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Tech Check
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But that's what's been happening to the wireless analyst at RBC Capital Mike Abramsky, who raised the ire of the Mac faithful recently when he simultaneously slapped his version of a "sell" on Apple shares with a $70 target, and a "buy" on Palm shares. His reasoning was that demand for Apple products in light of the recession posed serious threats to the business, and that there was a real concern about Steve Jobs and his return to the company.
Abramsky was skewered by Apple supporters who accused him of a conflict since he works for a Canadian-based firm and a top executive at RBC sits on Blackberry-maker Research in Motion's board, another Apple rival.
I've known Abramsky professionally for a while, I read his reports, I have talked to him fairly often, I find him reasoned, thoughtful and fair. He and I have had several conversations about his stance on Apple and while I have accentuated the positive as far as revenue streams, margins, cash, sales strategy and innovation are concerned, he has stressed the negative side of the coin. I never thought his reasons were based on conflicts; he and I just agreed to disagree, and heck, that's what makes a market.
It was a curious move earlier this week when he raised his target on Apple from $70 to $95 but still re-iterated his "underperform" on the shares, even as Apple, up 46 percent this year, continued to rally. He was the lone "sell" voice on the Street.
In the wake of yesterday's blockbuster report, Abramsky has apparently now been swallowed by Apple's jet-wash. This morning, he changed his tune to "outperform," or "buy," and slapped a new $165 target on the company's shares. It's a complete and total about-face and goes to show that he's not motivated by conflicts - as he has been so unfairly accused of - but motivated by his view of the fundamentals.
In his report today, he says, "Our prior concerns these past months were: 1) Recession headwinds; 2) Margin downshifts; 3) Management uncertainty. We now see these issues mitigated or resolved."
He adds that "Following 2 years of declines, RBC/IQ Changewave data shows 11% spending more on consumer electronics vs. 10% March, helping restore demand for Apple products." He's tracking data that shows "smartphones have proven recession-resistant; we are raising our Smartphone forecast to 30% Y/Y growth CY09 (21% prior) and our iPhone estimates to 28M (24M prior)." That's good for Apple, RIM, Palm, and Nokia.
He concedes that he underestimated the company's innovation premium, never a good thing when talking about Apple, and now expects Jobs to actually return to the company in June. As Apple has been consistently stating since the day the company announced his medical leave.
He's now focusing on Apple's "iPhone leadership and the stability of cash, and belief Apple will continue to out-innovate peers. We believe Steve Jobs is already re-engaged with creative work, and is likely to return to helm Apple."
Amazing what can happen when fundamentals replace the noise and static, and investors truly appreciate how unique this company's economic engine is. Apple's earnings were that good, and while Abramsky was likely biting down hard on a piece of shoe-leather as he typed out that upgrade, he is wise enough and flexible enough to change his mind, which is a credit to him, and a big tip of the hat to Apple.
Questions? Comments?
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