In his Monday Note, Jean-Louis Gassée anticipates an "extraordinary" 2018 holiday season for Apple.
From Apple, Sui Generis:
Wall Street still doesn’t trust Apple’s future. The company is seen as an anomaly, it shuns accepted ways of doing business and defies categorization. Perhaps the categories are wrong...
For my money [Gassée writes], the best analyst of Apple’s business is the technically astute, historically knowledgable, and occasionally poetic Horace Dediu. In a tightly-reasoned post, Dediu forecasts $120B total revenue for this year’s Xmas quarter, a 36% increase from the same period in 2017. My more simplistic analysis looks at Apple’s Manufacturing Purchase Obligations (MPO) for the mid-year, a number that, in the past, has reliably forecast up and down trends in the following Xmas quarter. The company’s MPO for the quarter ended in June shows a 31% increase.
A 30+% increase in revenue would be extraordinary, nearly without precedent, especially at Apple’s $200B+ size. If it happens, it will be interesting to see if it impacts Wall Street’s assessment of the company’s future. Perhaps a hugely successful quarter will convince traders that Apple can’t be compared to other companies. Apple, sui generis.
My take: As an Apple watcher, the man who ran the Macintosh division for nearly a decade after Steve Jobs' ouster—and whom Jobs never forgave for his part in it—is also sui generis.
Below: Gassée unveils the ill-fated Macintosh Portable (1989 video)
Even without Steve Jobs there were people at Apple who really understood marketing … so I wonder what was it that motivated them to have the Project Manager re-enact the job of an assembly line worker?
“it shuns accepted ways of doing business…”
I don’t think analysts understand Apple. And what we don’t understand, we either fear or mock.
My $95.177 Billion revenue forecast for the December quarter is looking more and more conservative, to the extent that I’m starting to have difficulty believing it myself. What a nice break from the mundane.
I also like Deidu, a lot.
That $275 price target looks more realistic. It’s about 20X forward earnings. Jean-Louis Gassée’s estimates imply that current forward earnings estimates are low.
The street doesn’t get Apple because people have a hard time admitting mistakes. LOLN means nothing, Likewise “communization of hardware”; “can’t innovate anymore”, “iPhone company”, Such labeling, stereotyping, shuts off learning. Hey Wall Street, it’s back to school season. Start studying Apple. Look at all the catalysts for growth, small, large and even tiny.
I placed an order for 100 Sept Wk2 $217.50/$220 Put Spreads (50 in each of two accounts) at 90¢ this morning (currently trading at $1.02). After reading Gassee’s comments about MPO (something I haven’t tracked in the past) and his admiration of Dediu’s analysis I’ve been thinking the wiser decision would be to look longer term. That means skipping the potential of a pullback and buying out of the money January and April Call Spreads.
Sure would like to hear from anyone that has been tracking MPO.
BTW, even if a 31% increase in mid-year MPO only results in 20% YoY revenue growth, Apple reports ~$106 Billion for the upcoming December quarter. Current WS consensus is $90 Billion. Using historical guidance to results ratios, a $106 Billion result means guidance of ~$101 Billion to $105 Billion. That’s fully 14% (at the mid-point) higher than current WS consensus. I’m open to thoughts on how the market will value AAPL in such a scenario. Brian White’s one year $275 target occurring by January is starting to look realistic.
The highest January Open Interest is the $250 Calls at 31,000 contracts. Open Interest jumped during three different periods. They were:
June 11-June 14 ~5,000 contracts at ~68¢
July 9-July 11 ~6,000 contracts at ~50¢
August 13-August 15 ~8,000 contracts at~$1.12
IOW, interest in the $250 Strike has increased, in 3 large purchases, >230% since June 11. Nineteen thousand contracts at an average 76¢ require $1.444 Million. These purchases were NOT made by options traders like myself.
This takes me back to my contention that AAPL’s current rally is not being driven by management’s September quarter guidance. WS is buying FY2019 results with both shares and options.
Sui Generis
“Things that are unique or that seemed to be the only representative of their class or group.”
That would accurately describe Apple, Inc.