360° Coverage : Samsung Guidance Changes Apple Earnings Battle Plan

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Samsung Guidance Changes Apple Earnings Battle Plan

Jan 24 2014, 11:33am CST | by

Apple will report earnings after the market close on Monday January 27.  My battle plan has changed after Samsung just provided weak guidance. Fourth quarter results for Samsung were mostly in line...

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27 weeks ago

Samsung Guidance Changes Apple Earnings Battle Plan

Jan 24 2014, 11:33am CST | by

Apple will report earnings after the market close on Monday January 27.  My battle plan has changed after Samsung just provided weak guidance.

Fourth quarter results for Samsung were mostly in line. Earnings came at 8.3 trillion won and revenues came at 59.7 trillion won.  In Seoul South Korea, Samsung shares traded up 1.2%.  Of concern is that for 2014 Samsung expects competition to intensify and sees weaker demand for mobile devices in the current quarter.

The increased competition Samsung sees is mostly coming from Apple and Lenovo (LNVGF).  My read of Samsung report is that it is likely good for Apple in the very short-term but bad for Apple in the medium-term.

For Apple, average Q1 analysts’ estimate is $14.09; the low estimate is $13.49 and the high is $15.24.  For revenue, the average analysts’ estimate for revenue is $57.46 billion; the low estimate is $55.93 billion and the high estimate is $59.88 billion.

More than the earnings, the three critical numbers to look for are number of iPhone sales, gross margins, and any indication of China Mobile iPhone sales.

iPhone sales numbers are important because even though Apple sells many products, iPhones account for about three quarters of profits.  Estimates of iPhone sales hover around 55 million units.  Regarding China Mobile, if my information from sources in China is correct, the street will be disappointed.  Apple may simply choose not to divulge any data about China Mobile sales.

The big potential surprise will be if Apple announces an additional stock buyback.  Activist investor Carl Icahn has been demanding $50 billion of additional share repurchases.

Apple usually does not announce new products with earnings, but the possibility of an indication of new products cannot be ruled out. If Apple announces a major stock buyback or gives indication of new products in a new category, Apple stock can easily move to the range of $610 to $620.  This will been an opportunity to lighten up on an Apple position.

If the report is in line, Apple stock is likely to stay range bound in the zone of $535 to $565.

If there is a big miss in iPhone sales, or gross margins are significantly lower than 36.5%, expect a sell-off to about $500.  Such a sell-off is likely to be a buying opportunity for the long-term investor.

Follow me here, write me at Nigam@TheAroraReport.com or find me at The Arora Report

Disclosure: Subscribers to The Arora Report have a long position in Apple.

Source: Forbes Business

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat was told tod ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Rakyat today. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hishammu ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states l ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

8 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 mi ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

8 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

8 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an all ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

8 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Scheme 201 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (Kidex) to ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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