Apple Inc. (AAPL) did it again
4-25-07: Consumers simply cannot get enough of the iPod. Apple’s (AAPL) second quarter earnings clearly reflect the continued demand. In the last quarter alone, Apple sold 21.1 million of these things. This is 50% above last year, very impressive indeed. We believed Apple’s momentum should continue to drive this company’s earnings for the remainder of 2007. With new products on the horizon, we remain bullish on the company’s ability to generate value for shareholders. Trading in the mid $90 per share, this stock is undervalued.
In the last quarter, the company generated $1 billion in profit, beating the most aggressive expectation by a mile. One interesting aspect to note is the quality of their earnings; they are recurring revenues from various units of the company. The growth was across the board, albeit the iPod was the most impressive. As far as we can tell, there is no window dressing going on. The quarter was solid. We are very encouraged by Apple’s ability to innovate relevant products and the company’s aggressive marketing campaigns.
In listening to the conference call, it appears all business units are being run very efficiently. This is a company that knows how to execute it strategies. Both the hardware and the software unit are doing extremely well. While the Macintosh computer holds a small fraction of the computer hardware market, it is growing as oppose to shrinking. The iTunes stores remains number #1 destination to download songs. What’s amazing about Apple is the demand for their products continues to grow; at times the demand appears to defy logic. I guess that is what happens when you build relevant products.
The future of Apple has never looked brighter. The iPhone is expected to be the next hot item. In a few more months, investors will see how this fare out. Our prediction is the iPhone will be in high demand. Despite the high cost (expected to be about $500), this product will sell. As a side note, do not forget about AT&T (T) in all of this; AT&T wireless will be the exclusive provider for Apple’s iPhone. Early reports suggest the demand for the iPhone is very high. The iPhone should help AT&T’s earning as well.
We believe Apple will continue to exceed expectations given the impressive demand for its products. This in turn should provide shareholders above average appreciation in the long term. Buying this stock during any weakness would be an excellent strategy.
Comments
good post.
can you take a look at NTRI? It raised about 10% in late trading after great 1Q earnings. But I am not sure when is the selling point. Thanks!
Posted by: As | April 25, 2007 08:51 PM
Hello As, see our previous article on some ideas as to when to sell, http://ibooyah.com/blog/2007/03/knowing_when_to_sell_is_critic_1.html
It really depends on what price you bought it at and your goals. Congratulation on a great pick. :-)
Posted by: ibooyah | April 25, 2007 09:14 PM