Top Tech Analyst Looks Ahead to Apple Earnings; Time for a Surprise Comeback Quarter?

Indie Research

Over the past decade, well over a thousand Wall Street analysts, money managers and institutional investors have joined thousands of savvy private investors in gaining key tech industry insights and intelligence from industry veteran and celebrated investor Paul McWilliams in his role as editor of Next Inning Technology Research.

In this exclusive interview, we asked McWilliams about his thoughts on Apple (AAPL) ahead of its earnings report later this month. Readers can access McWilliams' extensive investigation of Apple and 70 other companies in his new 167-page State of Tech Report, a must-read for technology analysts and investors, via a free, no-strings-attached trial.

Q: What is your view of Apple CEO Tim Cook? Does he have what it takes to get Apple back on the growth path?

A: When I flipped to a bullish view of Apple a bit more than 10 years ago I thought the investment case was obvious and compelling. When I grew concerned and suggested that readers sell the majority of their Apple allocation in the spring of 2012 when it first pushed above $600, and then again in the fall at $700, I cited specific risks that have all since materialized. Back then I viewed Tim Cook as only a wildcard risk that could go either way. I've since taken a decidedly negative view of Cook - my hope is he proves me to be wrong.

Q: What game-changing moves can Cook make?

A: One of the toughest questions facing Tim Cook today is whether he should stick with its ARM Holdings (ARMH)-based Ax processor strategy (currently A6X), or move over to Intel (INTC). Many think former Apple CEO John Sculley's number one failing was not moving to Intel during his reign. My bet is Apple has been trying to negotiate a deal with Intel to fab its custom Ax processors, and Intel has pushed back saying sure, but with an Atom x86 processor core.

Q: So, the big question, what should investors look for in Apple's upcoming earnings report? Will the earnings report spur a new rally or should investors be looking to avoid Apple shares here?

A: Well, I go into extensive detail on this question in my new State of Tech report and upcoming earnings previews, including price targets for Apple and dozens of other tech stocks [Ed note: both available via a free trial], but I can say this: While it's easy to make a value investment case for Apple based on the fact it trades at a low valuation multiple times its forward earnings, not to mention the value of Apple's monstrous balance sheet, the side of the road is littered with "value traps" that didn't work out. The point here is if Cook and team don't execute, the odds are the price of Apple's stock will go down.

The Next Inning model portfolio is up 280% since its inception versus 81% for the S&P 500. Click here to start your free 21-day trial membership to Next Inning Technology Research and get McWilliams' in depth reports, earnings previews, and real-time trade alerts.

View Comments (2)