iPhone 4 and now iPhone 4s sales have been limited by production capacity. This is clear when you look at the sales figures for since the 4 was introduced. The last 5 quarters have been - 14, 16, 18, 20, and 17 million with 5 million in inventory at the end of the Sept Quarter. That's a clear 2 million a quarter manufacturing capacity increase each quarter. Without going into to much depth about why Apple can only improve production by 2 million a quarter, suffice it to say, it is a machining capacity bottleneck that is resistant to rapid improvement. So, with this information we can say that if this quarter were a typical 13 week quarter, Apple could make 24 million iPhone 4's and 4s's. Since this is a 14 week quarter, add 2 million to that number = 26 million. Apple had a 5.75 million inventory bulge at the end of last quarter. This bulge was a result of buyers waiting for the new phone. Add the production capacity to the inventory on hand and you get 31 million iphone 4 & 4s's available for sale in this quarter. Then you have the iPhone 3Gs. This is a plastic case phone which is produced without any machining, therefore can be made in pretty much any quantity they can sell. Published estimates are the free model 3Gs will sell around 20% of the 4 models volume - this is a guess, but as good as any. So, add 6 million model 3Gs's to the total and you end up with 37 million - figure 2 million will be in channel inventory at the close of the quarter, and you end up with iPhone sales of 35 million units.
<< Their cash is actually a liability that is hurting the stock price. >>
Here's my short answer: I could care less what Wall Street thinks. I'm in the Steve Jobs camp to an extent, minus the "hold cash" mentality. Soon enough, Wall Street will be kissing APPLE's A$$ - because APPLE INC. is a "safe haven" of growth.
Now, here's my long answer...
The SHORT CONS have a way of describing 999.99% Gold as something that is "radioactive". It's just in their DNA to paint a negative slant - so that their "short" positions can be helped.
I see things more BLACK & WHITE. CASH is an ASSET...and, frankly speaking, many companies envy APPLE INC. and would love to have a small percentage of the CASH that APPLE has on their Balance Sheet(s).
I share your sentiment about destroying the SHORT CONS by implementing a Dividend of 3% to 4% (preferably paid Monthly) -AND- a Share Buyback Program, both with funding of $10 Billion+ respectively to be significant. Said Buyback Program Administrator would be mandated to eliminate "pinning" on Options Expiration and, and at the same time, purchase shares at a discount to maximize the removal of outstanding shares.
APPLE INC. holds approx. $27 Billion in CASH inside the USA. The balance, approx. $54 Billion, is outside of the USA and would be subject to a "tax" if repatriated back to the USA. Maybe the next administration will be more business-friendly and offer a "Tax Holiday" to US Corporations who wish to bring back billions of dollars into the USA to pay Dividends, Capital Expenditures, etc. etc. -- stimulating growth in Amercica. After all, that CASH has already been taxed once in the foreign tax jurisdiction. So, APPLE's Board of Directors may wish to wait...before repatriating offshore CASH.
IF APPLE INC. announced a 6% Dividend on Monday, the SHORT CONS would be "motivating" their financial media shills to spout more negativity such as -- "APPLE's Growth Days are OVER...just like Microsoft."...blah blah blah. It just goes on & on...if you try to please these liars, then it's never enough. APPLE INC. has to do what is in APPLE INC.'s best interest - and continue to ignore the SHORT CONS. Simply put - IGNORE THE LIARS.
All Wall Street Negative BS aside... NOW - Even if APPLE INC. announced a 6% Dividend, the GROWTH RATES in both Revenues and Earnings would not be hampered one iota. FACT: APPLE INC. is not a mature company - evidenced by strong growth rates in the USA and Internationally. This Next Quarter's Earnings Report will "flush" the idea that APPLE INC. is a mature company. TO THE CONTRARY, APPLE INC. is growing massively in the USA and Internationally.
You are absolutely correct. Once enough cushion is in the coffers to get the pricing/production schedule benefits from their suppliers, bolt-on acquisitions, and a reasonable economic saftey margin, then the rest is really just wasted capital. As investors it is the total of what you get back (based on time value of money calculation). While aapl's operations have done great and the stock's price has been a home run, it could have been much, much better if they only used this capital more effectively.
It isn't just about becoming the largest stock by stock valuation. That makes a great headline, but if AAPL just took their current run rate of free cash flows and or earnings and used that either for a share repurchase or a dividend, the stock's price would likely be 10% higher (not counting the dividend that you get to keep).
Best of luck..
I also believe the IPhone sales this QTR will blow away even the most bullish forecast..
And, the stock is consolidating so tight, the breakout will be spectacular, given the tight range it will spring from.....
AAPL's in the lets wipe out all calls phase, before the dawn..... How many times have we seen that?
Now that the stock options have been released, we may actually get some goose from the company.
You're right, under Jobs the stock price was totally unimportant. He had no interest in making his employees millionaires, after having seen what happened when Apple did it's IPO and all those new millionaires went nuts. And, he had more money than he could spend in 100 lifetimes - he didn't even take a salary. It was always about the products, that's all he cared about. I think Apple will be run more for the key employees and the stockholders now that he is gone. It will still come out with great products, but there will be changes made to maximize the stock price appreciation to reward the employee option holders and us stockholders. Expect a stock buy-back, maybe a dividend, and more timely self promotion when success in the marketplace warrants.
The numbers are adding-up to be "staggering huge" for next quarter's Earnings Report. The AAPL share price is deeply undervalued at only $400/share when considering the MASSIVE forward growth. I believe the smart money is accumulating AAPL rapidly. Here's a few key very important financial statistics:
AAPL Cash Balance = $81.6 Billion (as of the Fiscal Q4 Report)
AAPL Debt = ZERO (-0-)
AAPL Forward PE = 10.38
AAPL Qtrly. Revenue Growth (yoy) = 39%
AAPL Qtrly. Earnings Growth (yoy) = 53.7%
AAPL Profit Margin = 23.95%
AAPL Return on Equity = 41.67%
Expect Record EPS Next Quarter (Q1):
The sales #'s will be huge. The APPLE brand name has saturated news media in all forms because of Steve Jobs' passing. The APPLE stores have been jam-packed. Many new stores were opened last Quarter - and the additional sales growth will be seen this next Quarter. New carriers have been added in the USA and Japan. Greater China region's sales growth #'s are staggering huge - doubling YOY growth.
APPLE's EPS guidance for fiscal Q1 is $9.30/sh. (WOW). This guidance was HIGHER than the Analysts' EPS estimates! NOTE: The analysts overstated last quarters' EPS estimates - AND - the analysts have understated next quarter's estimates! Since then, the EPS for next quarter (Q1) have been raised to $9.70/sh. I just hope they don't get overzealous - and overstate the EPS yet AGAIN! Why not have a little RESPECT for APPLE's own company guidance of $9.30/sh.?
Over the past year, APPLE has "BEAT" their own guidance as follows:
Q1 Guidance = $4.80; Actual = $6.43;(Beat=40.0%)
Q2 Guidance = $4.90; Actual = $6.40; (Beat=30.6%)
Q3 Guidance = $5.07; Actual = $7.79; (Beat=53.6%)
Q4 Guidance = $5.50; Actual = $7.05 (Beat=28.2%)
If APPLE beats by only 30% in the Next Quarter, Q1, (I'm being conservative here), then I project an annualized trailing EPS of $33.33/sh.
With a PE of ONLY 14 and EPS of $33.33/sh., APPLE should move higher to $466.62/sh.
With a PE of 20 (APPLE is a premium brand - deserves a PE of 20) and EPS of $33.33/sh., APPLE may reach $666.60/sh.
The next Earnings Report will release in Mid-January, 2012. Soon thereafter, I project APPLE to be trading between $466.62 and $666.60/sh.
Between now and Mid-January, 2012, I believe APPLE will begin a runup into the COMPANY PROJECTED GUIDANCE of EPS hitting $9.30/sh. - which is defined as a BLOWOUT STRONG QUARTER!!!
I am long a load of APPLE...and I will add more shares on any dips with new money each Quarter. Because Steve Jobs' legacy or last "one more thing" IS...APPLE INC. - a company whose culture of excellence is second to none. The products are as beautiful on the inside...as they are on the outside. And, the innovations will continue as far as the eye can see! As Steve Jobs said... The best days for APPLE are ahead!