Apple's Health Is Testament to Mobile Wireless Broadband Theme

By Steve Birenberg  JAN 25, 2012 11:35 AM

Apple guidance for the March quarter is up 32% and is probably conservative.

 


Apple (AAPL) continues to amaze. Relative to expectations this is one of the best quarters I ever remember by any company. Damn, I am pretty certain I wrote that about Apple previously! In calendar 2011, Apple earned $35 a share. Guidance for the March quarter is up 32% and is probably conservative. The company could earn $45 per share in 2012.

By the end of the year, cash per share will be near $130 to $140. Subtract that from this morning’s price of $450, and you get $320 and you still have an absurdly cheap stock at seven to eight times earnings; $500 to $600 is a very reasonable 2012 target for the shares.

The story at Apple is iOS. 37 million iPhones. 15 million iPads. 15 million iPods that are mostly touches. iOS is mobile broadband. It defines and leads the experience. Even if this growth came somewhat at the expense of Android last quarter, Apple’s health is the greatest testament to the mobile wireless broadband theme.

Mobile broadband is a key theme for my firm's individual stock selection. Recent purchases of Qualcomm (QCOM) and EMC Corp. (EMC) play right into this mobile broadband. Qualcomm chips power many high-end smartphones, including from Apple. EMC data storage solutions enable smartphones, tablets, and laptops to access massive databases of content, information, and applications.

For more analysis on Apple’s latest earnings, below are the Twitter comments I posted live during the conference call. The tweets are listed in chronological order from the start of the call to the end.

Disclosure: Apple, Qualcomm, and EMC are net long positions in the Entermedia Funds. The Entermedia Funds are long/short equity hedge funds focused on media, entertainment, communications, and related technologies. Steve Birenberg is co-portfolio manager of Entermedia, owns a stake in Entermedia’s investment management company, and has personal monies invested in the Funds. Apple, Qualcomm, and EMC are widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg’s personal accounts. Steve is sole proprietor of Northlake, an SEC registered investment adviser.

This column was previously published by SNL Kagan on www.snl.com.
Positions in AAPL,EMC,QCOM

Entermedia is a long/short equity hedge fund focused on media, communic= ations, and related technologies. Steve Birenberg is co-portfolio manager o= f Entermedia, owns a stake in the Funds' investment management compan= y, and has personal monies invested in the Funds. CBS and Discovery Communi= cations are widely held by Northlake Capital Management, LLC, including in = Steve Birenberg's personal accounts. Steve is sole proprietor of Nort= hlake, a long only registered investment advisor.

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