Shaon
 The US bear market has affected dozens of companies, many in the financial sector. US consumers have seen their disposable income decreased substantially and they are unable to refinance their homes to get some needed relief as the mortgage market has tightened. Inflation with respect to energy has really hurt commuters as we have seen gas prices shoot through the roof, and they have had no other option but to trade in their SUVs and squeeze their two kids and family dog into a Prius.This doesn't mean short everything, but I am seeing a change in the market that is somewhat confusing. Citigroup (C) and Merrill Lynch (MER) came in with earnings and still had substantial write downs but not apocalyptic by any means. Microsoft (MSFT) and Google (GOOG) didn't do as well as many thought but that was on the heels of IBM (IBM) having another good quarter. The selloff in the Nasdaq Friday seems to be a little too much as I do not believe that things are as bad as many think. We are just starting to see the tapering off of oil prices and it is looking like a downward trend could continue for some time. With all of the commotion, many have forgotten some of the best companies that have consistently outperformed the market. My holdings in Potash (POT) and Monsanto (MON) are starting to look good from an earnings standpoint, but now I will be taking a position ahead of Apple's (AAPL) earnings. AAPL is not just a great company with one of the biggest fan clubs in the world, it also just seems to do things that others deem impossible and it makes the computers the world thinks are cool. The "cool" factor is something you can't buy or mimic, it is just something you have. I went to Best Buy (BBY) last week to take a look at a new computer as mine is so slow now I cuss more than I type, but AAPL had a huge setup with tons of people looking at their laptops and desktops. It is obvious the HPs (HPQ) and Dells (DELL) of the world are just bowing before them. When speaking with the sales staff, they didn't even want to bother with the other companies and kept directing me towards the new Apple that with a little VM software could do everything, even let my dog out in the morning if I slept in. Is all the hype warranted? I believe so, and I am going to put my money where my mouth is as earnings on Monday will probably be spectacular. When looking at AAPL, I am not dismissing the effect the iPod Touch and iPhone have had, but look at this as just the beginning of their halo effect on computer sales. I own an iPod Touch and currently hook it up through a wireless network that allows me to hear all of the baseball games over the internet while I mow my lawn. I know it sounds like a little thing, but it keeps me busy on many an uneventful weekend afternoon. These little enjoyable things are not just a want, at least for me, but a need. I cannot do without this technology, and since I have an iPod I will probably buy an Apple as my next computer, to replace my existing Compaq (now you have an idea how old it is). If you want to follow PC sales, one first needs to follow Gartner (IT) as it is the guru of guru's with respect to this area. On July 16th it was reported that AAPL is now the third largest PC vendor in the US. Only 60,000 units separate it rom Acer, but that is a far cry from last year's numbers. The market share gains are phenomenal with respect to sales even though the percentage does not seem that large. AAPL now has 8.5% of the US market, but when growth in this area is measured for the company, sales are up 38% year over year. Market share is up 2.1% year over year with respect to the entire US market. To give an idea of how much Apple can grow, Dell has four times the US shipments as AAPL currently has. Also, global shipments of PCs are up 16% year over year. The IDC has the numbers for Apple shipments lower than Gartner, but either way the numbers still look good. Robust growth in the sector was seen in the EMEA. There was some slowing in Asian markets, mostly in Japan. The US has also slowed, but that was expected. There were an estimated 2.37 million Macs shipped worldwide. Look for numbers to be substantially higher than the street expects as this stock has taken its breather. The 3G iPhone will also help sales, and I believe that many of the contractual situations will be lifted somewhat in order to get the product out to more consumers, increasing revenue. The main reason to be excited and buy this stock into earnings has more to do with performance. The company has beaten estimates for so many quarters in a row that it is hard to keep track. It will probably offer a conservative guidance, but look for something new over the horizon. The fact that Apple stores are empty with respect to iPhones is a little worrisome, but it gives an investor an opportunity to buy. Look for net income to come in over $1 billion and for earnings to be in the $1.25 area. This stock is headed to $200. |
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