In a popular investing newspaper’s list of 100 stocks that they think have great fundamentals and may be at good buy points. It checks in @ number 86.

In the list view it mentions the 3G issue “Infineon chip blamed for 3g problems”
The text under the chart view is more interesting. It reads “Double bottom or big cup-with-handle w/ buy point at 192.34″. That is the same buy point they had mentioned almost 2 months ago.

I don’t see anything like a double bottom. Encouraged to see mention of cup with handle still. I posted a week or so ago I was wondering if that hard dip and rebound on the the Steve health scare had broken the cup with handle. I guess IBD is a little unsure, but not in the “broken” camp.

The computer manufacturers group checks in at a very respectable 27 out of 197 industry groups they track. Looks good, but no idea if this will help. Better than bad press, IMHO.

Long term recommendation: 

STRONG BUY below $186 
buy from $186 to $214 
neutral from $214 to $246 
sell above $246 

Guidance for Q4 was slightly weaker than expected, but this is more than made up by huge iPhone upside. 

Longer term gross margin guidance of 30% is actually 200-300 bp higher than management’s most recent comments about their long-term GM target (27-28% from last year’s F2Q07 conference call in response to a question by Gene Munster). So I’m only slightly revising my long-term GM estimate from 33.5% to 33%, at least until more is known about these new revolutionary products. 

Once again I keep on raising iPhone estimates as more data comes through, now at 25.4 and 32.4 million units for Fiscal 2009 and 2010, respectively. 

3mo ending on Sep-2008: 
Apple gd: $7.80b rev, $1.00 eps 
Analysts: $8.08b rev, $1.11 eps 
My estmt: $8.43b rev, $1.29 eps 
2.86m Macs, 6.5m iPhones, 12m iPods 

12mo ending on Sep-2009: 
Analysts: $40.43b rev, $6.05 eps 
My estmt: $45.56b rev, $7.46 eps 

Valuation (25 x fwd eps): 
Sep-2008 (fair value): $186, + 6% upside (Sep-2009 eps $7.46) 
Jun-2009 (1yr target): $246, +40% upside (Jun-2010 eps $9.85) 
Analysts mean target : $210, +19% upside 

http://stashbox.org/browse.php?q=user%3Adeagol+aapl 

I just completed the paperwork for switching from Comcast to Verizon FIOS, going from the high end fast comcast service at 15Mb to 20Mb on FIOS that doesn’t share the wire with the kids on our block.

What does this have to do with Apple?
Going through the ordering process with the Verizon guy on the phone.
Want the movie package? Yup.
Internet? Yup, but your fastest.
Well, we’re 10Mb but you can go 20 for an extra 10? Yup, I want that.
HBO and Showtime group package? Yup, I want it.
Do you have an HD set? Yup, need the HD package, I want it.
One DVR? Yup , want that.
You can get up to three free boxes for regulatr tv’s? Yuo, want all three. Give’em to me.
We have a package for virus protection, spyware, popup-blocker the works? Nope…. don’t want it.
What? You don’t want that? Nope. I have Apple quipment, I don’t need no stinkin internet provider protection…..

Pretty funny.
Bought just about everything the guy had but his MicroSoft protection plan.

Apple’s most recent quarterly report shows that the company holds $20 billion in cash (behind only XOM and MSFT). Historically, they have not needed that cash for acquisitions - their pattern has been buying small companies purchased for very strategic reasons.

With the rate that AAPL is building cash and that XOM spends cash on dividends and share repurchases, Apple could pass XOM and have the largest corporate bankroll in what.. 3 years? Certainly in 5 years I think.

I think beyond a certain amount, which I think has passed, wall street dislikes the huge cash horde and gives the stock no additional appreciation. 

I’ve speculated one looming reason that Steve may feel more compelled than ever to pile up cash is the growing battle over bandwidth: Verizon, AT&T, Comcast etc making moves to throttle large downloads / punish heavy use. That is a potential big road block for the download HD movies model, if Steve really wants to grow that business. It loses all advantage if you have  pay a “toll” to the providers of a few dollars per download above the current cost. Rentals by mail or driving to blockbuster looks much better if the price goes up 30% on downloads.

He may be thinking he is going to have buy his own “pipes” somehow. Partnering with someone in the new 700 mhz spectrum (the old TV spectrum) perhaps? I don’t know. It could be a problem if the internet providers keep pushing this direction, though.

Just think though if every Apple TV, Notebook, Desktop, iPod Touch and iPhone had a chip included that got high speed wireless internet with the coverage area of broadcast TV (95% of US households I think) FREE. Talk about a game changer.  Say it cost 15 Billion to set up the network and increased the cost of every device $30 for the new chip (hurt margins a few %).  Would that expense be worth it  if it meant market share of 50% of the US in computers within a couple of years,  huge surge in Apple TV from a hobby to a dominant player, and made every other handheld computer/ smart phone look like a buggy whip? I think so.  

AT&T got a big chunk of the spectrum.  I think it would probably play out as paying them a huge amount of money / partnering with them / cutting them in somehow to compensate them from lost revenue of data services they now get, if it were to happen. 

Just wild speculation, but that could be the margin hit Apple was thinking about in 2009. The old TV spectrum becomes available Feb, 2009. 

Note: I have very limited knowledge of what is possible over the 700 mhz networks, the technology required, and what happens with regard to WiMax now, etc or the actual initial costs of setting up a nationwide network. Just guessing. Also, I believe such a chip would only be useful in the US. How would Apple handle that? Two sets of every product, one for the US, one for international? Or just take the hit having the chip in products that go overseas that won’t be used?

  Just some random thoughts about the future, the statements from Apple management about margins, and the huge cash pile. I do know it requires a new / different chip not in any AAPL devices currently (thanks M Paquette).

AAPL is still not in a major investing newspaper’s weekly 100 list of top rated stocks at possible good buy points. It hasn’t been in since June of 2008. I think we’ll need a heavy volume up day or two, and the 50 DMA (about 2 bucks overhead) to start working as support again before it will reappear. Maybe next week.

The computer manufacturers industry group checks in @ a respectable 27 out of 197 industry groups. It is lead by DELL, then HPQ, then AAPL. While AAPL scores much higher on fundamentals via their ranking system, both DELL and HPQ are technically much stronger - both have climbed over and hold their 50 DMAs. DELL in particular is strong, with a technical strength rating of “B”. AAPL is a “D” by comparison. RIMM is number 5 in this weeks list.. and  made a huge move up Friday into an unfilled gap down. A few dollars more to go to fill it.

The oil and gas, ag and mining stocks that heavily populated the list a month ago are all gone.

About the cup with handle:

Refer to the above weekly chart ^.

IMHO, the jury is out on whether we broke our cup with handle pattern. I reread the section in O’Neil’s book, and there are some problems, but you have to consider the overall size of the base & the market conditions in which it formed. 

 The cup was very, very deep… so logically, to shakeout the weak players before it is able to break out, you need a deep handle. 22% is too big according to his book (the depth of the handle) but about 5% of that is that spike down on the “health scare” at earnings, that was total BS.. and reversed instantly intraday. Take that out, and the handle falls closer to a normal size for the deep cup.  

He is kinda iffy on how far down the base the handle should go in the book as well. I see “upper half of cup” as a positive to look for and “midpoint of handle is in lower half of cup” as a negative. Well, the handle on that fast drop took out the midpoint of the cup, but the midpoint of the handle on the AAPL chart is well within the upper half of the cup.  There are too many heavy volume red weeks in the cup as well…but then go look at a chart of anything from back then, and damn near everything had heavy selling.  NASDAQ, QQQQs, etc… and you don’t drop from 202 to 115 in a few weeks on light volume usually.

Spotting chart patterns like cup with handles and W “double bottom” patterns are as much an art as a science, and there are some grey areas that are subjective.  The only real way we’ll know is when the stock takes out 202 again finally,  and what happens next: a strong rapid climb of 20% or more, and the base worked and wasn’t faulty. Feel free to chime in and let us know if you think it is valid, or broken.

kylobbyist was nice enough to post the article below in the paper about AAPL’s strong growth in educational sales. It was put out available to non-subscribers.  It is a great read if you haven’t yet.

Nothing nasty in Barron’s this week either, almost no mention.

I was at work today. I work at a major national television company. 

I was in an edit bay deep in the underbelly of my very large building, somehow still getting reception. We were stuck for a particular idea when someone referenced a youtube video. There was a Dell PC in the bay and my colleague started to open Internet Explorer, blah blah. 

Before she could even type in the search words, I had my iPhone 3G out, searched YouTube and was playing the video for them. 

In unison they both (who are Blackberry users) said “I gotta get one of those things.” 

My point in relaying this story: Even though Macs are the bread and butter of the company, this iphone product is revolutionary. It’s not just hype.We already know this, but it further boosts my faith in the future of this company.

They are selling like crazy at first perhaps because of the hype. But I believe sustained growth will happen because it’s a great product.

And, they are cool.

In case anyone has been too busy to read the posts from last night, SJ sent an email to Apple employees yesterday afternoon about the problems with the MobileMe launch.  Little in his analysis of what went wrong is news to members of Applelot - our own analysis was spot on.

I needed a genius visit to help with a macbook question, so it was off to the Apple Store in Natick, Mass. 

The mall itself was busy the Apple Store was mobbed. This is a small store and there were at least 125 people in the store…not including the staff. Lotsa questions being asked about the phone..some people seemed to be picking up their phones and a number of people were coming in because of issues with their phones…from reception problems to mobile me problems etc etc…I tried to eavesdrop but the number of people in the store made the noise level very high and you can only be so obvious. 

There seemed to be an enormous amount of action around the ipods…lotsa young people in the store and a lot of people playing with the 3g demos. I heard the phrase “Check availability on the net before you come in” many times. 

My problem was dealt with quickly by a fully grown genius (over 40)…didn’t know they came fully grown. he even noticed a crack in my macbook frame that is virtually identical to the cracks on the white iphone and suggested that they woud replace the entire case as soon as I could be without my computer for a while. 

The store was so busy that I likely not have gone in if I did not have an appointment before I arrived…it was buzzin!