Company Update
January 28, 2015
R
IT HARDWARE & SOFTWARE
Brian J. White, CFA
212-610-2416
briwhite@cantor.com
Equity Research
Isabel Zhu
212-294-8016
izhu@cantor.com
Apple Inc. (AAPL-$109.14)
Rating: BUY
Target Price: $160.00
A Huge iPhone Quarter and It's Now Time to Focus on Apple Watch - Raising PT to $160
REV
2015E
Prev
2016E
Prev
2017E
1Q
74.6A
68.2E
80.4E
71.8E
85.4E
2Q
56.2E
53.7E
62.4E
55.5E
68.0E
3Q
49.7E
46.2E
56.9E
49.2E
61.0E
4Q
53.6E
49.1E
57.6E
51.8E
63.6E
EPS
2015E
Prev
2016E
Prev
2017E
1Q
3.06A
2.61E
3.19E
2.78E
3.52E
2Q
2.13E
1.97E
2.42E
2.10E
2.73E
3Q
1.72E
1.56E
2.04E
1.72E
2.28E
4Q
1.75E
1.56E
1.95E
1.71E
2.25E
FY
REV
Prev
EPS
Prev
P/E
2015E
234.2E
217.2E
8.68E
7.72E
12.6x
2016E
257.3E
228.3E
9.62E
8.33E
11.3x
Note:�Revenue�figures�are�in�billions.
2017E
278.0E
—
10.80E
—
10.1x
Summary: Apple is off to a great start in 2015 with an exceptional December quarter
driven by much stronger-than-expected iPhone shipments and healthy margin upside.
In our view, Apple's strong results give credence to the notion that the company's
decision to shift to larger-sized iPhones makes this iPhone cycle very different
from those of the past. Up next is Apple Watch, and the company announced the
new device will begin shipping during the month of April. Given this powerful
iPhone cycle, a big 4G ramp in China and the upcoming launch of Apple Watch, we
believe there is still plenty to look forward to at Apple during this transformational
cycle. At the same time, we believe Apple's valuation has room to expand from
depressed levels (i.e., 8.7x our CY:16 EPS estimate, ex-cash). We are boosting our
EPS estimates for Apple and raising our 12-month price target to $160.00 (from
$143.00).
■
■
■
■
Apple Delivers a Truly Exceptional 1Q:FY15 Performance. Last night,
Apple reported 1Q:FY15 sales of $74.6 billion that handily beat our recently
increased revenue estimate of $68.2 billion and the Street estimate (FactSet
Consensus was at $67.4 billion), while pro forma EPS of $3.06 (up 48% YoY)
was much better than our $2.61 projection and the Street's $2.60 estimate. Apple
delivered a 1Q:FY15 operating margin of 32.5% that was well above our 30.4%
projection.
iPhone Unit Sales Surge by 46% YoY in 1Q. Apple reported 1Q:FY15 iPhone
unit sales of 74.5 million that handily beat our estimate of 67.0 million and was
up by 46% YoY, while iPad units of 21.4 million were slightly above our 21
million projection and down by 18% YoY. Mac unit sales came in at 5.52 million
units, slightly below our 5.74 million projection and up by 14% YoY. Apple
grew total sales in Greater China by 157% QoQ and 70% YoY in 1Q:FY15,
Boosting Our Estimates and Raising PT to $160. Apple expects 2Q:FY15
sales of $52-55 billion, while gross margin is expected at 38.5-39.5%. We are
boosting our 2Q:FY15 revenue estimate to $56.2 billion from $53.7 billion
(Consensus is at $53.6 billion), while increasing our EPS projection to $2.13
from $1.97 (Consensus is at $2.00). For FY:15, we are boosting our EPS
projection to $8.68 from $7.72 to reflect the addition of Apple Watch and
continued iPhone momentum, while increasing our FY:16 EPS projection to
$9.62 from $8.33.
Valuation: We are raising our 12-month price target to $160.00 from $143.00,
which is based on 14x our CY:16 pro forma EPS estimate (adjusted for interest
income/expense), plus Apple’s $24.07 net cash per share.
Current Statistics
Market Cap ($Mil)
Shares Out (Mil):
Dividend Payout:
Dividend Yield:
$651,795.0
5,972.100
1.88
1.72%
The Disclosure Section may be found on pages 12 - 13.
Debt-to-Capitalization Ratio:
Net Cash per Share:
Tangible Book Value Per Share:
22.80
$24.07
$19.44
January 28, 2015
Apple Delivers a Truly Exceptional Performance in 1Q:FY15
Last night, Apple reported 1Q:FY15 sales of $74.6 billion that handily beat our recently
increased revenue estimate of $68.2 billion and the Street estimate (FactSet Consensus was at
$67.4 billion), while pro forma EPS of $3.06 (up 48% YoY) was much better than our $2.61
projection and the Street's $2.60 estimate. This sales print represents a 77% QoQ increase and
was well above the five-year average increase of 46% for the past December quarters and much
better than the up 54% in 1Q:FY14. In fact, this was the strongest QoQ revenue growth that
we have on record in our Apple model that dates back to early FY:98. Recall, Apple's original
1Q:FY15 outlook called for sales of $63.5-66.5 billion.
Despite the beginning of foreign exchange headwinds that are expected to worsen in the coming
quarters, Apple's performance in the margin department was much better than our estimates. For
example, Apple delivered 1Q:FY15 gross margin of 39.9%, which was well above our 38.6%
estimate and the company's outlook of 37.5-38.5%. Operating margin of 32.5% was much better
than our 30.4% projection. As such, operating profit of $24.2 billion handily beat our estimate
of $20.7 billion.
A Truly Amazing iPhone Quarter for Apple
The iPhone was the big driver of upside in 1Q:FY15 and driven by Apple's shift to a largersized iPhone with the iPhone 6/6 Plus that we believe will driven a stronger, more sustainable
upgrade cycle for the company. Apple reported 1Q:FY15 iPhone unit sales of 74.5 million that
handily beat our estimate of 67.0 million and up 46% YoY, while iPad units of 21.4 million
were slightly above our 21 million projection and down 18% YoY. Mac unit sales came in at
5.52 million units, slightly below our 5.74 million projection and up 14% YoY.
iPhones unit sales handily beat our estimate and the product category turned in 46% YoY unit
growth and 58% revenue growth. During 1Q:FY15, iPhone unit sales were 74.5 million (up
90% QoQ) vs. our estimate of 67 million. The channel inventory for the iPhone decreased by
0.2 million units sequentially (vs. 1 million unit increase in 1Q:FY14) and below the company's
adjusted target range of 5-7 weeks. iPhone unit sales grew strongly in both developed and
emerging markets. For example, iPhone unit sales in the U.S. rose by 44% YoY and grew by
97% in BRIC countries, while sales doubled YoY in China, as well as in Singapore and Brazil.
With the introduction of iPhone 6 Plus, iPhone ASPs were $687, up $50 from a year ago.
The sales cycle of iPad remained in negative territory during the December quarter as the tablet
market has slowed down. However, Apple believes the market is far from saturated and still
has a long life ahead of it. Moreover, we believe the partnership with IBM will open up new
opportunities for the iPad in the enterprise market and ultimately we expect Apple to launch a
larger-sized iPad (i.e., 12.9-inch iPad) that we have discussed as the "iPad Pro". Apple reported
iPad units of 21.4 million (up 74% QoQ and down 18% YoY) and slightly above our 21 million
projection. The channel inventory for the iPad increased by 1.1 million units QoQ, placing the
company within its target range of 5-7 weeks on a look-forward basis. Importantly, iPad revenue
fell by 22% YoY in 1Q:FY15 and thus the iPad sales cycle remained in negative territory and a
deterioration from the down 14% in 4Q:FY14 but better than the low of down 27% in 3Q:FY13.
Mac unit (desktop and portables) sales came in at 5.52 million units (flat QoQ and up 14% YoY)
and were slightly below our 5.74 million projection. With the introduction of new iMac with
Retina 5K display, Mac ASPs increased by $58 sequentially, while both desktop and notebook
grew unit sales by double-digit percentage on a YoY basis. The company exited the quarter
below the target range of 4-5 weeks of Mac channel inventory.
Apple grew sales in Greater China (i.e., Mainland China, Taiwan, and Hong Kong) by 70%
YoY in 1Q:FY15, largely driven by the new iPhones launch, in our view. iPhone unit sellthrough in Mainland China rose by 100% YoY in the December quarter, despite a later launch
in October. With the early stage of 4G rollout and the launch with all three carriers for the first
time, Apple believes the opportunities in China will be enormous and the company continues
to invest in this market. For example, Apple currently has 17 retail store in Greater China with
2
January 28, 2015
two newly opened in January, and the company expects to bring the number of retail stores to
40 by mid-2016.
In our view, the ramp of 4G networks in Mainland China with new pricing plans is driving
a pause in 3G subscriber adds in recent months and this was again apparent in 3G subscriber
numbers out of China in recent months. In total, 3G/4G subs in China grew by 45% YoY in
2015 to 604 million (out of 1.291 billion total mobile subscribers), and we expect a strong 4G
subscriber ramp in 2015. We believe Apple has the potential to be one of the major beneficiaries
in the smartphone world within China given its relatively new relationship with China Mobile
and the recent launch of the iPhone 6/6 Plus. No carrier in the world compares to China Mobile's
size, exiting December with 807 million wireless subscribers with 246 million 3G subs. 4G subs
at China Mobile reached 90 million in December and were up from 71 million in November.
During the month of December, China Mobile represented 62% of China's wireless subs and
56% of China's 3G/4G subs. Within the next five years, we believe 15-20% of the mobile
subscribers in China could be candidates for a higher-end smartphone such as the iPhone,
representing an opportunity for Apple that we estimate at approximately $123 billion to $164
billion.
All Eyes Turn to Apple Watch
Last night, Apple finally announced a more definitive date for the launch of Apple Watch with
plans to begin shipping the new wearable gadget this April. The wearable technology buzz
was in full force at International CES in early January and the smart watch has been chosen
as the first mainstream product from this category; however, we were unimpressed with the
innovations on display at the conference. During the wearable technology sessions that we
attended at CES, smart watches were the clear wearable consumer electronic device of choice
in 2015, with revenue expected to handily surpass fitness trackers and smart eyewear based on
estimates from the CEA. Apple Watch was highlighted by CEA as expected to "carry" the smart
watch category in 2015. Even in 2018, CEA expects the smart watch category to contribute
61% of the total U.S. wearable consumer electronics shipment revenue.
We do not believe analyzing the legacy watch market provides much insight into the smart
watch opportunity, because we view the smart watch as really just an extension of a consumer’s
smartphone. As such, we believe the relationship between the tablet and smartphone could
provide some clues into the smart watch relationship with the smartphone. For example, the
attach rates of tablets to smartphones (i.e., number of tablets shipped per year divided by the
number of smartphones) over the past four years have averaged approximately a high-teens
percentage. Tablets started in the single-digit percentage range when the iPad was launched in
2010 and ramped higher over the next three years. If we assume just 40-50% of an 18% attach
rate (i.e., a 7-9% attach rate) to kick in by 2017, we estimate the global smart watch industry
could be shipping at 144 million units in 2017. If we assume an average selling price (ASP) of
$250-300, this equates to $36-43 billion in global smart watch revenue for the industry in 2017.
The ASP will depend on the mix of smart watches from the entry level to the luxury, highend models. We believe the smart watch industry is significant, and we believe Apple has an
opportunity to be the leader in this new product category. Given the company had approximately
800 million iTunes accounts (most with credit cards) as of April 2014, we believe Apple has
a large group of Apple enthusiasts to sell into.
As such, we believe Apple has a big opportunity to lead this nascent market in 2015 and become
Apple’s fastest selling new product category during the first year on the market, surpassing the
iPad (i.e., 19.5 million in first year on the market). At the same time, we believe the gross margin
profile for Apple Watch can be in a range of 50-55%, surpassing our iPhone gross margin
estimates and well above the corporate average of 38.6% in FY:14. Supporting this view, one
of the China-based OEMs highlighted a 60-65% gross margin objective during our meeting at
International CES.
3
January 28, 2015
We have previously indicated that if we assumed the entry-level price of $349 for Apple Watch
(this is the entry-level price and thus an ultra-conservative estimate) with a launch date in a
window of this March or April and an 18-20% quarterly iPhone conversation rate (vs. well
below the average of 45% for iPad to iPhone over the past four years), we estimate this would
drive Apple Watch unit sales of approximately 38-43 million, revenue of $13.4-14.9 billion, and
EPS of $0.68-0.76 during the first year on the market. Given that Apple has three collections of
Apple Watch, we believe an average selling price of approximately $464 is more reasonable and
still potentially conservative. After CES, we also highlighted the financial potential of Apple
Watch in the first year using a $464 ASP assumption, which resulted in revenue of $17.9-19.9
billion during the first year on the market and EPS of $0.90-1.00.
Today, we have added Apple Watch to our model; however, we have taken what we believe is
very conservative stance given that the details around the global rollout schedule, the exact price
points and the supply availability have not been disclosed by Apple. Our current model reflects
Apple Watch units of 20.6 million in the first year on the market (the best selling new product
in Apple's history based on this projection) and revenue of $9.6 billion. For FY:15, this equates
to 6.8 million units, revenue of nearly $3.2 billion and an EPS contribution of approximately
$0.18. For FY:16, we have modeled out 25.1 million units, revenue of $11.7 billion and an EPS
contribution of approximately $0.67. Again, we believe our estimates are very conservative at
approximately one-half what we believe Apple has the potential to sell in the first year.
During Apple’s Special Event last September, we had opportunity to play with Apple Watch,
and we found the experience much more compelling than any of the smart watches on display
at International CES. Apple is differentiating itself versus its smart watch competitors by
segmenting its portfolio with the Apple Watch Sport, Apple Watch, and Apple Watch Edition.
As was readily apparent with the smart watches at International CES earlier this month,
navigating a smart watch is not easy given the size constraints of a small screen. However, we
believe Apple has found a solution with the Digital Crown that allows for improved precision
when navigating, zooming, and scrolling around the device. No smart watches at recent CES
offered anything similar to Apple’s Digital Crown, just as Apple was a pioneer in using the
mouse to navigate the Mac, the Click Wheel to operate the iPod, and the Multi-Touch screen
technology to move around the iPhone.
Strong Operating Cash Flow of $34 Billion in 1Q:FY15
In the December quarter, Apple generated $33.7 billion in operating cash flow, and the company
exited the quarter with $141.6 billion in net cash (or $24.07 per share). This includes $178
billion in cash and $36.4 billion in debt with a debt-to-capital ratio of 22.8%. Apple has used
$103 billion of the $130 billion that is targeted to be returned by shareholders by the end of 2015.
The average accounts receivable DSO ended 1Q:FY15 at 21 days and was down from 31 days
in the September quarter, while accounts payable DSO decreased to 69 days from 89 days, and
average days of inventory fell to 5 days from 7 days. Overall, the company's cash conversion
cycle in 1Q:FY15 ended at negative 44 days compared to negative 52 days.
Boosting Our Estimates and Raising PT to $160
Apple is off to a great start in 2015 with an exceptional December quarter driven by much
stronger-than-expected iPhone shipments and healthy margin upside. In our view, Apple's
strong results give credence to the notion that the company's decision to shift to larger-sized
iPhones makes this iPhone cycle very different from those of the past. Up next is Apple Watch,
and the company announced the new device will begin shipping during the month of April.
Given this powerful iPhone cycle, a big 4G ramp in China and the upcoming launch of Apple
Watch, we believe there is still plenty to look forward to at Apple during this transformational
cycle. At the same time, we believe Apple's valuation has room to expand from depressed levels
(i.e., 8.7x our CY:16 EPS estimate, ex-cash). We are boosting our EPS estimates for Apple and
raising our 12-month price target to $160.00 (from $143.00).
4
January 28, 2015
Apple expects 2Q:FY15 sales of $52-55 billion, while gross margin is expected at 38.5-39.5%.
We are boosting our 2Q:FY15 revenue estimate to $56.2 billion from $53.7 billion (Consensus
is at $53.6 billion), while increasing our EPS projection to $2.13 from $1.97 (Consensus is
at $2.00). For FY:15, we are boosting our EPS projection to $8.68 from $7.72 to reflect the
addition of Apple Watch and continued iPhone momentum, while increasing our FY:16 EPS
projection to $9.62 from $8.33.
Valuation
Our $160 price target is based on 14x our CY:16 pro forma EPS estimate (adjusted for interest
income/expense), plus Apple’s net cash per share of $24.07. Despite Apple’s more attractive
growth track record than the S&P 500 and our expectation of higher growth rates in the future,
the multiple (prior to cash add back) that we have used for our valuation is below the S&P
500 P/E multiple; moreover, this multiple is also below the company’s historical P/E of 19x
since 2007.
Risks
Risks to our price target for BUY-rated Apple include: (1) the health of the economy and
consumer trends; (2) the ability to retain key Apple employees; (3) the ability to broaden the
portfolio through a wider array of price points to expand consumer adoption; (4) the ability
to successfully open up new market opportunities; (5) the ability to navigate litigation with
competitors and potential anti-trust issues; (6) technology trends in the markets of personal
computers, smartphones, tablets, and digital music; (7) competition and pricing pressure across
key Apple product categories; and (8) potential disruption from component supply, labor issues,
and channel inventory.
5
January 28, 2015
APPLE, INC. ($ millions)
BRIAN J. WHITE, CFA 212-610-2416
CANTOR FITZGERALD
QUARTERLY INCOME STATEMENT (SEPT)
FY2015E
FY2016E
FY2017E
1QFY15A
74,599.0
29.5%
77.1%
44,858.0
60.1%
29,741.0
39.9%
1,895.0
2.5%
3,600.0
4.8%
24,246.0
32.5%
170.0
24,416.0
32.7%
6,392.0
26.2%
18,024.0
24.2%
2QFY15E
56,208.5
23.1%
-24.7%
34,220.7
60.9%
21,987.8
39.1%
1,911.1
3.4%
3,541.1
6.3%
16,535.6
29.4%
350.0
16,885.6
30.0%
4,440.9
26.3%
12,444.7
22.1%
3QFY15E
49,743.7
32.9%
-11.5%
30,900.6
62.1%
18,843.1
37.9%
1,890.3
3.8%
3,631.3
7.3%
13,321.6
26.8%
250.0
13,571.6
27.3%
3,569.3
26.3%
10,002.2
20.1%
4QFY15E
53,625.1
27.3%
7.8%
33,897.5
63.2%
19,727.6
36.8%
2,091.4
3.9%
4,182.8
7.8%
13,453.5
25.1%
250.0
13,703.5
25.6%
3,604.0
26.3%
10,099.4
18.8%
1QFY16E
80,407.1
7.8%
49.9%
48,565.9
60.4%
31,841.2
39.6%
2,573.0
3.2%
4,744.0
5.9%
24,524.2
30.5%
250.0
24,774.2
30.8%
6,515.6
26.3%
18,258.6
22.7%
2QFY16E
62,360.8
10.9%
-22.4%
37,915.4
60.8%
24,445.4
39.2%
2,182.6
3.5%
3,866.4
6.2%
18,396.4
29.5%
250.0
18,646.4
29.9%
4,904.0
26.3%
13,742.4
22.0%
3QFY16E
56,928.3
14.4%
-8.7%
35,295.5
62.0%
21,632.7
38.0%
2,106.3
3.7%
4,098.8
7.2%
15,427.6
27.1%
250.0
15,677.6
27.5%
4,123.2
26.3%
11,554.4
20.3%
4QFY16E
57,579.9
7.4%
1.1%
36,332.9
63.1%
21,247.0
36.9%
2,188.0
3.8%
4,433.7
7.7%
14,625.3
25.4%
250.0
14,875.3
25.8%
3,912.2
26.3%
10,963.1
19.0%
1QFY17E
85,406.6
6.2%
48.3%
51,329.4
60.1%
34,077.2
39.9%
2,647.6
3.1%
5,039.0
5.9%
26,390.6
30.9%
250.0
26,640.6
31.2%
7,006.5
26.3%
19,634.2
23.0%
2QFY17E
67,956.4
9.0%
-20.4%
41,113.6
60.5%
26,842.8
39.5%
2,378.5
3.5%
4,213.3
6.2%
20,251.0
29.8%
250.0
20,501.0
30.2%
5,391.8
26.3%
15,109.2
22.2%
3QFY17E
60,992.8
7.1%
-10.2%
37,632.6
61.7%
23,360.2
38.3%
2,195.7
3.6%
4,391.5
7.2%
16,773.0
27.5%
250.0
17,023.0
27.9%
4,477.1
26.3%
12,546.0
20.6%
4QFY17E
63,617.1
10.5%
4.3%
39,951.5
62.8%
23,665.5
37.2%
2,353.8
3.7%
4,898.5
7.7%
16,413.2
25.8%
250.0
16,663.2
26.2%
4,382.4
26.3%
12,280.8
19.3%
Pro-Forma EPS
Y/Y % Change in Pro-Forma EPS
$3.06
47.9%
$2.13
28.3%
$1.72
34.6%
$1.75
23.5%
$3.19
4.0%
$2.42
13.4%
$2.04
18.7%
$1.95
11.5%
$3.52
10.5%
$2.73
13.0%
$2.28
11.6%
$2.25
15.2%
EPS (ex-Stock-Based Compensation Expense)
Y/Y % Change in EPS (ex-Stock-Based Comp.)
$3.18
47.6%
$2.24
28.6%
$1.84
34.2%
$1.87
23.5%
$3.30
4.1%
$2.53
13.0%
$2.16
17.8%
$2.07
11.1%
$3.65
10.3%
$2.85
12.6%
$2.41
11.3%
$2.38
14.6%
GAAP EPS
Shares Outstanding - Diluted
Source: Cantor Fitzgerald estimates, Company data
$3.06
5,881.8
$2.13
5,843.3
$1.72
5,804.8
$1.75
5,766.3
$3.19
5,727.8
$2.42
5,689.3
$2.04
5,650.8
$1.95
5,612.3
$3.52
5,573.8
$2.73
5,535.3
$2.28
5,496.8
$2.25
5,458.3
Revenue
Y/Y Growth %
Q/Q Growth %
Cost of Sales
% of Revenue
Gross Profit
Gross Margin %
Research & Development Expenses
% of Revenue
Selling, General & Administrative Expenses
% of Revenue
Operating Income
Operating Margin %
Other Income
Earnings Before Income Taxes
% of Revenue
Income Tax Expense
Income Tax Rate
Net Income
Net Margin %
6
January 28, 2015
APPLE, INC. ($ millions)
BRIAN J. WHITE, CFA 212-610-2416
CANTOR FITZGERALD
QUARTERLY INCOME STATEMENT (SEPT)
Revenue
Y/Y Growth %
FY2013
FY2014 FY2015E FY2016E FY2017E CY2013 CY2014 CY2015E CY2016E
170,910.0 182,795.0 234,176.3 257,276.1 277,972.9 173,992.0 199,800.0 239,984.4 262,275.6
9.2%
7.0%
28.1%
9.9%
8.0%
5.7%
14.8%
20.1%
9.3%
Cost of Sales
% of Revenue
Gross Profit
Gross Margin %
Research & Development Expenses
% of Revenue
Selling, General & Administrative Expenses
% of Revenue
Operating Income
Operating Margin %
Other Income & Expense
Income Before Provision for Income Taxes
% of revenue
Income Tax Expense
Income Tax Rate
Net Income
Net Margin %
106,606.0
62%
64,304.0
37.6%
4,475.0
2.6%
10,830.0
6.3%
48,999.0
28.7%
1,156.0
50,155.0
29.3%
13,118.0
26.2%
37,037.0
21.7%
112,258.0
61%
70,537.0
38.6%
6,041.0
3.3%
11,993.0
6.6%
52,503.0
28.7%
980.0
53,483.0
29.3%
13,973.0
26.1%
39,510.0
21.6%
143,876.8
61%
90,299.5
38.6%
7,787.7
3.3%
14,955.2
6.4%
67,556.6
28.8%
1,020.0
68,576.6
29.3%
18,006.2
26.3%
50,570.3
21.6%
158,109.7
61%
99,166.4
38.5%
9,050.0
3.5%
17,142.9
6.7%
72,973.5
28.4%
1,000.0
73,973.5
28.8%
19,455.0
26.3%
54,518.4
21.2%
170,027.1
61%
107,945.8
38.8%
9,575.7
3.4%
18,542.3
6.7%
79,827.9
28.7%
1,000.0
80,827.9
29.1%
21,257.7
26.3%
59,570.1
21.4%
108,902.0
62.6%
65,090.0
37.4%
4,795.0
2.8%
11,043.0
6.3%
49,252.0
28.3%
940.0
50,192.0
28.8%
13,161.0
26.2%
37,031.0
21.3%
121,368.0
60.7%
78,432.0
39.3%
6,606.0
3.3%
12,540.0
6.3%
59,286.0
29.7%
904.0
60,190.0
30.1%
15,728.0
26.1%
44,462.0
22.3%
147,584.7
61.5%
92,399.7
38.5%
8,465.8
3.5%
16,099.2
6.7%
67,834.7
28.3%
1,100.0
68,934.7
28.7%
18,129.8
26.3%
50,804.9
21.2%
160,873.2
61.3%
101,402.4
38.7%
9,124.6
3.5%
17,437.9
6.6%
74,839.9
28.5%
1,000.0
75,839.9
28.9%
19,945.9
26.3%
55,894.0
21.3%
Pro-Forma EPS
Y/Y % Change in Pro-Forma EPS
$5.68
-9.9%
$6.45
13.6%
$8.68
34.6%
$9.62
10.7%
$10.80
12.3%
$5.75
-8.7%
$7.39
28.6%
$8.78
18.8%
$9.93
13.0%
EPS (ex-Stock-Based Compensation Expense)
Y/Y % Change in EPS (ex-Stock-Based Comp.)
$5.93
-8.7%
$6.80
14.6%
$9.14
34.4%
$10.09
10.4%
$11.30
12.0%
$6.02
-7.5%
$7.77
29.0%
$9.24
18.9%
$10.41
12.6%
$5.68
6,521.6
FY2013
30.6%
19.3%
28.0%
123,549
207,000
140,509
16,960.0
0.0
16,960.0
140,509
12.1%
13.7%
8,165
4.8%
6,757
2.6%
6,757
53,666
$8.23
45,501
$6.98
80,300
2.128
$6.45
6,122.7
FY2014
33.6%
18.0%
27.0%
111,547
231,839
146,842
28,987.0
6,308.0
35,295.0
146,842
24.0%
31.6%
9,571
5.2%
7,946
3.3%
7,946
59,713
$9.75
50,142
$8.19
88,330
2.069
$8.68
5,824.1
FY2015E
39.9%
20.6%
30.6%
141,863
259,436
178,266
32,504.0
3,899.0
36,403.0
178,266
20.4%
25.7%
12,217
5.2%
10,375
3.3%
10,375
73,280
$12.58
61,063
$10.48
97,163
2.410
$9.62
5,670.1
FY2016E
34.6%
19.6%
27.7%
173,640
297,152
210,043
32,504.0
3,899.0
36,403.0
210,043
17.3%
21.0%
12,000
4.7%
10,400
3.5%
10,400
71,421
$12.60
59,421
$10.48
106,879
2.407
$10.80
5,516.1
FY2017E
31.1%
18.6%
25.8%
209,955
342,428
246,358
32,504.0
3,899.0
36,403.0
246,358
14.8%
17.3%
12,000
4.3%
10,400
3.4%
10,400
78,027
$14.15
66,027
$11.97
117,567
2.364
$5.75
6,441.5
CY2013
28.8%
17.6%
26.5%
129,684
225,184
146,645
16,961
0
16,961
146,645
11.6%
13.1%
7,833
4.5%
7,313
2.8%
7,313
NA
NA
NA
NA
NA
NA
$7.39
6,015.6
CY2014
35.1%
18.3%
28.6%
123,328
261,894
159,731
32,504
3,899
36,403
159,731
22.8%
29.5%
10,803
5.4%
8,377
3.3%
8,377
NA
NA
NA
NA
NA
NA
$8.78
5,785.6
CY2015E
36.6%
18.1%
28.5%
154,512
299,093
190,915
32,504
3,899
36,403
190,915
19.1%
23.6%
12,000
5.0%
10,400
3.5%
10,400
NA
NA
NA
NA
NA
NA
$9.93
5,631.6
CY2016E
32.7%
17.5%
26.6%
187,519
338,791
223,922
32,504
3,899
36,403
223,922
16.3%
19.4%
12,000
4.6%
10,400
0.0%
10,400
NA
NA
NA
NA
NA
NA
Tangible Book-Value Per Share
Book-Value Per Share
Cash Per Share
Net Cash Per Share
$18.51
$19.41
$23.06
$20.40
$17.21
$18.68
$25.99
$20.08
$23.04
$24.60
$32.79
$26.48
$29.34
$30.94
$39.61
$33.12
$36.82
$38.47
$47.91
$41.24
$19.58
$20.55
$25.17
$22.48
$19.44
$20.97
$30.26
$24.07
$25.40
$26.98
$37.38
$31.03
$32.03
$33.64
$44.65
$38.12
Gross Margin %
Operating Margin %
Net Margin %
EBITDA Margin %
37.6%
28.7%
21.7%
32.6%
38.6%
28.7%
21.6%
33.1%
38.6%
28.8%
21.6%
33.3%
38.5%
28.4%
21.2%
32.4%
38.8%
28.7%
21.4%
32.5%
37.4%
28.3%
21.3%
32.5%
39.3%
29.7%
22.3%
33.9%
38.5%
28.3%
21.2%
32.6%
38.7%
28.5%
21.3%
32.5%
1,764
13,102
22,367
25.7
4.4
74.5
-44.5
83.4
0.9
55,756.0
36,183.4
2,111
17,460
30,196
30.5
6.3
85.5
-48.6
57.9
0.8
60,449.0
38,786.0
1,641
12,547
30,534
23.4
4.8
77.0
-48.9
76.7
1.0
77,931.6
49,818.2
1,762
13,473
32,786
18.5
3.9
73.1
-50.7
92.9
0.9
83,373.5
53,781.4
2,283
16,709
38,001
28.2
6.6
101.6
-66.8
55.1
0.8
67,663.0
43,794.2
1,657
13,990
37,743
23.3
4.9
93.7
-65.4
74.9
0.9
78,234.7
49,994.2
1,760
14,859
40,090
20.1
3.9
88.3
-64.3
94.2
0.8
85,239.9
55,157.0
GAAP EPS
Shares Outstanding - Diluted
Annual (FY) Key Ratios
Return-on-Equity
Return-on-Assets
Return-on-Invested Capital
Total Equity ($ millions)
Total Assets ($ millions)
Total Invested Capital ($ millions)
Long-Term Debt ($ millions)
Short-Term Debt ($ millions)
Total Debt ($ millions)
Total Capital ($ millions)
Debt-to-Capital Ratio
Debt-to-Equity Ratio
Capital Expenditures ($ millions)
% of Revenue
Depreciation ($ millions)
% of Revenue
D & A ($ millions)
Operating Cash Flow ($ millions)
Operating Cash Flow per share
Free Cash Flow ($ millions)
Free Cash Flow per share
Number of Apple Employees
Sales-Per-Employee Ratio
Inventory ($ millions)
Accounts Receivable ($ millions)
Accounts Payable ($ millions)
Accounts Receivable DSO
Days in Inventory
Accounts Payable DO
Cash Cycle Days
Inventory Turns Ratio
Asset Turnover Ratio
EBITDA ($ millions)
NOPAT ($ millions)
Source: Cantor Fitzgerald estimates, Company Data
1,947
2,122
14,885
14,200
36,224
29,588
18.6
27.1
4.0
6.0
74.1
93.8
-51.5
-60.8
91.7
60.9
0.9
0.8
90,227.9 56,565.0
58,833.1 36,337.5
7
January 28, 2015
APPLE, INC. ($ millions)
BRIAN J. WHITE, CFA 212-610-2416
CANTOR FITZGERALD
BALANCE SHEET (SEPT)
FY2014
FY2015E
FY2016E
FY2017E
Assets:
Current Assets:
Cash & Cash Equivalents
Short-term Marketable Securities
Accounts Receivable
Inventories
Deferred Tax Assets
Other Current Assets
Total Current Assets
1QFY14
2QFY14
3QFY14
4QFY14
14,077
26,634
14,200
2,122
3,742
19,572
80,347
18,949
22,401
9,700
1,829
4,014
13,648
70,541
12,977
24,828
10,788
1,594
3,884
13,878
67,949
13,844
11,233
17,460
2,111
4,318
19,565
68,531
19,478
12,985
16,709
2,283
5,046
26,902
83,403
21,695
12,985
9,779
1,720
3,802
20,270
70,252
23,289
12,985
10,147
2,020
3,365
17,939
69,744
30,620
12,985
12,547
1,641
3,627
19,338
80,759
55,654
12,985
13,990
1,657
5,439
28,997
118,721
53,971
12,985
10,850
1,908
4,218
22,489
106,421
57,964
12,985
11,612
2,311
3,851
20,530
109,254
63,805
12,985
13,473
1,762
3,895
20,765
116,684
90,396
12,985
14,859
1,760
5,777
30,799
156,577
90,497
12,985
11,823
2,080
4,597
24,507
146,488
94,520
12,985
12,442
2,477
4,126
21,995
148,544
103,006
12,985
14,885
1,947
4,303
22,942
160,068
Long-term Marketable Securities
Property, Plant & Equipment
Goodwill
Acquired Intangible Assets, Net
Other Assets
Total Assets
118,131
15,488
2,022
4,105
5,091
225,184
109,239
15,120
2,055
3,928
5,106
205,989
126,685
17,585
2,374
3,767
4,160
222,520
130,162
20,624
4,616
4,142
3,764
231,839
145,492
20,392
4,629
4,370
3,608
261,894
145,492
20,792
4,629
4,370
2,719
248,253
145,492
21,192
4,629
4,370
2,406
247,833
145,492
21,592
4,629
4,370
2,594
259,436
145,492
21,992
4,629
4,370
3,889
299,093
145,492
22,392
4,629
4,370
3,016
286,320
145,492
22,792
4,629
4,370
2,753
289,290
145,492
23,192
4,629
4,370
2,785
297,152
145,492
23,592
4,629
4,370
4,131
338,791
145,492
23,992
4,629
4,370
3,287
328,258
145,492
24,392
4,629
4,370
2,950
330,377
145,492
24,792
4,629
4,370
3,077
342,428
Liabilities & Shareholders' Equity:
Current Liabilities:
Short-term Debt
Accounts Payable
Accrued Expenses
Dividend Payable
Deferred Revenue
Total Current Liabilities
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15A 2QFY15E 3QFY15E 4QFY15E 1QFY16E 2QFY16E 3QFY16E 4QFY16E 1QFY17E 2QFY17E 3QFY17E 4QFY17E
0
29,588
15,824
0
8,357
53,769
0
18,914
15,984
0
8,310
43,208
2,010
20,535
15,264
0
8,396
46,205
6,308
30,196
18,453
0
8,491
63,448
3,899
38,001
22,724
0
8,987
73,611
3,899
25,260
17,122
2,944
7,896
57,121
3,899
25,837
15,153
2,924
7,485
55,298
3,899
30,534
16,335
2,905
6,997
60,670
3,899
37,743
24,493
2,885
8,079
77,099
3,899
28,025
18,996
3,092
8,760
62,772
3,899
29,569
17,341
3,071
8,566
62,446
3,899
32,786
17,540
3,071
7,512
64,808
3,899
40,090
26,016
3,029
8,581
81,615
3,899
30,540
20,701
3,227
9,546
67,913
3,899
31,680
18,579
3,220
9,178
66,556
3,899
36,224
19,379
3,220
8,300
71,022
Deferred Revenue - Non-current
Long-term Debt
Other Non-current Liabilities
Total Liabilities
3,071
16,961
21,699
95,500
3,164
16,962
22,476
85,810
3,058
29,030
23,287
101,580
3,031
28,987
24,826
120,292
3,480
32,504
28,971
138,566
3,746
32,504
21,829
115,200
3,315
32,504
19,318
110,436
3,574
32,504
20,826
117,573
3,751
32,504
31,227
144,581
4,156
32,504
24,218
123,650
3,794
32,504
22,108
120,852
3,838
32,504
22,362
123,511
3,984
32,504
33,168
151,271
4,529
32,504
26,391
131,337
4,065
32,504
23,687
126,812
4,240
32,504
24,706
132,472
Shareholders' Equity:
Common Stock
Deferred Stock Compensation
Retained Earnings
Accumulated Other Comprehensive Income
Total Shareholders' Equity
20,559
0
109,431
(306)
129,684
21,496
0
98,934
(251)
120,179
22,139
0
98,715
86
120,940
23,313
0
87,152
1,082
111,547
24,187
0
97,178
1,963
123,328
25,080
0
106,010
1,963
133,053
25,978
0
109,456
1,963
137,397
26,881
0
113,019
1,963
141,863
27,789
0
124,760
1,963
154,512
28,702
0
132,004
1,963
162,669
29,620
0
136,855
1,963
168,438
30,543
0
141,134
1,963
173,640
31,471
0
154,085
1,963
187,519
32,404
0
162,553
1,963
196,920
33,342
0
168,260
1,963
203,565
34,285
0
173,707
1,963
209,955
225,184
205,989
222,520
231,839
261,894
248,253
247,833
259,436
299,093
286,320
289,290
297,152
338,791
328,258
330,377
342,428
Liabilities & Shareholders' Equity
Source: Cantor Fitzgerald estimates, Company
1QFY15A 2QFY15E 3QFY15E 4QFY15E 1QFY16E 2QFY16E 3QFY16E 4QFY16E 1QFY17E 2QFY17E 3QFY17E 4QFY17E
8
January 28, 2015
APPLE, INC. ($ millions)
APPLE, INC. ($ millions)
BRIAN J. WHITE, CFA 212-610-2416
CANTOR FITZGERALD
PRODUCT SEGMENTS (SEPT)
BRIAN J. WHITE, CFA 212-610-2416
CANTOR FITZGERALD
PRODUCT SEGMENTS (SEPT)
Revenue by Product ($ millions):
Mac
Services (iTunes/Software/Services/Apple Pay)
iPhone
iPad
Other Products
Total Revenue
Percentage of Revenue by Product:
Mac
Services (iTunes/Software/Services/Apple Pay)
iPhone
iPad
Other Products
Total Revenue
Q/Q % Change in Revenue by Product:
Mac
Services (iTunes/Software/Services/Apple Pay)
iPhone
iPad
Other Products
Total Revenue
Y/Y % Change in Revenue by Product:
Mac
Services (iTunes/Software/Services/Apple Pay)
iPhone
iPad
Other Products
Total Revenue
Source: Cantor Fitzgerald estimates, Company data
1QFY15A 2QFY15E 3QFY15E 4QFY15E 1QFY16E 2QFY16E 3QFY16E 4QFY16E 1QFY17E 2QFY17E 3QFY17E 4QFY17E Revenue by Product ($ millions):
6,944
5,989
6,289
6,602
7,004
5,892
6,187
6,863
7,280
6,125
6,431
7,134 Mac
4,799
5,041
5,142
5,245
5,454
5,727
5,956
6,195
6,442
6,765
7,035
7,317 Services (iTunes/Software/Services/Apple Pay)
51,182
36,790
29,788
32,740
51,421
38,125
33,605
33,444
53,151
40,590
34,655
36,203 iPhone
8,985
6,406
5,578
4,993
9,690
7,303
6,268
5,790
10,210
7,815
6,798
6,338 iPad
2,689
1,982
2,947
4,045
6,838
5,313
4,913
5,288
8,323
6,662
6,074
6,627 Other Products
74,599
56,208.5
49,743.7
53,625.1
80,407.1
62,360.8
56,928.3
57,579.9
85,407
67,956
60,993
63,617
Total Revenue
1QFY15A 2QFY15E 3QFY15E 4QFY15E 1QFY16E 2QFY16E 3QFY16E 4QFY16E 1QFY17E 2QFY17E 3QFY17E 4QFY17E Percentage of Revenue by Product:
9.3%
10.7%
12.6%
12.3%
8.7%
9.4%
10.9%
11.9%
8.5%
9.0%
10.5%
11.2% Mac
6.4%
9.0%
10.3%
9.8%
6.8%
9.2%
10.5%
10.8%
7.5%
10.0%
11.5%
11.5% Services (iTunes/Software/Services/Apple Pay)
68.6%
65.5%
59.9%
61.1%
64.0%
61.1%
59.0%
58.1%
62.2%
59.7%
56.8%
56.9% iPhone
12.0%
11.4%
11.2%
9.3%
12.1%
11.7%
11.0%
10.1%
12.0%
11.5%
11.1%
10.0% iPad
3.6%
3.5%
5.9%
7.5%
8.5%
8.5%
8.6%
9.2%
9.7%
9.8%
10.0%
10.4% Other Products
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0% Total Revenue
1QFY15A 2QFY15E 3QFY15E 4QFY15E 1QFY16E 2QFY16E 3QFY16E 4QFY16E 1QFY17E 2QFY17E 3QFY17E 4QFY17E Y/Y % Change in Revenue by Product:
4.8%
-13.7%
5.0%
5.0%
6.1%
-15.9%
5.0%
10.9%
6.1%
-15.9%
5.0%
10.9% Mac
4.1%
5.0%
2.0%
2.0%
4.0%
5.0%
4.0%
4.0%
4.0%
5.0%
4.0%
4.0%
Services (iTunes/Software/Services/Apple Pay)
116.2%
-28.1%
-19.0%
9.9%
57.1%
-25.9%
-11.9%
-0.5%
58.9%
-23.6%
-14.6%
4.5%
iPhone
69.0%
-28.7%
-12.9%
-10.5%
94.1%
-24.6%
-14.2%
-7.6%
76.3%
-23.5%
-13.0%
-6.8% iPad
41.8%
-26.3%
48.7%
37.2%
69.1%
-22.3%
-7.5%
7.6%
57.4%
-20.0%
-8.8%
9.1%
Other Products
77.1%
-24.7%
-11.5%
7.8%
49.9%
-22.4%
-8.7%
1.1%
48.3%
-20.4%
-10.2%
4.3%
Total Revenue
FY2014
24,079
18,063
101,991
30,283
8,379
FY2015E FY2016E FY2017E
25,824
25,946
26,970
20,227
23,333
27,559
150,500 156,596 164,599
25,962
29,050
31,160
11,663
22,352
27,686
182,795
234,176
FY2014
13.2%
9.9%
55.8%
16.6%
4.6%
FY2015E FY2016E FY2017E
11.0%
10.1%
9.7%
8.6%
9.1%
9.9%
64.3%
60.9%
59.2%
11.1%
11.3%
11.2%
5.0%
8.7%
10.0%
100.0%
FY2014
12.1%
12.5%
11.7%
-5.3%
-17.2%
7.0%
100.0%
257,276
100.0%
277,973
100.0%
FY2015E FY2016E FY2017E
7.2%
0.5%
3.9%
12.0%
15.4%
18.1%
47.6%
4.1%
5.1%
-14.3%
11.9%
7.3%
39.2%
91.6%
23.9%
28.1%
9.9%
8.0%
1QFY15A 2QFY15E 3QFY15E 4QFY15E 1QFY16E 2QFY16E 3QFY16E 4QFY16E 1QFY17E 2QFY17E 3QFY17E 4QFY17E
8.6%
8.5%
13.5%
-0.3%
0.9%
-1.6%
-1.6%
3.9%
3.9%
3.9%
3.9%
3.9%
9.1%
10.2%
14.6%
13.8%
13.7%
13.6%
15.8%
18.1%
18.1%
18.1%
18.1%
18.1%
57.5%
41.2%
50.8%
38.3%
0.5%
3.6%
12.8%
2.2%
3.4%
6.5%
3.1%
8.2%
-21.7%
-15.8%
-5.3%
-6.1%
7.8%
14.0%
12.4%
16.0%
5.4%
7.0%
8.5%
9.5%
-5.2%
5.4%
66.8%
113.3%
154.3%
168.0%
66.7%
30.7%
21.7%
25.4%
23.6%
25.3%
29.5%
23.1%
32.9%
27.3%
7.8%
10.9%
14.4%
7.4%
6.2%
9.0%
7.1%
10.5%
Source: Cantor Fitzgerald estimates, Company data
9
January 28, 2015
APPLE, INC. ($ millions)
APPLE, INC. ($ millions)
BRIAN J. WHITE, CFA 212-610-2416
CANTOR FITZGERALD
PRODUCT SEGMENTS (SEPT)
BRIAN J. WHITE, CFA 212-610-2416
CANTOR FITZGERALD
PRODUCT SEGMENTS (SEPT)
Units Sales by Product (thousands):
Total Mac
iPhone
iPad
1QFY15A 2QFY15E 3QFY15E 4QFY15E 1QFY16E 2QFY16E 3QFY16E 4QFY16E 1QFY17E 2QFY17E 3QFY17E 4QFY17E Units Sales by Product (thousands):
5,519
4,691
4,973
5,271
5,482
4,660
4,939
5,532
5,753
4,890
5,184
5,806 Total Mac
74,468
53,750
43,750
49,250
74,250
55,750
49,250
50,750
76,750
59,250
50,750
54,750 iPhone
21,419
15,500
13,250
11,750
20,500
17,000
14,500
13,500
22,000
18,000
15,500
14,500 iPad
FY2014
18,906
169,219
67,977
FY2015E FY2016E FY2017E
20,454
20,612
21,632
221,218 230,000 241,500
61,919
65,500
70,000
Q/Q Unit Sales Growth:
Total Mac
iPhone
iPad
1QFY15A 2QFY15E 3QFY15E 4QFY15E 1QFY16E 2QFY16E 3QFY16E 4QFY16E 1QFY17E 2QFY17E 3QFY17E 4QFY17E Y/Y Unit Sales Growth:
0.0%
-15.0%
6.0%
6.0%
4.0%
-15.0%
6.0%
12.0%
4.0%
-15.0%
6.0%
12.0% Total Mac
89.6%
-27.8%
-18.6%
12.6%
50.8%
-24.9%
-11.7%
3.0%
51.2%
-22.8%
-14.3%
7.9%
iPhone
73.9%
-27.6%
-14.5%
-11.3%
74.5%
-17.1%
-14.7%
-6.9%
63.0%
-18.2%
-13.9%
-6.5% iPad
FY2014
15.7%
12.6%
-4.3%
FY2015E FY2016E FY2017E
8.2%
0.8%
4.9%
30.7%
4.0%
5.0%
-8.9%
5.8%
6.9%
Y/Y Unit Sales Growth:
Total Mac
iPhone
iPad
1QFY15A 2QFY15E 3QFY15E 4QFY15E 1QFY16E 2QFY16E 3QFY16E 4QFY16E 1QFY17E 2QFY17E 3QFY17E 4QFY17E
14.1%
13.4%
12.7%
-4.5%
-0.7%
-0.7%
-0.7%
4.9%
4.9%
4.9%
4.9%
4.9%
45.9%
22.9%
24.3%
25.4%
-0.3%
3.7%
12.6%
3.0%
3.4%
6.3%
3.0%
7.9%
-17.7%
-5.2%
-0.2%
-4.6%
-4.3%
9.7%
9.4%
14.9%
7.3%
5.9%
6.9%
7.4%
Source: Cantor Fitzgerald estimates, Company data
Source: Cantor Fitzgerald estimates, Company data
10
January 28, 2015
APPLE, INC. ($ millions)
BRIAN J. WHITE, CFA 212-610-2416
CANTOR FITZGERALD
CASH FLOW STATEMENT
Cash Flow from Operating Activities:
Net Income (Net Loss)
Cumulative Effects of Accounting Changes, Net of Taxes
Adjustments to Reconcile Net Income to Cash Generated by Operating Activities
FY2012
FY2013
FY2014
FY2015E
FY2016E
FY2017E
41,733.0
0.0
37,037.0
0.0
39,510.0
0.0
50,570.3
0.0
54,518.4
0.0
59,570.1
0.0
Depreciation, Amortization & Accretion
Stock-based Compensation Expense
Non-cash Restructuring
Deferred Income Taxes Expense/(Benefit)
Tax Benefits from Stock Options
Loss on Disposition of Property, Plant & Equipment
Gains on Sales of Investments, Net
In-process Research & Development
Changes in operating assets and liabilities:
Accounts Receivable
Inventories
Other Current Assets
Other Assets
Accounts Payable
Deferred Revenue
Other Liabilities
3,277.0
1,740.0
0.0
4,405.0
0.0
0.0
0.0
0.0
6,757.0
2,253.0
0.0
1,141.0
0.0
0.0
0.0
0.0
7,946.0
2,863.0
0.0
2,347.0
0.0
0.0
0.0
0.0
10,375.0
3,582.0
0.0
3,615.7
0.0
0.0
0.0
0.0
10,400.0
3,662.0
0.0
-267.5
0.0
0.0
0.0
0.0
10,400.0
3,742.0
0.0
-408.4
0.0
0.0
0.0
0.0
-5,551.0
-15.0
-1,414.0
-3,162.0
4,467.0
2,824.0
2,552.0
-2,172.0
-973.0
223.0
1,080.0
2,340.0
1,459.0
4,521.0
-4,232.0
-76.0
-2,220.0
167.0
5,938.0
1,460.0
6,010.0
4,912.6
469.9
2,407.7
1,014.4
1,536.3
-951.4
-4,252.7
-925.4
-121.0
-1,426.2
-191.3
2,251.9
779.6
2,740.6
-1,412.6
-184.8
-2,177.1
-292.0
3,437.6
1,190.0
4,162.5
NET CASH GENERATED BY OPERATING ACTIVITIES:
50,856.0
53,666.0
59,713.0
73,279.7
71,421.1
78,027.4
Cash Flow from Investing Activities:
Purchases of Marketable Securities
Proceeds from Maturities of Marketable Securities
Procceeds from Sales of Marketable Securities
Purchases of Other Long-term Investments
Payment Made in Connection with Business Acquisitions, Net of Cash Acquired
Payment for Acquistion of Properaty, Plant & Equipment
Payment for Acquistion of Intangible Assets
Other
-151,232.0
13,035.0
99,770.0
0.0
-350.0
-8,295.0
-1,107.0
-48.0
-148,489.0
20,317.0
104,130.0
0.0
-496.0
-8,165.0
-911.0
-160.0
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
-48,227.0 -33,774.0 -22,579.0 -30,165.0 -12,000.0 -12,000.0
Cash Flow from Financing Activities:
Decrease in Notes Payable to Banks
Payment of Long-term Debt
Cash Dividends Paid
Proceeds from Issuance of Common Stock/Stock Repurchase
Excess Tax Benefits from Stock-based Compenstation
Cash Used to Net Share Settle Equity Awards/Stock Repurchase/Other
0.0
0.0
-2,488.0
665.0
1,351.0
-1,226.0
0.0
6,306.0
0.0
0.0
0.0
0.0
0.0
1,076.0
0.0
0.0
-10,564.0 -11,126.0 -11,379.0 -11,952.6 -12,526.1
530.0
730.0
-15,787.5 -14,284.1 -14,300.3
701.0
739.0
264.0
0.0
0.0
-7,046.0 -34,198.0
-512.0
0.0
0.0
NET CASH GENERATED BY (USED IN) FINANCING ACTIVITIES:
-1,698.0
-16,379.0 -37,549.0 -26,338.5 -26,236.7 -26,826.4
Net Increase (Decrease) in Cash & Cash Equivalents
Cash & Cash Equivalents, Beginning of Year
Cash & Cash Equivalents, End of Fiscal Year
Source: Cantor Fitzgerald estimates, Company data
-217,128.0 -44,915.0
0.0
0.0
18,810.0
2,807.0
0.0
0.0
189,301.0 24,166.0
0.0
0.0
0.0
0.0
0.0
0.0
-3,765.0
-23.0
0.0
0.0
-9,571.0 -12,217.0 -12,000.0 -12,000.0
-242.0
-48.0
0.0
0.0
16.0
65.0
0.0
0.0
931.0
3,513.0
-415.0
16,776.2
33,184.4
39,201.0
9,815.0
10,746.0
14,259.0
13,844.0
30,620.2
63,804.6
10,746.0
14,259.0
13,844.0
30,620.2
63,804.6
103,005.6
11
January 28, 2015
Company Description
Headquartered in Cupertino, Apple was established in 1976 (incorporated in 1977) as a personal computer company by Steve Jobs and
Steve Wozniak. Apple’s first product, the Apple I, was launched in April 1976. Today, Apple is a leading player across the mobile device
market with products such as the iPhone, iPad, iPod and Mac portfolio, combined with a digital ecosystem that includes iTunes, the
App Store, iCloud and iBooks.
Companies Mentioned:
Apple Inc. (AAPL - NASDAQ): BUY
China Mobile ADS (CHL - NYSE): NC
International Business Machines Corporation (IBM - NYSE): BUY
Disclosures Appendix
Analyst Certification
The analyst primarily responsible for this research report, and whose name appears on the front cover, certifies that: (i) all of the views expressed in
this research report accurately reflects his or her personal views about any and all of the subject securities or issuers featured in this report; and (ii) no
part of any of the research analyst’s compensation was, is, or will be, directly or indirectly related to the specific recommendations or views expressed
by the research analyst in this report.
Legal Disclosures
Investment banking (next 3 months): Cantor Fitzgerald and/or its affiliates, expect to receive, or intend to seek, compensation for investment banking
services within the next three months from all of the companies referenced within this report.
Lead or Co-manager: Cantor Fitzgerald and/or its affiliates, has not acted as lead or co-manager in a public offering of equity and/or debt securities
for Apple Inc. within the last 12 months
Cantor Fitzgerald and/or its affiliates has not received compensation for investment banking services in the last 12 months from Apple Inc..
Cantor Fitzgerald and/or its affiliates is a market maker in Apple Inc..
Lead or Co-manager: Cantor Fitzgerald and/or its affiliates, has not acted as lead or co-manager in a public offering of equity and/or debt securities for
International Business Machines Corporation within the last 12 months
Cantor Fitzgerald and/or its affiliates has not received compensation for investment banking services in the last 12 months from International Business
Machines Corporation.
Cantor Fitzgerald and/or its affiliates is a market maker in International Business Machines Corporation.
Cantor Fitzgerald's rating system
BUY: We have a positive outlook on the stock based on our expected 12 month return relative to its risk. The expected return is based on our view of
the company and industry fundamentals, catalysts, and valuation. We recommend investors add to their position.
HOLD: We have a neutral outlook on the stock based on our expected 12 month return relative to its risk. The expected return is based on our view
of the company and industry fundamentals, catalysts, and valuation.
SELL: We have a negative outlook on the stock based on our expected 12 month return relative to its risk. The expected return is based on our view
of the company and industry fundamentals, catalysts, and valuation. We recommend investors reduce their position.
NC: Not Covered. Cantor Fitzgerald does not provide an investment opinion or does not provide research coverage on this stock.
Prior to September 12, 2006, Cantor Fitzgerald had the below ratings:
BUY - denotes stocks that we expect will provide a total return (price appreciation plus yield) of 15% or more over a 12-month period. a BUY rated
stock is expected to outperform the total average return of analyst's industry coverage universe on a risk adjusted basis.
HOLD - denotes stocks that we suggest will provide a total return or total negative return of up to 15% over 12-month period. A HOLD rated stock is
expected to perform in-line with the total average return of the analyst's industry coverage universe on a risk adjusted basis.
SELL - denotes stocks that we expect to provide a total negative return of more than 15% over a 12 month period. A SELL rated stock is expected to
underperform the total average return of the analyst's industry coverage universe on a risk adjusted basis.
NC - Not Covered. Cantor Fitzgerald does not provide research coverage on this company.
Other Disclosures
This report is for informational purposes only and is based on publicly available data believed to be reliable, but no representation is made that such data
are accurate or complete. Opinions and projections contained herein reflect our opinion as of the date of this report and are subject to change. Pursuant
to Cantor Fitzgerald's policy, the author of this report does not own shares in any company he/she covers.
Disclosures for UK investors
This material is approved for distribution in the United Kingdom by Cantor Fitzgerald Europe (“CFE”). CFE is authorised and regulated by the Financial
Conduct Authority (“FCA”). While we believe this information and the materials upon which this information was based is accurate, except for any
obligations under the rules of the FCA, we do not guarantee its accuracy. This material is only intended for use by eligible counterparties or professional
clients who fall within articles 19 or 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 and not the general investing
public. None of the investments or investment services mentioned or described herein are available to other persons in the U.K and in particular are
not available to "retail clients” as defined by the rules of the FCA.
Disclosure for Canadian Institutional Investors
This research report was prepared by analysts of Cantor Fitzgerald & Co. and not by Cantor Fitzgerald Canada Corporation. As a result, this report has
not been prepared subject to Canadian Disclosure requirements. Cantor Fitzgerald Canada may distribute research reports prepared by its affiliates.
Risks
12
January 28, 2015
The financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions based
on their specific investment objectives. Past performance should not be taken as an indication or guarantee of future performance. The price, value of
and income from, any of the financial instruments featured in this report can rise as well as fall and be affected by changes in economic, financial and
political factors. If a financial instrument is denominated in a currency other than the investor's currency, a change in exchange rates may adversely
affect the price or value of, or income derived from, the financial instrument, and such investors effectively assume currency risk. In addition, investors
in securities such as ADRs, whose value is affected by the currency of the home market of the underlying security, effectively assume currency risk.
Distribution of Ratings/Investment Banking Services (IB) as of 01/28/15
Cantor
IB Serv./Past 12 Mos.
Rating
BUY [B]
HOLD [H]
SELL [S]
Count
Percent
Count
Percent
92
48
9
61.74
32.21
6.04
23
10
1
25.00
20.83
11.11
(1)
Additional information available on request. Copyright (C) Cantor Fitzgerald 2015
13