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  • Apple's Magical Mystery Year [View article]
    Skippy09:

    Thank you for your comment.
    Oct 27, 2014. 12:06 AM | Likes Like |Link to Comment
  • Apple's Magical Mystery Year [View article]
    2puttwo:

    On Saturday I was with a family member when he walked into an Apple retail store around noon local time and purchased a 16GB iPhone 6. Three people were in the iPhone purchase queue ahead of us and it took literally just a few minutes for the iPhone to be brought from the back of the store to be sold.

    There were no lines outside the store and we just walked in and purchased one. Although supplies may remain constrained through the western holiday season, I suspect Apple has contracted for much more production capacity than last year or at any time in the product line's history.
    Oct 26, 2014. 11:46 PM | Likes Like |Link to Comment
  • Apple's Magical Mystery Year [View article]
    391Banjo:

    I was attempting to be polite. I no longer publish share price targets for Apple. The reason for not publishing price targets is because the focus becomes the price target not the underlying data that supports the forecast.

    On a base case of $220 billion in revenue and a cautious estimate net income per revenue dollar this fiscal year remains fairly consistent with FY2014 results, the mentioned share price in your original comment would be within my broad share price target range.
    Oct 26, 2014. 11:37 PM | 4 Likes Like |Link to Comment
  • Apple's Magical Mystery Year [View article]
    User 16012202:

    There are a number of resources that will provide the current Street consensus estimates. I use Yahoo! Finance as a constant.
    Oct 26, 2014. 09:44 PM | 1 Like Like |Link to Comment
  • Apple's Magical Mystery Year [View article]
    391Banjo:

    Due in part to the company’s already massive market cap and tentativeness on the growth picture for FY2016, I can see Apple’s multiple contracting slightly this fiscal year. Revenue and earnings catalysts will continue to be more fully disclosed over the next few months including the release data for the Apple Watch line, the big data iOS apps being developed by IBM as well as the further development of new iOS-based services.

    As a constant, I use 15 times trailing earnings in my valuation forecasts. My focus is on net income growth as the primary driver of share price appreciation, not earnings per share.

    For long-term investors, how quickly Apple’s share price reaches a particular point is less important than the fundamental potential to increase net income over time.

    It’s possible the market could move the share price higher in anticipation of a strong holiday quarter for the company and it’s also possible the market could move the share price to $130 per share by this time next year.

    The share repurchase program and the timing of the repurchases will have some sway in the market’s near-term valuation of the company and consequently the share price. The more shares repurchased now in the range of the current share price, the more impact the repurchases will have on the share price moving forward.

    Please remember Apple averages the number of fully diluted shares reported at the end of each quarter. Throughout the period of the current $90 billion repurchase plan, provided shares are repurchased each quarter until the repurchases are completed, there will be at least slightly fewer shares in the fully diluted share count than the number of shares used in the quarterly eps calculations.
    Oct 26, 2014. 09:42 PM | 1 Like Like |Link to Comment
  • Apple's Magical Mystery Year [View article]
    Lopakaii:

    Thank you for your kind words.
    Oct 26, 2014. 09:21 PM | 2 Likes Like |Link to Comment
  • Apple's Magical Mystery Year [View article]
    Secular:

    Thank you for the quote below. I've been making this point repeatedly in the Braeburn Group discussions:

    "Also, without large margins and profits Samsung will not be able to afford its $14 billion a year Marketing, Advertising and Promotions budget on which so much of its success has depended, along with copying Apple’s designs and features as closely as possible."

    Samsung will remain a formidable competitor in the Android handset market. But other major players are emerging that will be challenging the South Korean conglomerate for revenue share and unit sales.
    Oct 26, 2014. 09:20 PM | 5 Likes Like |Link to Comment
  • Apple's Magical Mystery Year [View article]
    bjn & Camden:

    Apple primarily monetizes devices with services playing an important role in maintaining product pricing control. I don't see that approach to revenue growth changing anytime soon.

    I'm not looking to Apple Pay as a significant source of new revenue. I do see it as an attractive service for handset owners and a conspicuous new service that adds to the iPhone's overall value proposition for consumers.
    Oct 26, 2014. 06:11 PM | 5 Likes Like |Link to Comment
  • Apple's Magical Mystery Year [View article]
    cshoxie:

    Thank you for your comment. I do put a lot of work into each article.
    Oct 26, 2014. 06:06 PM | 3 Likes Like |Link to Comment
  • Apple's Magical Mystery Year [View article]
    I do expect some contraction in the multiple. In my view, net income is the primary driver of share price appreciation. Of course, the ongoing share repurchase program will increase earnings per share. But organic net income growth is more important than any other factor at this point in time.
    Oct 26, 2014. 06:01 PM | Likes Like |Link to Comment
  • Apple's Magical Mystery Year [View article]
    fritz68:

    Thank you for your comment.

    Growth in Apple's revenue in Greater China should be measured in years, not quarters. Apple is committed to increasing the number of retail stores in the region and China is adding millions of people to its middle class ranks every year.

    For modeling purposes, I'm using 15 times trailing 12-month earnings as a constant for my projections. I'm not expecting the market to increase Apple's multiple on a sustained basis. Please remember Apple's market is already over $600 billion. The recent $5 rise in the share price, for example, added nearly $30 billion to the company's value and $30 billion is already far more than the market cap of most enterprises trading on the US exchanges.

    This is among the reasons the share repurchases are important. In an ultra-low interest rate environment, share repurchases at this time not only keep the pace of the company's market cap below the rate of growth in the share price, it's also an excellent investment of shareholder resources. Today's share price will be seen as a relative bargain as we move through the next several months.

    Back to China which was the topic of your comment. Greater China eclipsing the Americas as Apple's largest revenue region would take several years to occur. China is Apple's second largest revenue country. But outperforming the US in revenue for Apple won't occur anytime soon. I don't forecast out more than eight fiscal quarters and I don't expect this to occur within that time frame.
    Oct 26, 2014. 05:08 PM | 1 Like Like |Link to Comment
  • Apple's Magical Mystery Year [View article]
    rrose39:

    Although some might erroneously consider Samsung a proxy for the Android handset market, there's intense competition throughout the Android handset spectrum for the South Korean conglomerate.

    Xiaomi, Huawei and others are poised to take Android revenue share and market share from Samsung over the next several months.
    Oct 26, 2014. 02:08 PM | 6 Likes Like |Link to Comment
  • Apple's Magical Mystery Year [View article]
    Camden:

    Thank you for comment.

    I expect the Wall Street analysts to gradually update their revenue forecasts as more catalysts for revenue growth are revealed including the big data apps coming to market through the IBM agreement and the release date for the Apple Watch line.

    Earnings per share is a moving target due to the ongoing share repurchase program. As revenue grows at double-digit rates this fiscal year (this will be the first year of double-digit revenue growth since FY2012), Apple’s R&D expenditures will consume a smaller portion of revenue than last year and the company will quickly ride down the cost curve on iPhone 6 production.

    Due to the ongoing share repurchase program and the fact that the reported number of fully diluted shares at the end of each quarter represents an average of the fully diluted share count in the corresponding period, both the pace of repurchases and the reported fully diluted share count at the end of each quarter are variables than can not be accurately forecast at this time.

    Rather, I’m focusing on net income which isn’t impacted by the timing of share repurchases. On let’s say 20% revenue growth, the pace at which Apple will ride down the iPhone 6 production cost curve, a lessening of the foreign exchange head winds as we move through the year and a favorable ASP mix on iPhone unit sales suggests net income could rise up to 25%.
    Oct 26, 2014. 02:02 PM | 7 Likes Like |Link to Comment
  • Apple's Magical Mystery Year [View article]
    Zipper0:

    Samsung's shares set new multi-year lows last week and are now trading at early 2012 price levels.

    There's intense competition for Samsung on China's mainland from Android-based handset makers and even Google's new handsets will take share in the high-end market from Samsung.

    This will be the biggest iPhone upgrade cycle in the history of the product line with strong unit sales growth in all five of Apple's geographic revenue regions.

    Please remember there's a robust market for pre-owned iPhone handsets. Although those handsets when resold won't be a factor in reported new handset sales, the resold handsets will increase the number of consumers engaged in Apple's global eco-system.
    Oct 26, 2014. 01:25 PM | 9 Likes Like |Link to Comment
  • Apple's Magical Mystery Year [View article]
    owens7301:

    There's much discussion in the Braeburn Group community as to whether or not Apple will announce an expansion of the current repurchase program in April. Absent other big uses of cash such as a major acquisition, the interest rate environment is favorable for more share repurchases and remains among the best ways to return capital to shareholders.
    Oct 26, 2014. 01:14 PM | 5 Likes Like |Link to Comment
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