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Wouldn't investing be simple if the past simply repeated itself. Traders could take positions based solely on charts, investors could choose long-term stocks with computer programs, and a simple understanding of previous market trends would be sufficient to predict the future.

While the S&P 500 and its tracking exchange traded fund, SPY, has rallied over 20% from the lows of last year, and market leaders such as GE and Caterpillar (NYSE:CAT) have rallied over 30% from the lows of last year, Apple (NASDAQ:AAPL) is up over 30% this year alone.

(www.thestreet.com)

I've written several recent articles about Apple. I recommended shorting Apple at around $630 a share in early April, going long the stock in early May, and I most recently wrote last month that Apple's likely next move would be to consolidate between $550 and $600 share. While all traders have good calls and bad ones, these calls were correct.

Apple has been by far the best performing major company in the U.S. stock market over the last year, and the share price has more than doubled over the last year and a half.

This is why I find it so interesting that Apple longs are so complacent about the company's recent earnings report.

Obviously, anyone who follows Apple or the market in general has known for some time that the company is planning its blockbuster iPhone 5 launch sometime in the Fall or Winter of this year. With the company recently reporting nearly 45% year-over-year growth in demand for iPads, strong PC growth of nearly 2% on significant sales in the education field, and only a moderate and largely expected miss in iPhone sales, the simple narrative of Apple experiencing seasonal weakness in the summer prior to its usual fall and winter rally seems firmly intact.

Herein lies the problem in my opinion. Apple longs have become so confident in the company's ability to generate huge revenue with new iPhone launches that the significant recent deterioration in consumer spending trends in China and the EU are being largely ignored.

The growth outlook in the EU has been weak for some time, and companies heavily levered to China's real estate and construction sector have sold-off hard over the last year, there are strong recent signs of a new and significant slowdown in consumer spending in these two countries. Companies such as McDonald's (NYSE:MCD) and Phillip Morris International (NYSE:PM) saw significant above expectation declines in consumer spending in the EU last quarter, particularly in less industrialized countries such as Greece and Spain.

A number of companies such as Las Vegas Sands (NYSE:LVS), which reported record first quarter earnings earlier this year, also reported a significant recent slowdown in consumer spending in Macau, and YUM Brands (NYSE:YUM) recently reported below expectation growth numbers in China as well.

China and Europe have been weak for some time. Still, the recent earnings reports of companies whose growth numbers in the EU and the world's second biggest economy have been fairly strong over the last year showed significant recent deterioration this past quarter.

This is why I question the simple theory that Apple's stock performance will mirror its move last year, with the stock remaining weak for much of the summer prior to the company's incredibly strong iPhone 4s launch. History seldom repeats itself in exact form. What is most interesting to me about Apple's significant recent earnings miss and the company's weak guidance for the third quarter, is that estimates for the fourth quarter have not been adjusted at all.

Essentially, even though Apple now gets nearly 20% of its revenue from China and the company's sales in the EU and China weakened significantly over the last several months, most analysts have not adjusted earnings expectations for the fourth quarter at all. Consensus estimates for the third quarter are at $8.62 a share, still significantly above the company's recent guidance for $7.50 as share in likely third quarter earnings. Estimates for the fourth quarter are largely unchanged, with the consensus estimate calling for $15.32 a share in likely fourth quarter earnings, down from the previous estimate of $15.52 a share in likely earnings that stood three months ago. Analysts have dropped estimates for the third quarter for the world's largest company by 20%, but these same experts have adjusted earnings for the fourth quarter by less than 3%.

This why I question the bullish and fairly simple narrative that Apple will simply remain weak until the fall, and then once again rally massively on the company's latest blockbuster product launch. Traders and investors have known for some time that the company's iPhone 5 would be launched some time in the back half of 2012, and analysts are now basing estimates for the iPhone 5 off of the company's iPhone 4s launch last year rather than Apple's guidance or the company's recently disappointing earnings report. Essentially, earnings estimates seem to be based on the best case scenario for iPhone 5 sales, and it is more than likely that Apple's stock is also likely pricing in the best case scenario for the company's planned blockbuster launch.

To conclude, with consumer spending trends decelerating significant in the EU and China over the last several months and Apple now getting nearly 20% of its revenues from Asia, it is far from certain that EU and Chinese consumers will upgrade phones less than a year after the iPhone 4s was launched. If consumers in the EU and China are trading down and spending less on fast food and cigarettes, Apple's sales growth in the Eurozone and the world's second largest economy are likely to be significantly impacted over the next year. Apple now gets over 50% of its revenues from the iPhone, and the iPhone sales will be the primary revenue driver for the stock over the next couple years. If Apple's iPhone 5 launch is even moderately disappointing, the company will likely face significantly slower growth and deteriorating margins for some time.

Source: Strong Signs Apple Investors Are Naively Pricing In Robust iPhone 5 Sales