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Sanjay Dalal is the CEO / Founder of OGoing Inc., Social Network that helps Small businesses, entrepreneurs, SMBs and startups promote and grow their business with innovative Social Media. Get your business going on Ogoing: http://www.ogoing.com Dalal is the chief innovator of... More
My company:
oGoing - Business Social Network
My blog:
Creativity and Innovation driving Business
My book:
Apple's Innovation Strategy
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  • Why Apple is a BUY at these levels!
    Apple (NASDAQ:AAPL) has corrected 8% from the 52 week high of $364.90 set on Feb 16, 2011. 

    Apple 8% Correction from high of $364.90 set on Feb 16, 2011

    Apple is set to announce record quarterly earnings this month on the heels of the hot launch of the iPad 2 and iPhone 4 on Verizon. The average quarterly estimate is $5.33 EPS on $23.18 billion of quarterly sales - a spectacular growth of 60.10% in earnings, and 71.70% in sales. Compare this to the quarterly earnings growth of 20.80% for the average S&P 500 company. Thus, Apple earnings growth is poised to be more than three times that of the average S&P 500 company. 

    Apple Muddied Picture

    Apple's current P/E is 18.69, while the forward P/E is only 12.56 - a significant undervaluation of Apple's future potential. What's wrong with this picture? Here are possible explanations: 1. Retail investor is holding out until after the earnings are announced 2. Current NASDAQ-100 rebalancing that reduces Apple's 20% stake to around 12%, and surrounding liquidation by funds 3. Steve Jobs medical leave, and speculation about his health 4. Downgrade by JMP Securities analyst.

    Apple quarterly milestones

    Apple has made significant announcements during the last quarter, which should translate to real growth in quarterly sales. Key Apple milestones include:
    1. iPad 2 launch in U.S.A on March 11
    2. iPad 2 launch in 25 countries on March 25
    3. Revved up MacBook Pro launch on February 24
    4. iPhone 4 launch on Verizon Wireless on February 2
    5. App Store growth juggernaut on January 22

    What will be Apple's earnings this quarter?

    Three earnings scenarios are plausible:

    1. Apple beats the average earnings estimates of $5.33 by at least 50 cents, and announces in the vicinity of $5.83 (40% probability).
    2. Apple makes the average earnings estimate of $5.33 (50% probability).
    3. Apple misses the average earnings estimate by 10 cents and announces $5.23 earnings (least likely, 10% probability).

    Accounting for all probabilities, Apple's mean earnings will be around $5.52 for this quarter; this will increase its prior 12 months earnings to $20.10. If Apple's current P/E were to remain the same at 18.69, Apple stock price should appreciate to $375.57.

    There you have it: If Apple delivers reasonable quarterly earnings of $5.52, and current P/E of 18.69 remains constant, Apple's stock price should jump to $375.57.

    What's the upside?

    Some analysts estimate Apple's earnings to be as high as $5.98.  If Apple were to kill its quarterly earnings, and make this high estimate, watch out from above! This will increase Apple's prior 12 months earnings further to $20.56, or fetch an Apple stock price of $384.27! (at the current P/E of 18.69)

    On an average, Apple has beaten the average earnings estimate by 20.3% during the previous four quarters. If Apple were to match this average, Apple could deliver whopping surprise earnings of $6.42. Imagine that! This will increase Apple's prior 12 months earnings to $21, or fetch an even higher Apple stock price of $392.49! (at the current P/E of 18.69)

    Thus, we have three possibilities of where the Apple stock price could be post earnings:
    1. $375.57 (for mean earnings of $5.52)
    2. $384.27 (for analyst high earnings of $5.98)
    3. $392.49 (for an Apple high earnings of $6.42)

    Analysts are even more bullish

    The mean target for Apple's 12 month price as per 46 analysts is $424.80, which is higher than all three possibilities above. The median is $440.00. The high target is $550.00, and the low target is $200.00. The high-low 12 month average target price is also $375.

    Apple Price Target Summary

    Mean Target:424.80
    Median Target:440.00
    High Target:550.00
    Low Target:200.00
    No. of Brokers:46

    Data provided by Thomson/First Call

    Caveat: Stock price drops after earnings

    Apple stock has not done well immediately after earnings announcement. On an average, Apple stock has actually dropped 4.48% post earnings during the previous four quarters, before it begins appreciating. This could mean that further downside to Apple stock is entirely possible after the earnings are announced this quarter. However, one can argue that Apple stock has already corrected significantly this quarter, and is priced for perfection post earnings to go up. 

    Where will Apple stock price end up after quarterly earnings call is anybody's guess... For instance, if Steve Jobs participates in the earnings call, the investors will welcome him and get excited about Apple's future. All eyes will be on the iPad 2 quarterly sales, Mac shipments, iPod sales, iPhone 4 growth and importantly, margins. If Apple were to hit a home run on all of these, Apple stock has nowhere to go, but up! We do know one thing for sure: At current price point of $335.06 as of Friday's close, Apple is quite undervalued! Even if the Apple stock remains undervalued and the P/E of 18.69 stays constant, it is reasonable to expect at least a 12% upside in the near term post earnings. $375 could be just round the corner!



    Disclosure: I am long AAPL.
    Apr 09 5:14 PM | Link | 3 Comments
  • Social Networking for Small Business
     
    "Experience the new OGoing!"

    Small Business Social Network - OGoing

    OGoing is new Social Networking for Small Business!

    Get started on the all new, most innovative Small Business Social Network and jump start your social media.


    Join Now: http://ogoing.com/joinogoing

    Create your own small business profile on OGoing, make new connections, promote your business with the latest social media, build deeper relationships, find new customers, and GROW your business!

    Multiply your opportunities with OGoing today...

    Share your SMB business news, events, services, deals, ideas and needs in real-time, live on the OGoing Small Business Community now... And it's FREE to join!

    7 reasons why you must join OGoing Business Social Network today:

    • VERY easy to use, and FREE to join!
    • FOR your business! Find and Connect with local small businesses instantly
    • PROMOTE your business! Market your products and services to your local markets
    • DO more! Find new referrals for your business, and post your business needs now
    • TALK more! Share real-time updates about your business deals, news and events
    • POWER your brand! Promote your brand on Twitter and Facebook, and cell phones
    • GROW your business! Expand your local contacts, brand and sales
    DRIVE your small business forward with OGoing Small Business Social Networking and Social Media! Go BIG with OGoing!

    Who should join?

    Small Businesses, Entrepreneurs, Startups, Professionals, Consultants, Small Business Sellers, Small Business Buyers, Procurement & Purchasing Managers, Government Consultants, SBA Advisers

    Get started on the all new, most innovative Small Business Social Network: http://ogoing.com/joinogoing

    OGoing - Drive Your Small Business Forward!

    Sincere regards,

    Sanjay Dalal
    CEO & Founder
    OGoing Inc.
    Connect with me:
    http://ogoing.com/sanjaydalal

    Mar 24 11:51 PM | Link | Comment!
  • Apple iPad 2 - Instant Hit
    New White iPad 2 source: Apple.com Apple (NASDAQ: AAPL) is the number one technology company in the world!

    iPad 2 has three things going for it which will make it an instant success!

    1. Price - Very, very attractive starting at $499! Believe me, as the current user of iPad, this is a screaming deal! I need to upgrade mine, soon! None of the new Tablets such as those from Motorola and Samsung can match this drop-bottom price. Apple has done something really great with the iPad line for which it doesn't get much credit - "Apple has made this amazing device very affordable for the average consumer!"

    2. New Powerful Features (and looks) In particular, the all new Video camera and Faster Processing! Current iPad is really fast... But with dual processors, the additional performance will come in handy for multi-processing and running all those powerful business and entertainment apps. And did I mention that the new iPad is thinner, lighter, sexier and available in a very cool white color. I love my black iPad!

    3. Apps! Apps! Apps! Apple has upped the ante on Built-in Apps including FaceTime, Photo Booth, enhanced Mail, Video, and the iPad finder (no more losing your iPad). More importantly, there are now over 65,000 iPad dedicated Apps! Some of my favorites are the Project, Wall Street Journal, Pandora, Kindle for iPad, YouTube, Netflix and OGoing. I also enjoy many of the games on the iPad... There are apps for Business, Communications, Entertainment, Productivity, and every industry... "There's an app for that"

    Why I love my iPad? I find that my iPad is very easy to use, performs extremely well, never crashes, is ON in seconds, and works all the time! I enjoy the music, movies, photos, surfing and the entertainment features. I love the fact that the iPad runs for 10 hours without having to recharge! My daughter loves it too for the many games, drawing, and the intuitive, easy touch interface! I do have a wish list for Steve Jobs and Apple - a. File folders to store docs, photos, files b. Flash video support. c. USB or external drive

    Check out Apple's Innovation Strategy, and learn to innovate like Apple and Steve Jobs, CEO and co-founder, chief innovator: http://www.innovationmain.com/Apple-eBook.html

    What's amazing is that the tablet market surpassed the mature eBook reader market owing to the Apple iPad in 2010! IDC is predicting shipments of roughly 50 million tablets for 2011, with Apple owning 70%-80% market share, or shipping at least 35 million iPads.

    Disclosure: I am long AAPL.
    Mar 13 5:56 PM | Link | 1 Comment
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