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Sterne Agee's Shaw Wu does his best to defend Apple (AAPL -0.2%) in the face of its recent...
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Tuesday, October 9, 2012, 1:13 PM ETSterne Agee's Shaw Wu does his best to defend Apple (AAPL -0.2%) in the face of its recent selloff. Supply chain checks indicate iPhone 5 demand remains strong and production appears to be improving, though Wu thinks lead times remain fixed at 3-4 weeks. He believes a consensus for 17M-18M FQ4 (Sep. quarter) iPad sales could prove high, but argues there could be upside to FQ1 estimates thanks to the iPad Mini. (Nomura)
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Who wants a cute little iPad for their kids and relatives for Christmas?? About half of America.
Apple's price is based on infinite demand from a horde of affluent consumers that is dwindling along with the labor participation rate. Without this fantasy demand Apple is like a Bose or other boutique electronics purveyor.
There's no reason to upgrade once you have a smartphone that works, playing with apps all day quickly fades. The iPhone 5 is basically the iPhone 4. No one is that impressed.
Oh....is that why consumers are buying iPhone 5s faster than Apple can manufacture them?
http://bit.ly/QfzP2c
I bought at the very low of the day, on margin, because I am 100% certain AAPL doesn't belong at these levels and that the so-called "bad news" has been either wildly over-hyped or turned out to be no big deal. No more CHina riots. Maps aps problem no worse than "antennagate" which turned out to be a small temporary problem. No real supply line problems. As Wu says in this article, and he knows what he is talkinjg about, Apple has planned it this way. They get paid upfront for every iPhone or mini, and then they deliver when they deliver, between 1-21 days. In my neighborhood the wait is 24 hours. But even if it is 3 weeks, my local Apple store manager told me he hadn't witnessed a single customer who was angry or wanted to switch to Samsung. Every since one wanted an Apple and is willing to wait. So, bottomline, all these so called big "problems" amount to a hill of beans. They don't affect growth, revenue or earnings whatsoever. Or maybe 1% at the most. And the stock was already undervbbalued at $700, so now it is idrt cheap. BTW, the CNBC report from China today assuring viewers there are no supply line problems in China was the bottom. From there, it went up 14 points to close almost even. Now since Alcoa just beat the street, I anticipate a short covering rally and gradual recuperation into earnings, which should be a lot better than pessimists think. After all, they have about 17 days of iPhone sales earnings and remember Apple gets paid upfront whether they actually deliver the phones quickly or not. And next quarter should be the biggest and best in world corporate history - by far. So why would anyone short this stock now? Shorts got lucky in the past week, but the opportunity is over. From here on, it is all upside. I expect to leave the 600's permanently within 2-4 weeks.
Oh.
Wait.