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Update – January 25, 2010: Apple (AAPL) has released Q1 2010 earnings and handily beat Street consensus estimates. Apple Q1 2010 earnings call highlights:

  • All-Time highest revenue and profit.
  • New accounting standards adopted - read iPhonAsia post > on AAPL accounting topic
  • Revenue of $15.68 billion and a net quarterly profit of $3.38 billion, or $3.67 per diluted share.
  • Gross margin was 40.9 percent, up from 37.9 percent in the year-ago quarter.
  • International sales accounted for 58 percent of the quarter’s revenue.
  • Apple sold 3.36 million Mac (33% growth – quarter-by-quarter comparison).
  • Apple sold 8.7 million iPhones in the quarter, representing 100 percent unit growth over the year-ago quarter.
  • Apple sold 21 million iPods.
  • Apple grew cash substantially ($5.8 billion during the quarter) and now has $39.8 billion in cash on hand.
  • By early January (appx 2 months of sales) Apple activated over 200,000 official iPhones in China in partnership with China Unicom. “I really like what I see so far” ~ Apple COO Tim Cook.

Read the full > Apple Q1 2010 earnings PR

We are very pleased to have generated $5.8 billion in cash during the quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second fiscal quarter of 2010, we expect revenue in the range of about $11.0 billion to $11.4 billion and we expect diluted earnings per share in the range of about $2.06 to $2.18.

Don’t Get Punked – the Sequel

Friday, January 22, 2010: Just before Apple’s (AAPL) October 19, 2009 Q4 earnings report, I authored a post entitled “Don’t get punked by harpoon throwers” (see full post below). Today — Friday January 22, 2010 — I’m reprising my admonition … now is not the time to get caught up in the fear, uncertainty and doubt (FUD) game that’s often played on Wall Street. The game was “on” big time this week. Petulant “let’s teach Obama a lesson” Street players did their thing on Thursday and Friday. The market’s big move down was partly the Street’s retribution against the Obama Administration for daring to regulate proprietary trading by banks. Now toss into the “FUD mix” uncertainty over Fed Chairman Bernanke’s reappointment, China’s move to restrain bank lending, and a few recent corporate earnings announcements that were not ahead of (better than) the Street’s guesstimates for top line revenues.  All nice excuses for institutions and proprietary trading desks to rip the market down. And rip they did!

False Apple (AAPL) “downgrade” rumor debunked … a bit too late

Apple (AAPL), being a large part of the QQQQs, was caught up in today’s down draft and was sold and shorted mercilessly, finishing the day down $10.58 (5%). Helping to accelerate the selling was a false report today about Apple (AAPL) being downgraded by Deutsche Bank. This “Apple (AAPL) downgrade” story was pumped widely by the Street echo-chamber (i.e. hedge funds, institutional trading desks and other denizens of Wall Street). It is my opinion that the majority of trading desks understood precisely what happened at Deutsche Bank, but held tight to the truth and may have intentionally misled the financial press (by omission). Here’s what really happened. Deutsche Bank took Apple (AAPL) off of its short-term “buy” list this morning (Jan 22). Contrary to media reports, this was NOT a downgrade. Nor was it a negative reflection on Apple’s (AAPL’s) fundamentals. The removal of Apple (AAPL) from Deutsche Bank’s list was purely due to the firm’s internal rules, which mandate that a stock cannot remain on the short term “buy” list for more than six (6) months (or “short term” loses its meaning). So Apple’s removal from the Deutsche Bank list was an automatic calendar removal and NOT any reflection on Apple’s fundamentals. Yet nefarious Street traders playing their book (buying puts and shorting AAPL) made sure the press learned about an “AAPL downgrade” (not a downgrade of any kind) and this only added fuel to the FUD fire.

CNBC’s Jim Goldman was the first journalist to call attention to the miss-read of the Deutsche Bank ST buy list removal… yet his “correct the record” report was too late in the day to affect Apple’s (AAPL’s) close — down $10.58. NOTE: Jim Goldman posted a clarification comment to Apple 2.0 > read article and scroll down to comments

All and all, it was an ugly week for longs … Apple (AAPL) shares crested at $215.59 on Wednesday and finished the week almost 17 points lower – closing today (Friday Jan 22) at $197.75.

My suggestion to Apple (AAPL) shareholders is to be very careful before acting on the advice of those who claim that it’s time to give up your shares. After this week’s action, shareholders with “weak hands” (those easily spooked into selling when fear reigns down) might be tempted to place sell orders before the market opens on Monday. My advice to you is “don’t get punked!” Apple is due to report Q1 2010 earnings on January 25, 2010 (Listen to Audio Webcast at 2 p.m. PST) and two days later (January 27) Apple will host a special event at the Yerba Buena Center for the Arts in San Francisco - “Come see our latest creation” where they will almost certainly unveil the much anticipated iTablet device (name TBA). Those who sell now will be giving up their AAPL on the cheap to institutional traders and hedge funds who are now poised (finger on the button) to cover their short positions with your shares.

For a rundown of analysts’ Q1 2010 Apple (AAPL) earnings estimates, read > Spotlight on Apple’s Earnings

Oct 19, 2009 – Apple Q4 Earnings due today – Don’t get punked by harpoon throwers!

After hours Update: Apple (AAPL) absolutely crushes their Q4 numbers! 3.05 million macs, 7.4 million iPhones, 10.2 million iPods, GAAP Revenue $9.87 billion, EPS $1.82. The recession ends at the door of the Apple Store!” ~ Tommo, UK

AAPL trading up 8.5% after hours – over 200 now … Sadly there were far too many Apple shareholders who got harpooned this morning at $186 courtesy of hedge fund FUD. Read below.

Opinion Alert: The following is my opinion and should not be considered investment advice. Consult your own financial advisor. Disclosure: Long AAPL

apple-logo1Apple (AAPL) is due to report Q4 earnings after the market closes today and as expected, the FUD (fear, uncertainty and doubt) and fomenting game is in full swing. This morning I switched on CNBC to the following exchange between commentators:

Mark Haines and Erin Burnett

Mark Haines & Erin Burnett

Mark Hanies: “Is there a ‘core’ problem with Apple (AAPL)?”

Erin Burnett: “Rotten!” (haha)

As a side note, CNBC’s Erin Burnett loves her Blackberry phone and never misses a chance to dis iPhone. She is also famous for her potty mouth. In January 2008 Burnett quipped before the cameras; ”Apple (AAPL) was the It Stock of ’07, and it is apparently the sh*t stock of 2008.”

Scatological remarks aside, the real harm is done when lazy journalists spread chum for harpoon wielding hedge funds and rogue traders. Unwittingly or not, CNBC commentators are tossing bloody FUD (fear, uncertainty and doubt) into the waters.

The chum that’s being spread is that “component shortages” and “supply constraints” will result in weaker than expected iPhone sales for the quarter. The genesis of this rumor is a report from Oppenheimer tech analyst Yair Reiner. He points to preliminary iPhone sales numbers delivered by Steve Jobs during the Sept. 9 iPod event. Using some back of the napkin calculations, Reiner divines that Apple sold just “3.5 million iPhones with only 21 days left in the quarter.” Reiner adds that reports of iPhone supply shortages from carriers in Europe suggest that Apple has not been able to ship to demand. While bullish on Apple (AAPL) Reiner advises investors wait for the Q4 report before they accumulate shares.

Some Street denizens made sure CNBC’s Jim Cramer was in on the game. He advised viewers of Friday’s Mad Money program that Apple would seff off on today (Monday) due to iPhone supply problems; “Your game plan next week is to buy Apple Inc. (AAPL) on weakness on Tuesday morning [after earnings].”

harpoon_gunI don’t offer investment advice via iPhonAsia (consult your own investment professional), however, my own view is that Apple is now being pushed down ahead of what might prove to be a very good 4th quarter earnings report. As a result, hedge funds and traders with high-powered harpoon guns, will spear Apple (AAPL) shares at attractive prices and reel them into the boat before retail investors know what hit them. Here’s what happened Joe investor … you got punked by the chum in the water and gave up your Apple (AAPL) shares on the cheap. It’s an old hedge fund FUD ploy that works over and again.

As one member of the AAPL Sanity stock message board put it this morning:

I can’t remember such concerted attempts on CNBC and across the financial community to sandbag AAPL … rumors, high whisper numbers, etc.. The really ironic thing is that AAPL was at this price [186 range] 22 trading days ago now. It has been consolidating between 180 and 192.”

They [CNBC] had someone [Richard Winsor] from Nomura Securities on CNBC Worldwide very early this morning saying Apple was overvalued, not to buy, and he was short. The lady didn’t even question him or ask the guy to explain how AAPL was overvalued. Nada. Zip.

October 19 premarket. Richard Winsor, Nomura Securities "I would short AAPL" [price 187]

Richard Winsor - "I would love to go short" AAPL premarket price @ 187

Shining a bit more truth on the subject … Apple has historically been very good at supply chain management. They have also been known to purchase large quantities of materials well ahead of production. Recent rumors of cell phone “components shortages” are more likely to have pinched competitors, and not Apple, who may have already scooped up the necessary raw materials.

I will concede one point to Reiner and those who’ve jumped aboard the hedge fund whaling vessels trolling in his wake, the robust worldwide demand for iPhone may have resulted in some shipping delays to a few carriers in select markets. However, in my opinion, Apple will make (already made) necessary adjustments and any temporary supply constraints will quickly be solved. Most importantly, in my view, the modest and temporary supply chain squeeze will not damage Apple’s (AAPL) 4th quarter results.

One more aside, there are likely (my guess) some 500,000 iPhones that have now been shipped to China Unicom and its distribution partners. These special model iPhones (A13124 ands A1325) may count towards Q4 sales for Apple.

I seem to remember that once upon-a-time tremendous demand for your product was considered a good thing. Don’t get harpooned!

Note: For a complete review of analysts’ Q4 Apple (AAPL) projections, read Philip Elmer-DeWitt’s Apple 2.0 column. DeWitt has the full rundown on earnings guesses and guidance > HERE

2 Responses to “Apple Q1 2010 earnings due Monday – “Don’t get punked II””

  1. Dan Butterfield says:

    Thanks for the kind words … Wall Street machinations seem to never end

  2. FreeRange says:

    Dan – Great post and analysis. It is time to rein in these manipulative snakes in the grass. And as it relates to the president, no matter what Obama does, the great conspiracy hits him below the belt – first its “he’s been too soft on Wall Street”, and now, “oh wait, what does he mean he’s going to put regulations on Wall Street, he’s going to hurt our financial instituions and therefore the country”. The great manipulators are at work not just on Wall Street, but in the political process – our country has become dysfunctional based on the tactics of these behind the scenes scumbags. And what is it with this “super majority” crap? There’s nothing in the constitution about it and it certainly flys in the face of our founding fathers. Obama needs to grab the reins and shove these obstructionists out of the way. That is the only way he is going to regain his footing.

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