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Michael Blair
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I retired as CEO of an Automotive Parts supplier, and manage an investment portfolio for myself and family. I have a BA in History from Royal Military College of Canada and an MBA from the University of Western Ontario. My first career was as a fighter pilot in the RCAF, and, following my MBA I... More
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  • Apple's Q1 Due January 27, 2015 With E.P.S. Likely About $2.50 Per Share

    Apple (NASDAQ:AAPL) will report its Q1 results January 27, 2015. They are expected to beat last year's December quarter by a wide margin. Last year, Apple turned in sales of $58 billion.


    Sales of the popular iPhone 6 are where the action is this year, with estimates as high as 70 million units or more despite the higher prices Apple is charging for the larger screened devices. Sales of 70 million units at $650 could increase iPhone revenue from $32.5 billion last year to $45.5 billion this year. I think that likely.

    iPads are another story. While I see many observers calling for iPad sales in the 20 million range, I believe they will have trouble getting past 15 or 16 million with many buyers opting for an iPhone 6 Plus instead of an iPad and an iPhone. Fifteen million units at $400 average selling price would generate $6 billion revenue rather than the $11.5 billion turned in Q1 2014.

    Macs are selling well by all accounts and sales of 5.5 million units are within reach with ASP's somewhere around $1,300. That is a tidy $7.1 billion in revenue and a nice jump from $6.4 billion in the fiscal 2014 period.

    iTunes, software, service and accessories have been growing and I think a reasonable guess is for $6.8 billion of revenue from these sources, nicely above $6.2 billion in 2014.

    Add it up and you get sales of $65.8 billion for Q1 2015. Margins should improve with a richer mix of larger iPhones and could easily reach 39% (Apple guided to 38.5% at the high end). Higher margins are possible, but the headwind arising from the strong U.S. dollar may mute any gain that is not offset by Apple's hedge program.

    I would think the U.S. - Yen shift in the quarter significant and not likely fully hedged. If Apple's treasurer could call that degree of a foreign exchange shift accurately, Apple could make a lot more money on foreign exchange than by selling devices.

    (click to enlarge)


    Corporate expenses of $5.5 billion and a tax rate of 26.5% would bring net income to $14.8 billion or $2.51 per share assuming 5.9 billion shares outstanding.

    It is a week to go and as most readers know, I am bearish on the stock. The $2.51 earnings will be the high water mark for the next three quarters if history is any guide, and net income for the year as a whole likely to fall in the $7 to $9 range. If so, it is hard to see a compelling case for the stock staying much above $100 unless growth is sustained. That seems unlikely to me.

    I am short the stock through puts.

    Disclosure: The author is short AAPL. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

    Tags: AAPL, short-ideas
    Jan 22 10:22 AM | Link | 3 Comments
  • What Mobile Platform To Do You Consider To Be The Best? had a recent poll on smartphone operating systems. They asked the question "Which mobile platform do you consider to be the best?

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    The survey has been going on for one month and has had about 6,000 responses. Seeking Alpha readers should all take the poll since the mobile market of the future will undoubtedly reflect consumers' preferences for not only the devices but also the platforms they run under.

    I took the poll and selected the Windows platform. No surprise to most of you - it was not the platform of choice for most who replied.

    If the poll has any guidance, it should assist readers to decide whether to buy, hold or sell short Apple (NASDAQ:AAPL); Google (NASDAQ:GOOG); Microsoft (NASDAQ:MSFT); or, BlackBerry (NASDAQ:BBRY).

    Register your vote. Then post your comment. I won't spoil the fun but the poll showed one platform with 65% of the votes; one with 22% of the votes; and, the other two were "also ran's" with less than 10% of the votes in each case.

    In the long run, the best investment in this space may well be the company with the most respected platform, whether deserved or otherwise.

    As most of you know, I have a very small long position in BBRY and have a short position in AAPL. Neither has worked out well to date.

    Disclosure: I am long BBRY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Additional disclosure: I have a short positions in AAPL

    May 20 8:00 AM | Link | 6 Comments
  • Some Days You Have The Wind At Your Back

    The universe is unfolding as it should today.

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    Disclosure: I am long PGH, LSTMF, DRGDF, IAG, COSWF, PWE, ERF.

    Additional disclosure: I am short CRM, CP, WHR, AAPL

    Apr 23 12:45 PM | Link | 33 Comments
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