my iTouch people are always stopping me asking how I like my iPhone. I tell them it stinks… there is no mic and they look at me like I’m stupid - lol

20 million should be no problem for worldwide sales when they release it to +70 countries. Korea is the exception with their stupid protectionist laws.

Posted by Hardhead on 07/02/2008 at 10:04 PM

ops forgot to mention the NAND chips:

Apple Gobbles Up 50M Samsung NAND Chips

http://hothardware.com/cs/forums/t/39191.aspx

8GB NANO coming soon?

Posted by HardHead on 07/02/2008 at 10:10 PM

I might get the iPhone myself, mulling it over.

yes the NAND situation is worth watching, SNDK is my proxy and the stock was up 6.24% July 2nd after printing 52 week lows.

This market is nasty though...and tough times in US. I have never seen people so morose.

scary

keep it coming hard head...good work

Posted by on 07/02/2008 at 10:58 PM