Apple's Shares Are Approaching A Bottom
by Saibus Research
When Apple Inc. (AAPL) recently announced that its revenues missed consensus expectations by about .4%, all of Apple's detractors let out a collective cheer that was so loud; it broke the sound barrier up here in Boston. Although we were disappointed that Apple's management had issued a disappointing Q1 2013 outlook after releasing its Q4 2012 performance in October, we were pleased that Apple was able to beat the Q1 2013 consensus estimates by $.34/share. Apple reported quarterly revenue of $54.5B and quarterly profit of $13.08B, or $13.81 EPS. Apple's shares dipped 5% after hours when it released its Q1 2013 results and then fell another 6% for a total of 11% when it issued Q2 2013 guidance that was well below what investors were projecting. While Apple has a history of lowballing its guidance to the point where investors have implied wiggle room in their models, we think investors were shocked at Apple's Q2 2013 management guidance and took Apple's shares down. Although Apple's Q2 2013 guidance calls for increased revenue of 5%-10% year-over-year, its gross margin is expected to decline by 10% due to the increased proportion of sales from iPads and iPad Minis, which carry lower gross margins than the iPhone. read more »
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