My Take on Apple

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OK, I give up: everyone in the world has an opinion on Apple: here's mine.

The two anxieties about Apple are: 1) the parabolic stock price, up almost 50 percent, and 2) sales expectations are high.

I do have a problem when you have a stock with a 200-day moving average of $436 and a 50-day moving average of about $560 and it's trading at $590, I won't deny it. But what matters more are sales expectations.

AAPL is mostly about how many iPhones and iPads they can sell. Here's the breakdown of revenues:

Apple's Revenues
(% of 2012 Q1 revenues, rounded)

iPhone 53%

iPad 20%

Mac 14%

iPod 5%

Other 8%

Source: Apple

Sales expectations are high, but not unreasonable. Standard and Poor's, for example, estimates sales growth of 53 percent for the fiscal year ending in September. That's after rising 66 percent in FY 2011. This, with a market cap of $544 billion!

And the growth is in the right areas. Even as iPod sales fall off, sales of iPads are lifting off. They have 60 percent of the market in tablets; Gartner thinks their sales will DOUBLE this year. And no one is cutting estimates.

Same with iPhones: Apple had about 19 percent of the smartphone market in 2011. Credit Suisse thinks it will grow to 23 percent in 2012.

Also consider:

1) almost everyone believes that AAPL will gain or retain market share in iPhone, iPads, and even MacBooks;

2) iPhones are GAINING adherents in the enterprise space; more companies are supporting iPhone as company phones, at the expense of Blackberry

3) AAPL has one of the most loyal base of users you can imagine (I'm one). You can't say that about Google's Android. Or Microsoft. Surveys consistently show that 90 percent or more of AAPL users will keep using. And buying. The iPhone 5 is coming in the second half.

4) The recently announced a dividend ($2.65 per share, or 1.8 percent dividend yield), which should attract an investor base well beyond the usual growth investors, into the value crowd.

OK smartypants, if AAPL is so great, why is it down today? There's clearly some broader tape issues at work, since it's been down five days in a row. Macro concerns are stronger.

For today, all the weakness in Apple came in the first twenty minutes; it's been stable since then.

Volume is heavy, and when I see other big tech names up (IBM, Intel, Micron, Microsoft, Oracle, EMC), this suggests that AAPL may be being used as a source of funds to buy other names that have not had anywhere near the technical runups AAPL has had.

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