Apple Inc. (NASDAQ: AAPL) is reporting its fiscal third quarter financial results Monday, July 21, after the close. The question is not only what Apple will report, but also how the Street will react, and most important, is it a buy ahead of earnings?
In terms of numbers, according to Thompson Financial's survey of analysts, Apple is expected to report net income of $972.6 million, or $1.08 per share, on sales of $7.4 billion. That's an 18.9% profit growth and a 37% sales growth.
Investors will be interested in the following:
iPhone sales numbers for Q3 may not interest investors that much, as the new 3G iPhone was released in fiscal Q4, and that is expected to be the main driver of iPhone sales going forward. The launch, despite its technical glitches was very successful, but investors might be concerned over Apple's ability to supply the demand. Already German and many U.S. stores have experienced shortages.
The new Apple Inc. (NASDAQ: AAPL) iPhone is even a bigger hit than analysts had expected. During its debut weekend, about a million units of the phone that can do everything but your taxes were sold. This number is already higher than earlier estimates from today Doug McIntyre has posted. Even Apple's prickly Chief Executive Steve Jobs was impressed.
"iPhone 3G had a stunning opening weekend," he said in a press release issued this morning. "
It took 74 days to sell the first one million original iPhones, so the new iPhone 3G is clearly off to a great start around the world."
Indeed, diehard geeks camped out and around Apple and AT&T Inc. (NYSE: T) stores to be among the first to get their hands on the sleek new phone. A 22-year-old college student from New Zealand named Jonny Gladwell was the first to purchase the mother of all gadgets. He waited outside his Vodafone store for 60 hours, according to Vnunet.com. His parents must be proud (or horrified).
What makes this even more amazing is that many Apple fans are fuming over technical glitches and shortages of the phone their lives will not be complete without. Gizmodo dubbed this the iPocalypse. Mitch Wagner of Information Week argues that Apple has got some fence-mending to do with customers who clearly expected better.
Apple Inc. (NASDAQ: AAPL) is opening its online App Store for iPhone software in a move some think is more important than the 3G iPhone launch on Friday. The App Store will let iPhone users choose from over 500 software applications to download, including games, educational programs, mobile commerce and business productivity tools.
In business, and specifically in technology, there are some people who live in the past and can't see beyond familiar and existing systems. Lucky for us, there are the true visionaries, those who innovate and take things further. Steve Jobs is one such visionary.
After seeing the success of Palm (NASDAQ: PALM) smartphones initially, and then the addictive-like relationship Research in Motion (NASDAQ: RIMM) BlackBerry owners have with their handsets, it is no wonder Apple could zero in on what consumers want and give it to them in an intuitive way. That has been Apple's mark all along.
Indeed, the Mac OS has always been touted as being the better operating system, and yet it is Microsoft (NASDAQ: MSFT) with its Windows OS that dominates the market. Many say that Jobs' was overprotective of the software, causing third-party developers to shy away. If that's the case, Jobs has learned his lesson and is amending his stance now with the iPhone software, hoping to achieve a new computing platform.
The Wall Street Journal reported that Toyota Motor Corporation (NYSE: TM) is set to revamp its manufacturing operations in the U.S. in response to rising gasoline prices that have led to a shift toward fuel-efficient models. Officials at the auto maker said key moves may include dropping plans to produce the Highlander car-SUV crossover vehicles in a Tupelo, Mississippi plant, instead producing the Prius at the plant.
Tomorrow Apple Inc (NASDAQ: AAPL) is set to launch its second version of the iPhone but it also will be opening its APP Store to software developers--an online bazaar--with the intent of bringing more applications to the phone as it has with music via its iTunes stores. Apple's goal is to turn the iPhone into a gadget that more resembles a personal computer, the Wall Street Journal reported.
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According to sources, the South China Morning Post reported that Wynn Resorts Limited (NASDAQ: WYNN) is considering a secondary listing in Hong Kong that would raise as much as $3B. The source said that the fund-raising plan has yet to be approved that that the company is a "long way" from a share sale and "might never do it."
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In an interview, Bloomberg reported that Former St. Louis Federal Reserve President William Poole said there is an increasing chance the U.S. may need to bail out "insolvent" Federal National Mortgage Association (NYSE: FNM), or Fannie Mae, and Federal Home Loan Mortgage Corporation (NYSE: FRE), or Freddie Mac. Poole said data provided show that the fair value of Fannie Mae's assets fell 66% to $12.2B in Q2, while Freddie Mac owed $5.2B more than its assets were worth during the quarter.
Sony Ericsson, a joint venture between Sony Corporation (NYSE: SNE) and Sweden-based Ericsson Telecommunications Co. (NASDAQ: ERIC), announced to Billboard Wednesday that the company would be incorporating AM/FM radio features into selected new devices and phones before the end of the year. Designed for global markets, the R300 Radio and R306 Radio phones will be launched in South America first with hopes that the specific AM capability will spur emerging markets and consumer interests in sporting events and listening to music.
According to Billboard, the new phones resemble transistor radios but are not equipped "to allow users to download tracks from the radio but do have a feature that identifies the song and artist played." Sony Ericsson's marketing VP for South America, Stephan Croix, told the trade paper the devices are part of "a very simple and straightforward concept that will make music more relevant in the mass market," as opposed to more sophisticated technology like Apple Inc. (NASDAQ: AAPL)'s iPhone that merges music capabilities with phone and Internet functions.
Sony Ericsson recently issued a second profit warning for 2008, hoping to recover in the second quarter after falling behind rival South Korea-based LG Electronics in the first quarter. The warning points to declining European sales, which could indicate why the new radio/phone devices are being pushed in South American markets, in addition to the obvious reasons outlined above. The company is also hoping for a massive resurgence in quarter three with the launch of the new Xperia X1 handset in September. The release of the iPhone and how it performs after this week will only add to complications and competition Sony Ericsson may have before the radio/phones are released regionally and later globally.
According to people familiar with the situation, the Wall Street Journal reported that Yahoo! Inc (NASDAQ: YHOO) is again talking to Time Warner Inc (NYSE: TWX), this time about taking over AOL, with Time Warner taking a stake in the combined entity. News Corporation (NYSE: NWS) has its eye on any Yahoo moves. Meanwhile, Microsoft Corporation (NASDAQ: MSFT) is considering what its next move against Yahoo might be and is talking to News Corp.
The Wall Street Journal also reported that, as part of the company's plan to cut costs, Tribune Co's Los Angeles Times newspaper may look to cut about 250 jobs, including about 17% of its news staff.
The Financial Times reported that Chrysler, which has been searching for foreign partnerships, signed with China's Great Wall Motor a memorandum of understanding to explore long-term business ties in areas that include technology, distribution and components.
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According to the Dallas News, AMR Corporation's (NYSE: AMR) American Airlines informed its flight attendants' union that is may lay off 900 flight attendants on August 31.
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Yonhap reported that LG Electronics will release "Dare," a new touch-screen mobile phone in the U.S. that will compete with Apple Inc's (NASDAQ: AAPL) latest iPhone models.
Apple Inc. (NASDAQ: AAPL)'s new 3G iPhone will hit store shelves on July 11 for a breakout new price of $199. Figuring that this new version is quite a bit more enhanced than the existing version -- but is going to sell for half the price -- who is losing out here? Nobody. It's Apple's way of hitting a new price point by agreeing not to take a monthly cut of revenue from every AT&T Inc. (NYSE: T) subscriber who uses the iPhone. Where's the cash flow part for Apple in the agreement then?
One theory is that AT&T is paying Apple $325 in cash for every 3G iPhone that will be sold soon. To help ward off phone unlockers and other potential miscreants, the new iPhone will have to be purchased and activated in an AT&T or Apple store, in person. This will probably eliminate almost all of the "buy here, use on another carrier" mentality that many non-AT&T folks would love to accomplish. It also preserves revenue for both companies by tight-fisting consumer control over where they use the device they just purchased.
The Wall Street Journal reported that executives from Ford Motor Company (NYSE: F) informed plant managers and union representatives that they intend to reduce overtime and that additional buyouts of union workers were necessary to cut costs.
The Wall Street Journal also reported that federal prosecutors are preparing to file criminal charges against Ralph Cioffi and Matthew Tannin, two hedge fund managers at Bear Stearns, now part of JP Morgan Chase & Co (NYSE: JPM), with securities fraud.
Investors who helped U.S. financial companies raise capital are currently losing nearly $10B on paper, according to an analysis by the Financial Times.
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Fortune reported that the materials used to build Apple Inc's (NASDAQ: AAPL) new 3G iPhone could cost as little as $100, while the components of the old iPhone cost $170, according to analysis by Portelligent, an Austin, Texas-based teardown specialist.
Steve Jobs appeared to be extremely thin during the unveiling of Apple's new iPhone last Monday, causing speculation by observers. Fortune speculated that Jobs' weight loss over the years is being caused by a complex operation he underwent in 2004, in order to treat a rare type of pancreatic cancer.
It's been an interesting week watching Apple Inc. (NASDAQ: AAPL)'s stock. On Monday, a gaunt Steve Jobs announced the new iPhone 3G -- something that was completely expected due to months of rumors and talk from the tech world and the finance community as well.
Jobs indeed announced the new iPhone that will run on higher-speed data networks. The tagline is this: Twice as fast. Half the price. So, Jobs announced the newest, fastest iPhone with all these new features while dropping the price to under $200.
Investors apparently could have cared less. Although speculation about Jobs' health immediately started circulating around the internet, Apple's share price briefly peaked about $185 during his' keynote speech (see red circle), then started going south the further he progressed into his iPhone demo. Then, on Tuesday, AAPL shares rose above $186 before starting a downward trend to just over $173 a share Thursday.
In many cases, the market goes hog wild anytime there is a major announcement from Apple, and these generally happen in January, June or September. Why wasn't the market caring about the newest, greatest iPhone that will undoubtedly sell like crazy when it's released in less than a month, pushed out to 70 countries this year, and given away for such an entry-level price? What's not to like? Another Apple home run in a series of dozens of them in a row. The market seems unimpressed, or perhaps it's waiting until sales actually occur in July before taking AAPL shares above the $200 mark.
For months now that investors and Apple Inc. (NASDAQ: AAPL) enthusiasts have been expecting the 3G iPhone. The past few weeks, there was so much hype that speculation over features, dates and even a new business model surfaced daily, from bloggers, reporters, investors and analysts.
Finally the day came and Steve Jobs announced a 3G iPhone for $199 to be released on July 11 in 22 countries at first with the intention of selling the iPhone in 70 countries. Not only that, but the new model includes a GPS and push email.
As expected, Apple announced today the launch of its next generation iPhone, and the new phone will come with a price tag that is $200 less than the current model. The new 3G iPhones are going to hit the market with a $199 price tag.
A big reason for the release of the the new iPhones is the desire by Apple (NASDAQ: AAPL) to hit their goal of selling 10 million phones by the end of the year. The new phone will have faster Internet connection and satellite navigation capabilities. If you are like me, and have been postponing the purchase of a new phone in anticipation of today's announcement, you will have to wait a bit longer. The new phones will be available on July 11.
While the new phones will be about half the price of the current models, the monthly service plans will be a bit higher. Look for a $39.99 monthly plan, plus another $30 monthly fee for unlimited data. This works out to be about a $10 monthly increase, but considering the improvements of the new phones, not too bad of a deal if you ask me. Supposedly the new iPhones will be able to download data twice as fast as the current model.
It's so odd to see a developer's conference turn into a PR machine for arguably the world's hottest tech company, but about all of the geek crowd is sitting on pins and needles this morning waiting for the Worldwide Developer's Conference (WWDC) from Apple, Inc. (NASDAQ: AAPL) to begin. Why? Well, the expected unveiling of the iPhone 2, of course.
As I wrote last week, Apple's shares may inch towards $200 today depending on what product bombshell Steve Jobs drops on the world. If you bought shares when they were in the $120 range back at the start of 2008, are you going to take a profit should shares reach the $200 level? Apple, like most of the market, took a beating this past Friday as the DJIA dumped almost 400 points in a single day, but that doesn't mean AAPL shares will not make up for lost ground. Customers are still buying Mac computers and iPhones like there's no tomorrow -- recession or not.
The trick is this: Apple could score a major coup if an iPhone 2 is announced today -- and is immediately available for purchase at Apple stores. This is being predicted, and it's not really out of the realm of reality. The original iPhone was a launch of monstrous proportions, but it was announced in January 2007 and released in June 2007. The hype built in that gap was so large that iPhones flew off the shelves once June came last year. The hype is now for the newer, speedier iPhone that has extended capabilities and a possibly lower cost. If that happens when Jobs takes the stage at 9:30 a.m. PDT this morning, expect the market to take notice and AAPL shares to lift past their ending $186.25 price from Friday's market close.
In part two of a series to help explain the reasons why The Bear Stearns Companies Inc (NYSE: BSC) collapsed, the Wall Street Journal said that executives believed they were about to turn a corner, but fear and rumors sent lenders, trading partners and clients running.
The Wall Street Journal also reported that a host of factors could derail InBev NV from bidding for Anheuser-Busch Companies Inc (NYSE: BUD), including the cultural differences between the two, protests by politicians over foreign ownership of a U.S. company during an election year and possible unrest from Anheuser distributors and employees.
Following the recent indictment of one of the bank's former senior executives, the Financial Times reported that UBS AG (NYSE: UBS) told members of its former private banking team not to travel to America. The restrictions suggest UBS is concerned investigations by the SEC may widen.
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The latest set of photos that supposedly show parts of Apple Inc's (NASDAQ: AAPL) 3G iPhone, released by Dutch website iPhoneclub.nl, look identical to the previously released pictures that were supposedly photos of the 3G iPhone, Engadget reported.
On Friday, French wireless operator Orange said it has signed a deal with Apple Inc. (NASDAQ: AAPL) to sell its iPhone in the Middle East, Africa and several European countries. Well, wasn't it just Monday that we've heard that Apple has signed deals with Singapore's Singapore Telecommunications Ltd and three of its affiliates to bring the iPhone to four Asian countries later this year? And wasn't it last week that Vodafone Group (NYSE: VOD) signed a deal with Apple to sell the iPhone in ten of its markets? That was just what I remembered offhand. Seems like Apple has pretty much signed deals with companies to sell the iPhone nearly worldwide. Let's check that:
From the Vodafone deal we have: Australia, the Czech Republic, Egypt, Greece, Italy, India, Portugal, New Zealand, South Africa and Turkey
From the SingTel deal we have: Singapore, India, the Philippines and Australia
From the Orange deal we have: Austria, Belgium, the Dominican Republic, Egypt, Jordan, Poland, Portugal, Romania, Slovakia, Switzerland and African markets
According to internal company and agency documents, the Wall Street Journal reported that the FAA is investigating into why AMR Corporation's (NYSE: AMR) American Airlines ordered mechanics to skip specific safety instructions to detect damage to planes from potential lightning strikes.
Yahoo! Inc (NASDAQ: YHOO) is trying to quickly put the finishing touches on a search advertising deal with Google Inc (NASDAQ: GOOG) as billionaire Carl Icahn launches a proxy fight for control of Yahoo's board, according to the New York Post. Yahoo! hopes to announce a deal with Google to create an open platform system within the next week, two inside sources said.
The New York Post reported that a partnership of MGM Mirage (NYSE: MGM) and investment company Dubai World may seek to buy the Drake Hotel site from developer Harry Macklowe. If a deal is reached, MGM and Dubai World would assume $580M in defaulted debt and interest, inside sources said.
Apple Inc. (NASDAQ: AAPL) is reporting its fiscal third quarter financial results Monday, July 21, after the close. The question is not only what Apple will report, but also how the Street will react, and most important, is it a buy ahead of earnings?
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