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Chuck Jones’ career has spanned twelve years as an equity analyst, sixteen years in various roles at IBM and most recently as a Wealth Strategist with Northern Trust. At Northern Trust he developed and implemented a go-to-market strategy to introduce Investment Management and Trust Services to... More
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  • Apple: NAND Pricing Weakness Good For Margins

    Apple (NASDAQ:AAPL) guided to 41.5% gross margins in the June quarter, down from 47.4% in the March quarter. While we know that Apple is very conservative with guidance since it has exceeded its gross margin guidance by at least 230 basis points for the past fifteen quarters Digitimes is reporting that NAND pricing continued to slide in the second half of April.

    While it is still early in the June quarter this is an indication that Apple should meaningfully exceed its gross margin and EPS guidance of $8.68. I am currently estimating a gross margin of 45% and EPS of $11.65.

    Disclosure: I am long AAPL.

    Tags: AAPL
    May 04 12:49 PM | Link | Comment!
  • Apple iPad Lead Times Improving

    I have been tracking Apple's (NASDAQ:AAPL) new iPad availability in all of the countries that Apple has retail stores. The lead time for the new iPad showed better availability on Wednesday, May 2, with five of the thirteen countries where Apple has stores improving to 3-5 business days.

    Here is a synopsis of iPad lead times:

    March 16: 2 to 3 weeks in 8 countries (First shipment)
    (US, UK, Japan, Canada, Australia, Switzerland, Germany, France)

    March 21: 1 to 2 weeks in 8 countries

    March 24: 1 to 2 weeks in 3 additional countries (Italy, Spain,

    April 20: 5 to 7 business days in 5 countries (US, Japan, Canada,
    Australia, France)
    Hong Kong added with 1 to 2 week availability

    April 27: France back to 1 to 2 week availability

    May 2: 3 to 5 business days in 5 countries (US, Japan, Canada, Australia, Hong Kong)

    A way to get a read on how the new iPad is doing is to check the percent of traffic it generates versus the iPad1 and iPad2 as measured by Chitika. On May 2 about 11% of all US iPad traffic was on the new iPad.

    Through March 2012 there have been 67.1 million iPads sold and my initial estimate is that Apple could sell 16 million iPads in the June quarter. This would be a 73% year over year increase and 36% higher than the March quarter. While these are lower than the growth rates after the iPad2 was launched a year ago this quarters growth is coming off of a higher base (11.8 million in the March 2012 quarter vs. 4.7 million in the March 2011 quarter). Depending on its introduction to China (Apple could be waiting for a resolution to the Proview suit over the iPad naming rights in China), increased corporate and educational demand my estimate is probably more biased to the upside vs. downside.

    Disclosure: I am long AAPL.

    Tags: AAPL, Long idea
    May 02 4:00 PM | Link | Comment!
  • Apple Benefits From Nokia’s Dramatic Smartphone Shipment Decline

    Note: This was posted after Apple announced earnings due to it being hung up in review. I thought it may still be of interest.

    Apple (NASDAQ:AAPL) should continue to benefit from Nokia's (NYSE:NOK) and RIMM's (RIMM) continuing problems in the smartphone market. While Nokia could make a comeback with Microsoft's new Windows Phone software the reviews of the new Nokia Lumia phone have been lackluster.

    On Thursday, April 19, Nokia announced that it has incurred losses in the March quarter that were greater than expected due to competitive challenges and seasonality.

    Since seasonality shouldn't be much different from one year to another I would attribute the shortfall to Apple, Samsung and low-end Asian competitors. Nokia announced that it had only sold 11.9 million smartphones in the March quarter vs. 24.2 million a year ago, a decline of 51%.

    This is another indication that Apple could have had a strong iPhone quarter with my estimate being 39 million iPhones vs. sell-side analysts around 30 to 31 million and I believe the buy-side at 34-35 million.

    Disclosure: I am long AAPL.

    Additional disclosure: I have no position in Nokia (NOK) or RIMM (RIMM) and do not plan to initiate any positions within the next 72 hours.

    Tags: AAPL, NOK, BBRY, long-ideas
    May 02 12:13 PM | Link | Comment!
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