Apple retreats again, after valuation tops $3 trillion again

Apple Inc's stock market value peaked on Tuesday for a second day above a $3 trillion, but the iPhone maker's shares again failed hold that gain by the session's end.

Apple shares ended down 1.3 percent at $179.70, leaving its market capitalization at $2.95 trillion.

On Monday, Apple's stock market value rose briefly above $3 trillion for the first time ever, and it repeated that again on Tuesday before losing ground. The world's most valuable company has yet to end a session at that level.

Apple accounts for nearly 7 percent of S&P 500 index's value, according to Refinitiv data, the highest for a single stock in the index at a time when the benchmark is perched at a peak.

Surging demand for iPhones, MacBooks and iPads during the pandemic helped push the Cupertino, California company's market capitalization past $2 trillion in August 2020.

"Apple has been one of the key pandemic trades for a lot of people and as we exit the pandemic. ... the iPhone maker is going to struggle a little bit," warned Edward Moya, senior market analyst at Oanda in New York.

Apple's massive share repurchases in recent years have also fuelled its stock rally.

The company has bought back $348 billion worth of shares in the 5 years through the September quarter of 2021, reducing its share count by 23 percent over that period, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

"You know there's going to be buying," Silverblatt said. "From an investor point of view, it's very important."

With Tesla now the world's most valuable automaker as Wall Street bets heavily on electric cars, many investors expect Apple to launch its own vehicle within the next few years as it looks to reduce its current reliance on iPhones for about half of its revenue.

Notably, Apple is worth more than any of Europe's main regional indexes including Britain's FTSE 100, France's CAC 40, Germany's DAX, Spain's IBEX 35 and Italy's FTSE MIB.

Apple's stock is now up 1 percent in 2022 after gaining 34 percent last year. It is trading at about 31 times expected 12-month earnings, which is expensive compared to its five-year average of 20 times expected earnings, according to Refinitiv data.

-reuters-

Apple inches closer to $3 trillion market cap

Apple Inc is within striking distance of a $3 trillion market capitalization, a milestone that would make it as big as the world's fifth largest economy after Germany, just over a year after breaching the $2 trillion mark.

Shares of Apple were up 1.6 percent at $174. They need to trade at $182.85 to hit the mark and cap a strong rally that has been powered by investors betting on its brand and viewing it as a comparative safe haven.

The stock has jumped about 30 percent this year on top of an 80 percent surge in 2020. In comparison, the S&P 500 has risen 25% for the period.

Its peers in the trillion-dollar club - Microsoft, Amazon, Alphabet and Tesla - have all gained between 10 percent and 70 percent.

"Apple does seem to be more immune to the ebb and flow of economic forces just because of this really strong brand. Its new product pipeline is pretty strong too," Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said.

"There is an expectation that Apple is still going to come for you even though there have been some weaknesses in getting hold of the handsets and making sure that they're available for the public."

Apple hit the $1 trillion in market capitalization in 2018 and took two years to double that valuation.

The stock has already breached Wall Street's median price target by $4, with a majority of analysts covering the stock rating it "buy" or higher.

Apple briefly lost its title as the most valuable company to Microsoft Corp earlier this year after CEO Tim Cook's comments on supply chain woes and the struggle to procure semiconductors and components to make smartphones and laptops.

Microsoft is about $500 billion short of reaching $3 trillion in market capitalization. 

-reuters-

Apple stock climbs on 5G iPhone expectations ahead of event

NEW YORK - Apple's stock was up significantly in US trading Monday ahead of a much-anticipated event where the tech giant is expected to unveil its 5G-capable iPhone 12 line-up.

The company is the most expensive on Wall Street with a value of $2.03 billion as of the close of Friday trading, and its share value on Monday was up 4.8 percent at $122.59 around 1550 GMT.

Analysts expect Apple to introduce a selection of iPhone 12 models in multiple sizes, with some shipping earlier than others due to the toll the pandemic has taken on the company's supply chain.

The new model will be particularly notable for being tailored for the super-fasted 5G telecom networks taking root around the world.

Some Apple rivals have already produced 5G models, and China is far ahead of the US when it comes to the new-generation networks.

Wedbush Securities called the new iPhone "Apple's most important product cycle since the iPhone 6 in 2014," with demand by Chinese consumers to upgrade to the phone expected to be strong.

"Cook & Co. have the stage set for a super cycle 5G product release which should drive shares further, in our opinion," Wedbush said in a note, referring to chief executive Tim Cook.

"Although the soft macro and COVID backdrop will clearly dent some demand, we believe the underlying growth drivers for iPhone 12 success are unparalleled."

Agence France-Presse

Apple loses $1 trillion status after soft holiday forecast

Shares in Apple Inc. fell 6 percent on Friday, cutting its market value back to less than $1 trillion after it forecast softer-than-expected sales for the holiday quarter and fueled nerves over iPhone sales by saying it would no longer release the figures.

The dip in Apple's shares to $208.50 knocked around $67 billion off its value, and put Amazon and Microsoft Corp back in the mix in the race among the United States' big tech players to be the world's most valuable company.

The Cupertino, California-based company blamed weakness in emerging markets and foreign exchange costs for a disappointing forecast for sales in the run-up to Christmas that are crucial to results for consumer electronics producers.

Most analysts were still upbeat on fourth-quarter results, and there was no obvious fallout for rest of the FAANG group of major U.S. tech stocks. Shares in Facebook Inc., Amazon.com Inc., Netflix Inc. and Google-owner Alphabet Inc. all rose on a generally buoyant Wall Street.

Eight brokerages cut their price targets for Apple, but only one - Bank of America Merrill Lynch - cut its rating on the stock, to neutral from buy.

"Time for investors to adjust to the new disclosures," analysts from the brokerage said. "Although the long term opportunity is significant, we expect near term pressure on shares."

The move announced on Thursday to stop reporting unit sales data for iPhones, iPad and Mac computer products was widely criticized, with some arguing it meant Apple expected sales of iPhones have now peaked.

"While the company believes units are a less relevant metric, we strongly disagree – particularly since we believe iPhone units will begin to decline y/y as a result of higher average selling prices," Raymond James analysts said.

Apple shares were down 6.4 pct. at $208.05 before the bell.

source: news.abs-cbn.com

LOOK BACK: Apple's road to a $1 trillion enterprise

SAN FRANCISCO -- Launched on a shoestring budget in a Silicon Valley garage more than four decades ago, Apple survived a near-miss with bankruptcy before soaring to a trillion-dollar market value on Thursday.

The California-based company born of a friendship between Steve Wozniak and the late Steve Jobs is credited with giving rise to smartphone lifestyles and "apps" for nearly everything.

Here are some of the milestones in Apple's history:

April 1976: Jobs, Wozniak and Ronald Wayne create Apple Computer to sell an eponymous computer hand-built by Wozniak. The company is incorporated the following year.

January 1984: Apple heralds the arrival of its first Macintosh computer with a "1984" television commercial directed by Ridley Scott portraying a bold blow struck against an Orwellian computer culture.

September 1985: Jobs leaves Apple after a power struggle with chief executive John Sculley. Wozniak also departs.

1990s: Competitive pressure from lower-priced personal computers from Microsoft running on Windows software, and some failed products, puts a financial squeeze on Apple, which cuts staff and changes top executives.

September 1997: Jobs returns as chief executive as the company teeters near bankruptcy. Microsoft helps Apple survive with a $150 million investment.

August 1998: Apple releases the all-in-one iMac computer.

October 2001: Apple unveils the iPod and opens its first real-world shops.

April 2003: Apple opens its online iTunes store for digital content, pricing music at 99 cents per song for iPods.

June 2007: Apple unveils the iPhone.

July 2008: Apple launches the online App Store to sell applications for the iPhone and iPod Touch. 

January 2010: Apple introduces the iPad.

October 2011: Jobs, 56, dies after battling pancreatic cancer, having turned over command of Apple to Tim Cook earlier in the year.

September 2014: Apple introduces the Apple Watch.

June 2015: Apple Music streaming service launches including internet radio from Beats, a startup Apple bought the prior year in a deal valued at $3 billion.

January 2016: Apple announces that more than a billion of its devices are in use around the world.

August 2018: Apple surpasses $1 trillion in stock market value.

source: news.abs-cbn.com

Trade fight weighs on world stocks; Apple milestone boosts US

NEW YORK -- An intensifying trade dispute between the United States and China weighed on global stocks and bond yields on Thursday, but a rise in Apple shares took its valuation above a record $1 trillion and helped major US indexes close in positive territory.

In midday trading, Apple Inc became the first publicly traded company with a market capitalization exceeding $1 trillion. That led a rebound in technology stocks that helped key US indexes pare earlier losses to turn positive.

"They get the blue ribbon," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama. "If you look at a trillion dollars, that's about 5 percent of the US economy. On the other hand, if you look at the stock relative to the market its (price-to-earnings ratio) is less, it still has a decent growth rate."

The tech company's stock jumped more than 3.3 percent to as high as $208.38, bringing its gain to about 9 percent since Tuesday when it reported quarterly results that beat expectations and said it bought back $20 billion of its own shares.

The Nasdaq, Dow and benchmark S&P indexes had opened lower, but began to turn positive as the advance in Apple shares helped take the focus away from the trade dispute. The Dow, which was the worst performer of the three indexes, was the only one to end lower.

On Wall Street, the Dow Jones Industrial Average fell 7.66 points, or 0.03 percent, to 25,326.16, the S&P 500 gained 13.86 points, or 0.49 percent, to 2,827.22 and the Nasdaq Composite added 95.40 points, or 1.24 percent, to 7,802.69.

Despite the day's reprieve for Wall Street, concerns remained over the US-China trade spat, which intensified on Wednesday after US President Donald Trump raised pressure on China by proposing a higher 25 percent tariff on $200 billion worth of Chinese imports.

China on Thursday urged the United States to "calm down," but market participants remained unnerved.

MSCI's gauge of stocks across the globe shed 0.75 percent, while the pan-European FTSEurofirst 300 index lost 0.85 percent.

Germany's blue-chip index DAX, which is seen as a trade war proxy, fell 1.5 percent while the broader pan-European STOXX 600 was down about 0.8 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan closed down 1.6 percent, dragged lower by a 1.8 percent fall in Chinese H-shares.

Benchmark US government bond yields dipped as the market sought safe-haven debt in Treasuries amid the trade dispute.

US yields, however, moved in narrow ranges ahead of Friday's US nonfarm payrolls report for July.

"The market was pretty much back and forth. We're just waiting for tomorrow's payrolls," said Tom Simons, money market economist at Jefferies in New York.

Euro zone government bond yields dipped, and borrowing costs in Germany and France pulled back from seven-week highs.

Gold prices inched downward after Fed's upbeat assessment of the economy on Wednesday to the lowest price in more than a year as the dollar, which typically has an inverse relationship with gold, rose.

Spot gold dropped 0.6 percent to $1,208.72 an ounce. US gold futures fell 0.87 percent to $1,216.90 an ounce.

The dollar index rose 0.56 percent, with the euro down 0.61 percent to $1.1587.

Oil prices strengthened after an industry report suggested US crude stockpiles would soon begin to decline again after a surprise rise in the latest week.

Traders said prices rallied when industry information provider Genscape reported crude inventories at the Cushing, Oklahoma, delivery hub for US crude, dropped 1.1 million barrels since Friday, July 27.

Brent crude futures settled up $1.06, or 1.5 percent at $73.45 a barrel. US crude rose $1.30, or 1.9 percent, to $68.96 a barrel. 

source: news.abs-cbn.com

Apple firmly on course for $1 trillion valuation, analysts say

Apple Inc's shares rose to a record high on Friday as more analysts set a trillion-dollar valuation on the company, following a blowout fourth quarter and an upbeat forecast that quashed investor concerns around the iPhone X.

The stock rose as much as 3.7 percent to $174.26, briefly breaching $900 billion in market value, amid declines in the broader market. The gains added nearly $32 billion to the company's market capitalization.

The Cupertino, California-based company also forecast a strong holiday quarter ahead, which will include the iPhone X that started selling on Nov. 3.

"We see iPhone X unlocking pent-up iPhone upgrades, especially in China, driving more than 20 percent iPhone unit growth and a revenue and earnings beat in 2018," analyst Katy Huberty on Morgan Stanley said.

The glass-and-steel $999 phone appeared to have brought back the frenzy associated with iPhone launches - long lines formed outside Apple stores across the world as fans flocked to buy the new phone.

The company will make 30 million iPhone X units during the current quarter, Nomura Instinet analysts estimated, allaying production worries related to the phone.

IPhone X's launch follows weeks of concerns among analysts about the production of the phone, which for the first time includes new facial identification software to replace the fingerprint used on previous phones.

Apple said on Thursday it expects first-quarter revenue of $84 billion to $87 billion, at the high end of analysts' average expectation of $84.18 billion, according to Thomson Reuters I/B/E/S.

"We – and many others – had feared that guidance could be weaker, reflecting only 9 weeks of the flagship iPhone X and limitations on supply," Bernstein analyst Toni Sacconaghi said.

At least 13 brokerages raised their price targets on the stock, with Citigroup making the most bullish move by raising its price target by $30 to $200.

Of the 37 analysts that track the stock, as per Thomson Reuters data, 31 had a "buy", or higher rating. None had a "sell".

With the latest brokerage actions, at least nine Wall Street analysts now have target prices that put Apple's market value above $1 trillion. Drexel Hamilton's Brian White is still the most bullish among Apple analysts tracked by Thomson Reuters, raising his target price further to $235.

Apple's fourth-quarter results underscored the company's ability to drive growth not just on iPhones, but across its range of products, analysts said.

The company's suite now includes five different iPhone models, the iPad, the Mac and the Apple Watch as well as its fast-growing services.

Apple said it sold 46.7 million iPhones in the fourth quarter ended Sept. 30, above analysts' estimates of 46.4 million, according to financial data and analytics firm FactSet. Mac and iPad sales too were above the estimates of most analysts.

source: news.abs-cbn.com

iPhone sales hit 1.2 billion, Apple shares sail to record high

Apple Inc on Tuesday delivered surprisingly strong fiscal third-quarter earnings and signaled that its upcoming 10th-anniversary phone lineup is on schedule, driving the stock up 6 percent to an all-time high in after-hours trading.

The stock climbed above its intraday record high to $159.10 after the company reported better-than-expected iPhone sales, revenue and earnings per share. The stock price move was expected to help drive the Dow Jones Industrial Average over the 22,000 mark on Wednesday.

Apple also said it hit a milestone of 1.2 billion iPhones sold.

The April-June quarter is traditionally a soft one for Apple as the market waits for the September launch of new iPhone models. But Tuesday’s results show that iPhone buyers may be less inclined than they once were to delay purchases until a new model is out.

The iPad product lines also showed unexpected strength, service revenue continues to grow at a healthy clip, and even the much-maligned Apple Watch showed a 50 percent sales increase.

Apple is widely tipped to adopt higher-resolution OLED displays for the latest iPhone, along with better touchscreen technology and wireless charging - which could come with a $1,000 plus price tag.

The phone is expected to launch in September.

The company forecast total revenue of between $49 billion and $52 billion for the current fourth quarter, while analysts on average were expecting $49.21 billion, according to Thomson Reuters I/B/E/S.

Apple's fourth quarter generally includes first-weekend sales of the company's latest devices.

The forecast "makes it fairly certain that at least some new iPhone models will be released on the normal schedule,” said analyst Jan Dawson of Jackdaw Research. “That doesn’t necessarily mean all new models will go on sale then, or that they’ll all be in abundant supply, but I would think it means that at the very least the successors to the current phones will be available."

But Bob O'Donnell, chief analyst at TECHnalysis Research, cautioned that if Apple releases cheaper models before the premium models in its 10th anniversary phone lineup, the cheaper models could dampen sales of more expensive units released closer to the holidays.

The company said iPhone sales rose 1.6 percent to 41.03 million in the third quarter ended July 1, above analysts' average estimate of 40.7 million units, according to FactSet StreetAccount. Apple sold 40.4 million iPhones a year earlier.

But a lower average iPhone selling price of $606, well below Wall Street expectations of $621, caused iPhone revenue to come in at $24.8 billion, below expectations of $25.5 billion.

Apple Chief Financial Officer Luca Maestri told Reuters the weak price was partly explained by Apple lowering the flow of inventory by 3.3 million units, which he said were “entirely at the high end of the range.”

Apple reports how many phones it sells to retailers, not how many phones it sells to consumers, what is known as a sell-in basis. When factoring how many existing “high end” phones the company cleared out of retail inventory, Maestri said average selling prices were higher.

The company's net income rose to $8.72 billion, or $1.67 per share, from $7.80 billion, or $1.42 per share, a year earlier.

Revenue rose to $45.41 billion from $42.36 billion in the quarter, typically the company's weakest, beating expectations of $44.89 billion.

CHINA REVENUE DOWN, AUTONOMY TO THE FUTURE

Apple said revenue from emerging markets excluding China grew 18 percent, a bright spot. But sales from the Greater China region fell 9.5 percent to $8 billion in the latest quarter, as consumers switched to newer domestic offerings.

The decline was smaller than recent quarters. Apple's Maestri said mainland China revenue was flat, as were iPhone sales in the mainland. Sales of other Apple products rose in mainland China and were also up in Taiwan.

“The decline from a market standpoint was concentrated in Hong Kong, which is a place that has been really affected by a reduction in tourism because the Hong Kong Dollar is pegged to the US dollar,” Maestri said.

Apple CEO Tim Cook also directly addressed the company's decision to remove so-called VPN apps from the App Store in China. Those apps help Chinese users circumnavigate government internet restrictions.

"We would obviously rather not remove the apps, but like we do in other countries we follow the law wherever we do business," Cook said. "We believe in engaging with governments even when we disagree. This particular case, we’re hopeful that over time the restrictions we’re seeing are lessened, because innovation really requires freedom to collaborate and communicate."

Strong iPad sales of $4.9 billion - almost $1 billion above Wall Street expectations - and a 21.6 percent jump in the company's services business that includes the App Store also helped boost revenue. In particular, Apple said that Walmart Stores Inc would buy 19,000 iPads to train as many as 225,000 employees. The company also said it increased production of AirPods, its wireless headphones.

Apple CEO Tim Cook declined to directly address US President Donald Trump's claims that Apple will build three new factories in the US, instead citing the company's job creation efforts and a $1 billion US manufacturing fund.

Cook also hinted that Apple's experiments with self-driving cars may include ambitions that extend beyond cars. He said the company was making a "big investment" in autonomous systems.

"From our point of view, autonomy is sort of the mother of all AI projects," Cook said. "And the autonomous systems can be used in a variety of ways, and a vehicle is only one, but there are many different areas of it. And I don't want to go any further with that."

source: news.abs-cbn.com

Apple hits record high but leaves some investors in dust

SAN FRANCISCO - Apple shares cruised to a record-high close Monday, helping catapult the S&P 500 stock index over the $20 trillion mark in what amounts to a victory for plain-vanilla mutual funds over a bevy of hedge fund managers who recently backed away from the iPhone maker.

The largest component of the S&P 500 and a core holding on Wall Street, Apple's stock climbed 0.9 percent to end at $133.29, above its record high close of $133.00 hit on Feb. 23, 2015 and giving it a market value of about $699 billion.

Its increase helped balloon the S&P 500's market capitalization on Monday beyond $20 trillion for the first time.

While mutual funds have largely bet on Apple in recent months, some big names missed out on all or part of its recent acceleration.

Hedge fund manager Dan Loeb's Third Point LLC cut its stake in Apple by 26 percent to 1.9 million shares in the fourth quarter, according to regulatory filings, while George Soros and Carl Icahn also shed their Apple shares last year.

In contrast, the number of mutual funds reporting they became Apple shareholders in recent quarterly filings has jumped by 187 percent to 287, while the number of mutual funds liquidating their Apple holdings dropped by 26 percent to 151, according to Morningstar.

Among the big names who backed the stock, Warren Buffett's Berkshire Hathaway last August said it had increased its stake in Apple by 55 percent to 15 million shares, now worth $2 billion. David Einhorn's hedge fund Greenlight Capital in January said it still likes Apple.

Apple has climbed 50 percent from lows in the first half of last year and is up 15 percent so far in 2017. It was still short of its all-time intraday high of $134.54, set on April 28, 2015.

Monday's gain came after Goldman Sachs analyst Simona Jankowski raised her price target for Apple to $150. She said she is more confident that an upcoming 10th anniversary iPhone will feature augmented-reality technology, which could help boost demand in a saturated smartphone market.

Many investors are betting that Apple will mark the iPhone's 10th anniversary with a dramatically improved model. They also believe that strong sales of the iPhone 6S two years ago have left a larger-than-normal base of customers ready to upgrade.

The Cupertino, California company reported strong December-quarter results on Jan. 31, and although it gave a cautious outlook for the current quarter, Wall Street expects revenue to grow this year after sinking nearly 8 percent in fiscal 2016.

In 1998, when the S&P 500 closed above $10 trillion for the first time, Apple accounted for just under 0.06 percent of the index. It now accounts for about 3.5 percent of the S&P 500, according to S&P Dow Jones Indices.

The 721 days that have passed since Apple's previous record-high close represent the largest gap between such milestones since the iPhone's launch in 2007.

source: news.abs-cbn.com

Signs of life for Apple's stock as Wall St eyes new iPhone

SAN FRANCISCO - After months of declines in Apple's stock, sentiment appears to be mending as investors focus on steady earnings expectations and bet that the expected launch of a new iPhone will add badly-needed fuel to sputtering sales.

Battered by nearly a year of off-and-on declines from record highs because of fears of a slowdown in iPhone sales, Apple's stock now is valued closer to IBM, which has disappointed Wall Street for the past four years with declining revenue, than to Silicon Valley technology pioneers Alphabet and Tesla Motors.

Apple shares have increased 5 percent in the past two weeks as Wall Street bets the company this month will launch a less expensive iPhone to boost sales in developing countries like China. With U.S. consumers upgrading their smartphones less often, manufacturers have been relying on China for growth.

Shareholders this week pointed to Apple's reliable cash generation, beaten down valuation and its wild card potential for future game-changing products as key reasons for owning it.

"This company has a history of doing better than expectations and surprising people," said Daniel Morgan, Senior Portfolio Manager at Synovus Trust Company, which holds over 1 million shares of Apple. "Where else can I go and find a company trading at 10 or 11 times earnings that has had such a great history?"

At $100.97 a share on Wednesday, Apple is selling at 10.7 times its expected earnings per share over the next 12 months. Its average forward price-earnings-ratio has been 13 over the past two years.

By comparison, Internet behemoth Alphabet, whose Android mobile platform competes against Apple's iOS, trades at 20 times expected earnings and 13-year old Tesla Motors trades at 132 times earnings. International Business Machines , which is struggling to expand into a high-growth business like cloud computing, has a P/E of 10.2, according to Thomson Reuters data.

"Unless something big happens, (Apple) doesn't deserve to trade at 20 to 25 times earnings anymore. It's just too big," said David Meier, a portfolio manager at Motley Fool Funds. "But as a high-quality company, could it trade at 15 times earnings? Certainly."

A target of 15 times its next 12 months' expected earnings would put Apple at around $138.

In another hint of improving sentiment, Apple's stock has recently moved above its 50-day moving average for the first time since December.

The stock's selloff in recent months has boosted Apple's dividend yield to 2.2 percent from 1.5 percent a year ago.

Analysts' covering Apple have been little help to investors. Ahead of the stock's 20-percent drop that started in December, 41 analysts recommended buying Apple shares while just one recommended selling, according to Thomson Reuters data. Currently, no analysts recommend selling, while 38 recommend buying.

A new iPhone with a smaller 4-inch screen will likely boost volumes by about 5 percent this year, an increase not yet incorporated into Wall Street's expectations, Goldman Sachs analyst Simona Jankowski wrote in a report on Monday.

Apple chip supplier Dialog Semiconductor on Tuesday forecast March-quarter revenue below analysts' expectations, but said it still expects single-digit growth for the year. That suggests the March quarter could mark the low-point in iPhone shipments, with demand for new models building later in the year, RBC analyst Amit Daryanani wrote in a research note.

Jeffrey Carbone, Senior Partner at Cornerstone Financial Partners, said Apple remains a staple holding at his firm but that he has recently turned his attention to Apple suppliers including Skyworks Solutions, which he believes is undervalued.

"We have a normal weighting on Apple, we like the company, but we think the supply chain could have greater potential," Carbone said.

source: www.abs-cbnnews.com

Apple gives weak forecast, shares fall nearly 7 pct

BENGALURU/SAN FRANCISCO - Apple Inc. shares slumped nearly 7 percent in after-hours trading as its fourth-quarter revenue forecast fell short of estimates and it missed some targets for iPhone sales.

The shares dropped to $121 after the company released its results on Tuesday, from $130.75 at the close.

The forecast overshadowed Apple's strong sales in China, which more than doubled to $13.23 billion from a year earlier.

Apple Chief Financial Officer Luca Maestri said in an interview the results in China were "spectacular" during the quarter and noted plans to open 40 stores there over the next 12 months.

Without disclosing specific figures, Maestri said sales of the Apple Watch beat the company's expectations. He noted that in the nine weeks since its launch in late April, the device has sold better than either iPhones or iPads over a similar period after their launch.

Apple said on Tuesday it sold 47.5 million iPhones in the third quarter, up 35 percent from a year ago. But some analysts had expected around 49 million.

Colin Gillis, an analyst for BGC Partners, said the results highlighted the vulnerability of Apple's dependence on the iPhone and the Chinese market's growing importance to the company.

"Where are you going to find growth in the world?" he said. "You've done an amazing job sucking all the smartphone profits into your balance sheet, but smartphone sales are slowing. What's going to happen when the industry matures, just like PCs did?"

The company forecast revenue of $49 billion to $51 billion, missing analysts' average estimate of $51.13 billion according to Thomson Reuters I/B/E/S.

The company's iPhone 6 and 6 Plus, which shattered iPhone sales records when they were launched, are already 10 months old.

Apple had a troubled day, with its App Store, Apple Music, iTunes Store and some other services suffering disruption for more than three hours before results were released.

source: www.abs-cbnnews.com

Big problem for fund managers: liking Apple too much

NEW YORK - At more than 15 percent of his fund's assets, John Burnham, manager of the $136 million Burnham Fund, has a larger stake in Apple Inc than any other diversified fund.

"I think they are doing everything right and it's still a cheap stock based on earnings and revenue," he says.

Yet that devotion for Apple is a problem for Burnham and some other managers of so-called diversified funds like his - they want more Apple than they can buy under self-imposed risk-reducing guidelines that typically have them holding no more than 5 percent of their assets in any one company.

Burnham and the 174 fund managers like him who hold large stakes of their diversified portfolios in Apple are pulled in two directions: hoping to prevent an unforeseen drop in Apple shares from upending their portfolios, while also benefiting from a company whose shares are up 12 percent this year so far.

"Your positioning in Apple may hold a big sway in how your fund does overall, particularly in categories like large blend where every basis point counts," said Laura Lutton, who oversees equity fund research at fund tracker Morningstar.

In 2014, for instance, funds that underweighed Apple compared to broad market indexes were the most likely to underperform their peers, she said.

RISKS

Holding a concentrated position in one company is one way for stockpickers to stand out as investors move money to passive index funds. Yet it is unusual for diversified funds like Burnham's to hold more than 10 percent of their portfolios in one company, said Todd Rosenbluth, director of mutual fund research at S&P Capital IQ.

"Investors may not realize that their fund manager is taking on a higher amount of risk," he said.

Most fund managers are inclined to take profits when a stock hits 7 percent of a portfolio, yet there are few set mandates set down by fund firms, Rosenbluth said. He said that he can’t think of any fund families that have to sell if holdings exceed guidelines as a result of appreciation.

Diversified mutual funds are allowed by law to add shares of a company as long as its total weight is below 24.9 percent of their portfolios overall, but do not have to sell shares if they appreciate above that level, said Jay Baris, an attorney at Morrison & Foerster in New York.

BIG BETS
Burham didn't set out to have such a big stake in Apple, he said. He began buying shares in 2005 when they traded at a split-adjusted level of less than $7 each. Those shares have now appreciated over 2,000 percent.

"It's the world's greatest company. I just don't see any reason to sell it," Burnham said, adding that he thinks that the stock should trade above $200 a share. Shares of the company closed at $123.59 on Friday.

His big weighting in the company is also helping his performance, which may in turn bring in more investor dollars. Burnham's fund, which also has significant positions in Chipotle Mexican Grill and Williams Companies Inc, is up 4.8 percent for the year to date, according to Lipper, a return about 4 percentage points better than the S&P 500.

Over the last 5 years, the fund has returned an average of 14.3 percent a year, a performance slightly better than average large cap fund. The fund costs $1.36 per $100 invested, a rate slightly above average.

Other fund managers with large stakes in Apple who aren't selling say that they didn't set out to have an oversized position in the company.

David Chiueh, the manager of the Upright Growth fund, has 13.4 percent in Apple, the second-largest among diversified funds tracked by Lipper, mostly because shares he bought in 2008 have appreciated, he said. The BlackRock Science and Technology Opportunities Portfolio, the third-largest Apple holder, has an underweight position according to the fund's chosen benchmark, the MSCI World Information Technology index, a company spokeswoman said.

Other large holders of Apple have started to trim their positions. Mark Mulholland, whose Matthew 25 fund is classified as a non-diversified fund, has 15.3 percent of his portfolio's assets in Apple.

He expects to trim the position down to 10 percent of his portfolio, in part because the company's shares do not look as attractive on a valuation basis, he said.

"It's not a company under duress by any means, but it's not trading at as big as a discount as it was before," Mulholland said.

source: www.abs-cbnnews.com