Networking & IT Hardware
Apple Inc. (NASDAQ: AAPL)
COMPANY UPDATE
Price Target Changes
Estimate Changes
Rating:
Price:
12- Month Price Target:
Previous Price Target:
You Can't Keep a Good Apple Down; Raising
Estimates and PT to $550
BUY
$340.65
$550.00
$450.00
Market Data
52-Week Range:
$190.25-$348.48
Shares Outstanding (MM):
Average Daily Vol (000):
ROE:
Net Debt (MM):
Market Capitalization (MM):
Net Cash per Share:
Tangible Book Value:
Net Debt/Capital:
933.2
15,064
46.90%
$(59,707.00)
317,895
$63.98
$57.23
(109)%
Financial Data
Fiscal Year: Sep
2010A
Revenue (MM):
$65,225
Previous Revenue (MM):
2011E
2012E
$102,026 $118,745
$88,503 $102,410
EPS ProForma
Q1
Q2
Q3
Q4
January 19, 2011
$3.67
$3.33
$3.51
$4.64
$15.15
EPS:
Previous EPS:
P/E ProForma:
22.5x
EBITDA (MM):
$19,412
Previous EBITDA (MM):
Consensus:
$14.55
Previous Consensus:
$6.43A
$5.13
$5.43
$6.37
$23.36
$19.01
14.6x
$30,705
$25,252
$19.97
$18.11
$7.66
$5.63
$5.91
$6.87
$26.06
$22.53
13.1x
$35,461
$30,750
$23.30
$20.77
Summary
Apple Delivers Big Upside, and the Stock Has Plenty of Room to Run.
Last night, Apple reported 1QFY11 sales of $26.74 billion, above our estimate
of $24.17 billion, while pro forma EPS of $6.43 handily exceeded our $5.35
projection (Street was at $5.40). Despite Monday's news regarding Steve
Jobs's medical leave of absence, we believe it will be difficult to keep Apple's
stock from reaching new highs given the much stronger than expected quarter
and outlook reported by the company last night. With the stock now trading at
just over 11x our conservative CY11 EPS estimate (ex-cash), we believe there
is plenty of upside left in the stock price, and we are raising our 12-month
price target to $550.00.
Margin Concerns to Subside With Big Upside in 1QFY11. During Apple's
4QFY10 earnings call, the company spooked the market with lower than
expected margins, and investors were left wondering if this was the beginning
of a trend as the company expands its portfolio. Apple proved this should not
be a concern given last night's performance. Apple's 1QFY11 gross margin
came in at 38.5% versus our 37.2% estimate, while operating margin of 29.3%
was well above our 27.5% estimate.
China Has Clearly Caught Apple Fever, With a Fourfold Sales Rise.
During our trips to China in October and December, we highlighted the
momentum Apple's products were gaining with Chinese consumers. Our
observations were supported by Apple's commentary last night with revenue
of $2.6 billion (~10% of sales) from Greater China during 1QFY11 and up 4x
Y/Y and not far below the ~$3 billion in sales achieved for all of FY10.
The iPad Ramp Is On, and iPhone Demand Overwhelms Supply. After a
disappointing iPad performance in the September quarter, Apple experienced
much stronger than expected iPad shipments in 1QFY11 that exceeded our
forecasts, while the iPhone unit shipments came in line with our expectations
and were held back by supply constraints, as we highlighted during our trips to
China. For FY11, we are raising our iPhone unit forecast to 68.5 million (vs.
61.4 million) and increasing our iPad projection to 27.4 million (vs. 22.4
million).
Apple's Momentum to Continue; Raising Estimates and PT. Apple
provided a strong 2QFY11 outlook that calls for revenue of $22 billion (18%
Q/Q revenue decline) with a pro forma EPS of $4.90. We are raising our
2QFY11 revenue projection to $22.75 billion from $19.73 billion and
increasing our pro forma EPS estimate to $5.13 from $4.15. For fiscal 2011,
we are increasing our revenue estimate to $102.0 billion from $88.50 billion
and raising our pro forma EPS estimate to $23.36 from $19.01. With another
strong quarter delivered by Apple and our increased estimates, we are raising
our price target to $550.00 (from $450.00). See Risks and Valuation on
page 6.
Brian J. White , CFA
(212) 906-7461; bwhite@ticonsec.com
See last page of the report for Ticonderoga Securities LLC disclosures and positions in herein mention issuer
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Networking & IT Hardware
January 19, 2011
Apple Delivers Big Upside, With Sales Surging 31% Q/Q
Last night, Apple reported 1QFY11 sales of $26.74 billion, above our estimate
of $24.17 billion (Street was at $24.42 billion), while pro forma EPS of $6.43
handily exceeded our $5.35 projection (Street was at $5.40). This
performance was well above the company's 1QFY11 outlook that called for
revenue of $23 billion and EPS of $4.80. We estimate that a lower tax rate
and a higher than expected other income each added approximately $0.08 to
EPS.
Recall, we highlighted this holiday season as one to remember for Apple, and
the company did not disappoint. Despite Monday's news regarding Steve
Jobs's medical leave of absence, we believe it will be difficult to keep Apple's
stock from reaching new highs given the much stronger than expected quarter
and outlook reported by the company last night. With the stock now trading at
just over 11x our conservative CY11 EPS estimate (ex-cash), we believe there
is plenty of upside left in the stock price and are raising our 12-month price
target to $550.00.
During Apple's 4QFY10 earnings call, the company spooked the market with
lower than expected margins, and investors were left wondering if this was the
beginning of a trend as the company's expands its portfolio. Apple proved this
should not be a concern given last night's performance. Apple's 1QFY11
gross margin came in at 38.5% versus our 37.2% estimate, while operating
margin of 29.3% was well above our 27.5% estimate. As such, operating
income of $7.83 billion was well above our estimate of $6.65 billion.
With over 160 million cumulative iOS devices (iPhone, iPad, iPod touch
combined) sold by Apple through the end of 1QFY11, combined with over
300,000 apps available (~9.9 billion downloads to date) and over 35,000 apps
for the iPad, Apple remains well ahead of the competition with a digital
ecosystem that no one can match, in our view. Additionally, Apple had 323
retail stores at the end of the December quarter, with an average revenue per
store of $12 million and 75.7 million visitors hosted.
iPad Shipments Beat Our Estimates, While iPhone in Line
After a disappointing iPad performance in the September quarter, Apple
experienced much stronger than expected iPad shipments in 1QFY11 that
exceeded our forecasts, while the iPhone units shipments came in line with
our expectations and were held back by supply constraints, as we highlighted
during our trips to China.
Apple sold 16.24 million iPhone units in 1QFY11 with revenue of $10.47 billion
(up 19% Q/Q), essentially in line with our 16.22 million unit or $10.32 billion
revenue projection. Apple's iPad sales came in at 7.33 million units (up 75%
Q/Q) or $4.61 billion (up 65% Q/Q) and above our estimate of 5.95 million
units or $3.91 billion. The channel inventory for iPhone was 3.5 million units in
1QFY11 or up 250,000 from 4QFY10. Apple continues to have a sizable
backlog for the iPhone and highlighted that supply constraints limited its ability
to sell additional units. Driven by channel expansion and to support increased
sales, the channel inventory for the iPad was at 4-6 weeks (up 525,000), in
line with the company's expectations.
The ASP for iPhone was $625 in 1QFY11, up from $610 in 4QFY10. The
iPhone is now available in 90 countries through 185 carrier relationships. We
continue to be intrigued by the growth in the enterprise market for the iPhone.
Apple mentioned that the iPhone was being deployed or piloted in 88 of the
Apple Inc.
2
Networking & IT Hardware
January 19, 2011
Fortune 100 in 1QFY11. Further, nearly 60% of the FT Europe 100 companies
are also embracing the iPhone. Wells Fargo (WFC, $32.47, NR), Archer
Daniels Midland (ADM, $33.72, NR), DuPont (DD, $49.70, NR), Staples
(SPLS, $23.18, NR) and others were highlighted to have approved the iPhone
for their employees.
The ASP for the iPad was $600 in 1QFY11 vs. $645 in 4QFY10 as Apple
expanded its distribution network outside of its retail operation. The iPad is
now available in 46 countries (as of December quarter) compared with the 26
countries during the last call in October, and another 15 countries are
expected to be added this January. This is still well below the 90 countries for
the iPhone and 170 countries for the Mac, offering a significant opportunity for
the iPad, in our view. Similar to the iPhone, the iPad has a big opportunity in
the enterprise market, and 80% of the Fortune 100 are now deploying or
piloting the iPad compared with the 65% in the September quarter.
Companies such as JP Morgan Chase (JPM, $44.75, NR), Sears (SHLD,
$74.02, NR), Cardinal Health (CAH, $41.35, NR) and others were mentioned
as companies that have approved the iPad. Finally, Apple continues to
expand the iPad distribution channel both in terms of countries and distribution
partners. Looking into 2QFY11, we expect a falloff in iPad unit sales as
consumers await the launch of iPad 2, which we believe will be launched in
April. For FY11, we believe that our iPad forecast of 27.4 million (vs. 22.4
million) could prove to be conservative, especially given the lack of a strong
competing tablet at CES.
Verizon Is Only the Beginning of CDMA Networks
We believe Apple's February 10 launch date for the iPhone 4 on the Verizon
CDMA network is only the beginning of more CDMA announcements. Keep in
mind, CDMA subscribers around the world are estimated at 550 million (2Q10)
by the CDMA Development Group, with approximately 57% in Asia.
Following a strong holiday season for the iPhone 4 and the iPad, we expect
strong demand for the iPhone CDMA EV-DO on the Verizon (VZ, $34.36, NR)
network, and this will begin to benefit the March quarter. Verizon provides the
iPhone 4 with access to 93.2 million wireless customers (3Q10), comparable
to AT&T's 92.8 million wireless subscribers (3Q10). AT&T (T, $28.33, NR)
activated 5.2 million iPhones in the September quarter, following the
introduction of the iPhone 4 in 3Q10, and has activated an average of 3.3
million iPhones per quarter over the past six quarters. With the iPhone 3GS
launched in June 2009, we also expect subscribers currently on the AT&T
network could move to Verizon when their contract comes up for renewal this
summer. Further, we believe the iPhone 5 will be launched sometime in the
summer. Given the ramp with Verizon and strong global demand for the
iPhone, we are increasing our iPhone projection to 68.5 million units in FY11
(vs. 61.4 million) and 83.5 million units in FY12 (vs. 74.6 million).
iPod Surprises on the Upside; Mac Also Strong
Spurred by a product refresh earlier in the year and strong holiday sales, the
iPod revenue increased by nearly 132% sequentially in 1QFY11 to $3.43
billion following the sale of 19.45 million devices (up 115% Q/Q) and well
above our projection of approximately 14 million units or $2.26 billion in
revenue. The iPod touch accounted for over half the iPod unit sales in the
quarter.
Meanwhile, Mac (desktop and portables) revenue came in at $5.43 billion (up
11% Q/Q) or 4.13 million units (up 6% Q/Q), above our projection of $5.07
Apple Inc.
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Networking & IT Hardware
January 19, 2011
billion in revenue or 3.96 million units. The Mac continues to benefit from a
halo effect from the iPhone and the iPad. Unit sales of Mac products crossed
4 million for the first time, as the demand for portable devices rose 10% on
strong demand for the new MacBook Air while desktop unit sales declined
marginally by 1%.
China Has Clearly Caught "Apple Fever"
International markets represented 62% of the total revenue, up from 57% from
the previous quarter, with strong sequential growth experienced across most
geographies. Retail (up 41% Q/Q) and Asia Pacific (up 40% Q/Q; includes File
Maker) experienced the strongest sequential growth, while Europe (up 33%
Q/Q) and Americas (up 28% Q/Q) also benefited from strong holiday sales.
The Americas continues to represent the biggest market, contributing 34.5%
of 1QFY11 revenue and Europe at 27.1%, with Asia Pacific and File Maker
(18.6%), Retail (14.4%) and Japan (5.4%) accounting for the rest.
Last night, Apple highlighted that management had identified Greater China
(Mainland China, Hong Kong and Taiwan) as its top priority amongst the BRIC
countries many years ago, channeling its efforts to develop the market. In
1QFY11, Apple generated $2.6 billion in revenue (~10% of sales) from
Greater China compared with the ~$3 billion in sales achieved for all of fiscal
2010. Recall, in October last year, we had highlighted that the buzz around
the iPad and iPhone 4 in China was much stronger than previous Apple
product launches. Furthermore, during our China Technology Tour last month,
China Unicom (CHU, $14.82, NR) highlighted stronger than expected demand
for the iPhone 4, as a result of which the carrier was unable to fulfill around
one-third of the pre-orders. Wait times for the iPhone 4 in China was two
months during our visit.
Apple highlighted that in 1QFY11, its four stores in China experienced the
highest average traffic and the highest revenues in the world. Note that the
high-end mobile phone opportunity in China is estimated to be approximately
100-125 million subscribers. Total wireless subscribers in China came in at
833 million at the end of November. We are long-term bulls on Apple's
position in the China market, and we wonder when the company will begin to
gain momentum in India.
Apple Investing in the Supply Chain to Secure Components
Apple highlighted that it expects the DRAM pricing environment to be
favorable, with further declines expected. Further, the company expects
NAND flash memory, batteries, HDDs/ODDs and LCDs to remain in a
supply-demand equilibrium, resulting in normal price declines.
Apple indicated that it has identified the need to secure supply of a certain
component, strategic to its product line and entered into supply agreements
with vendors. Specifically, the company mentioned on the call that it has
entered into long-term contracts with three vendors, allocating approximately
$3.9 billion in inventory prepayments and capex over two years. During our
recent China Tech Tour, touch screens were mentioned more than any other
component as a shortage problem. The touchscreen represents a sizable
portion of the bill of materials (BOM) of these products, and we all expect
Apple to derive cost benefits from this agreement. Recall, last week, we
highlighted in our Touchscreen Barometer that touch panels remain in short
supply following strong demand for touchscreens from tablet and smartphone
makers.
Apple Inc.
4
Networking & IT Hardware
January 19, 2011
Big Operating Cash Flow Drives Nearly $60B in Cash
Apple's balance sheet continues to be an extremely powerful tool and
provides the company with potential ammunition to expand into new product
areas, markets and geographies, sign multi-year supply chain agreements
and invest heavily in R&D. Apple ended the December quarter with $59.71
billion in cash, cash equivalents and investments (or $63.98 per share) with no
debt on the balance sheet, while generating about $9.77 billion in cash flow
from operations in the quarter. Inventories declined by 15.8% in the quarter
compared with the 31.5% increase in revenues.
The average accounts receivable DSO ended the quarter at 20 days, in line
with the September quarter; accounts payable DSO also remained at 73 days,
while the average days of inventory declined from 7 days to 5 days. Overall,
the company’s cash conversion cycle in 1QFY11 declined to negative 48 days
from negative 46 days in 4QFY10. We believe that this is potentially one of the
best cash cycles in the tech world.
Apple Has Plenty of Room to Run; Raising PT to $550
Despite Mondays news regarding Steve Jobs's medical leave of absence, we
believe it will be difficult to keep Apple's stock from reaching new highs given
the much stronger than expected quarter and outlook reported by the
company last night. With the stock now trading at just over 11x our
conservative CY11 EPS estimate (ex-cash), we believe there is plenty of
upside left in the stock price and are raising our 12-month price target to
$550.00.
We also believe there is more for investors to look forward to in the coming
months. For example, we expect Apple to announce the iPad 2 with an April
launch and a new MacBook Pro, while iPhone 5 should be out in the summer
of this year. Further, with the advent of the CDMA EV-DO iPhone, we believe
that Apple is in a strong position to launch the iPhone on China Telecom's
(CHA, $57.81, NR) CDMA network of 88 million wireless subscribers and
other CDMA carriers around the world.
Over the past decade, Apple’s growth has proven to be quite remarkable, with
revenue increasing from $5.9 billion in FY98 to $65.23 billion in fiscal 2010,
which represents an 12-year revenue CAGR of 22%. Over the past six years,
Apple has grown sales by a robust 41% between FY04 and FY10. During this
period, Apple's profitability has been even more incredible. For example,
Apple has delivered a 12-year pro forma EPS CAGR of 34% between FY98
and FY10. Over the past six years, Apple’s annual pro forma EPS growth rate
has been even higher at 86%.
Apple generally provides an ultra-conservative outlook, but we felt the sales
outlook was rather strong and above our estimate. Last night, Apple said it
expects 2QFY11 revenue of about $22 billion (down ~18% Q/Q revenue
decline) with a pro forma EPS of $4.90. We believe that Apple's intricately
entwined digital ecosystem of the iPhone, the iPad, new iPod/iPod touch,
MacBook and Apple TV along with the iTunes, app stores for iPhone, iPad
and Mac is a powerful portfolio that offers a consistent experience compared
with its competition.
We are raising our 2QFY11 revenue projection to $22.75 billion from $19.73
billion and increasing our pro forma EPS estimate to $5.13 from $4.15. For
fiscal 2011, we are increasing our revenue estimate to $102.0 billion from
$88.50 billion and raising our pro forma EPS estimate to $23.36 from $19.01.
Apple Inc.
5
Networking & IT Hardware
January 19, 2011
We are also raising our estimates for FY12 and FY13. With another strong
quarter delivered by Apple and our increased estimates, we are raising our
price target to $550.00 (from $450.00) which is based on 20x our interest
expense/income adjusted CY11 pro forma EPS estimate plus net cash per
share of $63.98.
Risks and Valuation
AAPL: Our 12-month price target of $550.00 for Buy-rated Apple is based
on 20x our interest expense/income adjusted CY11 pro forma EPS estimate
plus net cash per share of $63.98. Essentially, this equates to a straight P/E of
22x our CY11 EPS estimate and is below the 26x multiple over the last six
years, despite the continued strong momentum for the iPhone and the new
growth opportunities we expect from the iPad. Risks to our price target for
Buy-rated Apple include: (1) the health of the economy and consumer trends;
(2) technology trends in the markets of personal computers, smart phones,
digital music, video devices and tablets; (3) competition and pricing pressure
in all Apple product categories, but especially iPhone and iPad; (4) ability to
penetrate new markets; (5) potential disruption from component supply and
channel inventory; (6) unsuccessful launch of new product and services; (7)
Tim Cook's (COO of Apple) performance in Steve Jobs's (CEO of Apple)
absence; (8) the health of Steve Jobs and his return from medical leave of
absence.
Apple Inc.
6
Networking & IT Hardware
January 19, 2011
TICONDEROGA SECURITIES LLC
BRIAN J. WHITE, CFA 212-906-7461
bwhite@ticonsec.com
APPLE, INC. (FY: SEPT)
($ millions)
FY11E
FY12E
FY13E
QUARTERLY INCOME STATEMENT
Revenue
Y/Y Growth %
Q/Q Growth %
Cost of sales
% of revenue
Gross profit
Gross margin
Research and development expenses
% of revenue
Selling, general and administrative expenses
% of revenue
Operating income
% of revenue
Other income and expense
Income before provision for income taxes
% of revenue
Provision for income taxes
Income tax rate
Net income
% of revenue
Pro Forma EPS
Y/Y Pro Forma EPS % Change
EPS (ex-stock-based compensation expense)
Y/Y EPS (ex-stock-based comp.) % Change
GAAP EPS
Y/Y GAAP EPS % Change
1QFY11A
26,741.0
70.5%
31.5%
16,443.0
61.5%
10,298.0
38.5%
575.0
2.2%
1,896.0
7.1%
7,827.0
29.3%
136.0
7,963.0
29.8%
1,959.0
24.6%
2QFY11E
22,748.8
68.5%
-14.9%
13,967.8
61.4%
8,781.0
38.6%
591.5
2.6%
1,774.4
7.8%
6,415.2
28.2%
50.0
6,465.2
28.4%
1,648.6
25.5%
3QFY11E
24,407.8
55.5%
7.3%
15,108.5
61.9%
9,299.4
38.1%
610.2
2.5%
1,855.0
7.6%
6,834.2
28.0%
55.0
6,889.2
28.2%
1,756.7
25.5%
4QFY11E
28,128.2
38.3%
15.2%
17,298.9
61.5%
10,829.4
38.5%
646.9
2.3%
2,109.6
7.5%
8,072.8
28.7%
60.0
8,132.8
28.9%
2,073.9
25.5%
1QFY12E
33,243.8
24.3%
18.2%
20,378.5
61.3%
12,865.4
38.7%
698.1
2.1%
2,393.6
7.2%
9,773.7
29.4%
65.0
9,838.7
29.6%
2,508.9
25.5%
2QFY12E
26,222.5
15.3%
-21.1%
16,336.6
62.3%
9,885.9
37.7%
655.6
2.5%
2,019.1
7.7%
7,211.2
27.5%
70.0
7,281.2
27.8%
1,856.7
25.5%
3QFY12E
27,798.4
13.9%
6.0%
17,429.6
62.7%
10,368.8
37.3%
667.2
2.4%
2,084.9
7.5%
7,616.8
27.4%
75.0
7,691.8
27.7%
1,961.4
25.5%
4QFY12E
31,480.5
11.9%
13.2%
19,517.9
62.0%
11,962.6
38.0%
724.1
2.3%
2,329.6
7.4%
8,909.0
28.3%
80.0
8,989.0
28.6%
2,292.2
25.5%
1QFY13E
36,776.8
10.6%
16.8%
22,581.0
61.4%
14,195.8
38.6%
735.5
2.0%
2,611.2
7.1%
10,849.2
29.5%
85.0
10,934.2
29.7%
2,788.2
25.5%
2QFY13E
29,288.1
11.7%
-20.4%
18,158.6
62.0%
11,129.5
38.0%
761.5
2.6%
2,225.9
7.6%
8,142.1
27.8%
90.0
8,232.1
28.1%
2,099.2
25.5%
3QFY13E
31,197.5
12.2%
6.5%
19,342.4
62.0%
11,855.0
38.0%
779.9
2.5%
2,308.6
7.4%
8,766.5
28.1%
95.0
8,861.5
28.4%
2,259.7
25.5%
4QFY13E
35,365.0
12.3%
13.4%
21,749.5
61.5%
13,615.5
38.5%
813.4
2.3%
2,581.6
7.3%
10,220.5
28.9%
100.0
10,320.5
29.2%
2,631.7
25.5%
6,004.0
22.5%
4,816.5
21.2%
5,132.4
21.0%
6,058.9
21.5%
7,329.8
22.0%
5,424.5
20.7%
5,730.4
20.6%
6,696.8
21.3%
8,145.9
22.1%
6,132.9
20.9%
6,601.8
21.2%
7,688.8
21.7%
$6.43
75%
$6.68
74%
$6.43
75%
$5.13
54%
$5.37
52%
$5.13
54%
$5.43
55%
$5.67
54%
$5.43
55%
$6.37
37%
$6.61
37%
$6.37
37%
$7.66
19%
$7.90
18%
$7.66
19%
$5.63
10%
$5.88
10%
$5.63
10%
$5.91
9%
$6.16
9%
$5.91
9%
$6.87
8%
$7.12
8%
$6.87
8%
$8.30
8%
$8.56
8%
$8.30
8%
$6.21
10%
$6.47
10%
$6.21
10%
$6.65
12%
$6.91
12%
$6.65
12%
$7.70
12%
$7.96
12%
$7.70
12%
Source: Ticonderoga Securities LLC estimates, Company data
Apple Inc.
7
Networking & IT Hardware
January 19, 2011
TICONDEROGA SECURITIES LLC
BRIAN J. WHITE, CFA 212-906-7461
bwhite@ticonsec.com
APPLE, INC. (FY: SEPT)
($ millions)
ANNUAL INCOME STATEMENT
Revenue
Y/Y Growth %
FY09
42,905.0
14.4%
FY10
65,225.0
52.0%
FY11E
102,025.9
56.4%
FY12E
118,745.3
16.4%
FY13E
132,627.4
11.7%
CY09
46,708.0
19.9%
CY10E
76,283.0
63.3%
CY11E
108,528.7
42.3%
CY12E
122,278.2
12.7%
Cost of sales
% of revenue
Gross profit
Gross margin
Research and development expenses
% of revenue
Selling, general and administrative expenses
% of revenue
Operating income
% of revenue
Other income and expense
Income before provision for income taxes
% of revenue
Provision for income taxes
Income tax rate
25,683.0
60%
17,222.0
40.1%
1,333.0
3.1%
4,149.0
9.7%
11,740.0
27.4%
326.0
12,066.0
28.1%
3,831.0
31.8%
39,541.0
61%
25,684.0
39.4%
1,782.0
2.7%
5,517.0
8.5%
18,385.0
28.2%
155.0
18,540.0
28.4%
4,527.0
24.4%
62,818.1
62%
39,207.8
38.4%
2,423.6
2.4%
7,635.0
7.5%
29,149.2
28.6%
301.0
29,450.2
28.9%
7,438.2
25.3%
73,662.6
62%
45,082.7
38.0%
2,744.9
2.3%
8,827.1
7.4%
33,510.6
28.2%
290.0
33,800.6
28.5%
8,619.2
25.5%
81,831.5
62%
50,795.9
38.3%
3,090.4
2.3%
9,727.3
7.3%
37,978.2
28.6%
370.0
38,348.2
28.9%
9,778.8
25.5%
27,582.0
59.1%
19,126.0
40.9%
1,416.0
3.0%
4,346.0
9.3%
13,364.0
28.6%
201.0
13,565.0
29.0%
4,207.0
31.0%
46,712.0
61.2%
29,571.0
38.8%
1,959.0
2.6%
6,125.0
8.0%
21,487.0
28.2%
258.0
21,745.0
28.5%
5,106.0
23.5%
66,753.6
61.5%
41,775.2
38.5%
2,546.7
2.3%
8,132.6
7.5%
31,095.9
28.7%
230.0
31,325.9
28.9%
7,988.1
25.5%
75,865.1
62.0%
46,413.1
38.0%
2,782.3
2.3%
9,044.7
7.4%
34,586.1
28.3%
310.0
34,896.1
28.5%
8,898.5
25.5%
Net income
% of revenue
8,235.0
19.2%
14,013.0
21.5%
22,011.9
21.6%
25,181.5
21.2%
28,569.4
21.5%
9,358.0
20.0%
16,639.0
21.8%
23,337.8
21.5%
25,997.6
21.3%
Pro Forma EPS
Y/Y Pro Forma EPS % Change
EPS (ex-stock-based compensation expense)
Y/Y EPS (ex-stock-based comp.) % Change
GAAP EPS
Y/Y GAAP EPS % Change
Annual (FY) Key Ratios
ROE
ROA
ROIC
Total Equity
Total Assets
Total Invested Capital
LT Debt
ST Debt
Total Debt
Total Capital
Debt-to-Capital
Debt-to-Equity
Capital Expenditures
% of Sales
Research and Development
% of sales
Depreciation and Amortization
Cash Flow from Operations
Operating Cash Flow per share
Free Cash Flow generation
$9.08
33.9%
$9.48
32.1%
$9.08
33.9%
FY09
30.5%
19.7%
29.7%
31,640.0
47,501.0
31,640.0
0.0
0.0
0.0
31,640.0
0.0%
0.0%
1,144
2.7%
1,333.0
3.1%
734
10,159
$11.20
9,015
$15.15
66.9%
$15.87
67.4%
$15.15
66.9%
FY10
35.3%
22.8%
35.0%
47,791.0
75,183.0
47,791.0
0.0
0.0
0.0
47,791.0
0.0%
0.0%
2,005
3.1%
1,782.0
2.7%
1,027
18,595
$20.11
16,590
$23.36
54.2%
$24.33
53.3%
$23.36
54.2%
FY11E
36.9%
24.4%
36.5%
71,588.9
105,314.7
71,588.9
0.0
0.0
0.0
71,588.9
0.0%
0.0%
5,264
5.2%
2,423.6
2.4%
1,556
28,550
$30.30
23,286
$26.06
11.6%
$27.06
11.2%
$26.06
11.6%
FY12E
29.7%
20.9%
29.4%
98,060.4
135,805.5
98,060.4
0.0
0.0
0.0
98,060.4
0.0%
0.0%
6,100
5.1%
2,744.9
2.3%
1,950
29,950
$31.00
23,850
$28.85
10.7%
$29.88
10.4%
$28.85
10.7%
FY13E
25.3%
18.7%
25.0%
127,999.8
170,402.5
127,999.8
0.0
0.0
0.0
127,999.8
0.0%
0.0%
6,400
4.8%
3,090.4
2.3%
2,350
34,061
$34.40
27,661
$10.27
37.5%
$10.69
35.3%
$10.27
37.5%
CY09
30.9%
20.2%
30.5%
35,768
53,926
35,768
0
0
0
35,768
0.0%
0.0%
1,181
2.5%
1,416
3.0%
763
NA
NA
NA
$17.93
74.6%
$18.73
75.1%
$17.93
74.6%
CY10E
36.8%
23.7%
36.4%
54,666
86,742
54,666
0
0
0
54,666
0.0%
0.0%
2,843
3.7%
1,959
2.6%
1,174
NA
NA
NA
$24.61
37.3%
$25.58
36.6%
$24.61
37.3%
CY11E
34.9%
22.7%
34.6%
79,234
119,093
79,234
0
0
0
79,234
0.0%
0.0%
5,500
5.1%
2,547
2.3%
1,650
NA
NA
NA
$26.74
8.6%
$27.75
8.5%
$26.74
8.6%
CY12E
28.0%
19.3%
27.7%
106,541
150,637
106,541
0
0
0
106,541
0.0%
0.0%
6,250
5.1%
2,782
2.3%
2,050
NA
NA
NA
Free Cash Flow per share
Employees
Revenue-Per-Employee
$9.94
34,300
1.251
$17.94
37,730
1.729
$24.72
41,503
2.458
$24.69
45,653
2.601
$27.94
50,219
2.641
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
Book Value Per Share
Tangible Book Value Per Share
Cash Per Share
Net Cash Per Share
$34.60
$34.11
$37.18
$37.18
$51.45
$50.29
$54.92
$54.92
$75.27
$73.94
$78.26
$78.26
$100.56
$99.26
$100.79
$100.79
$128.11
$126.84
$126.05
$126.05
$38.89
$38.35
$43.29
$43.29
$58.58
$57.23
$63.98
$63.98
$82.78
$81.46
$87.15
$87.15
$108.59
$107.30
$110.21
$110.21
Gross Margin
Operating Margin
Net Margin
EBITDA Margin
40.1%
27.4%
19.2%
29.1%
39.4%
28.2%
21.5%
29.8%
38.4%
28.6%
21.6%
30.1%
38.0%
28.2%
21.2%
29.9%
38.3%
28.6%
21.5%
30.4%
40.9%
28.6%
20.0%
30.2%
38.8%
28.2%
21.8%
29.7%
38.5%
28.7%
21.5%
30.2%
38.0%
28.3%
21.3%
30.0%
Inventory
Accounts Receivable
Accounts Payable
Accounts Receivable Days Outstanding
Days in Inventory
Accounts Payable Days Outstanding
Cash Cycle
Inventory Turns
Asset Turnover
455
3,361
5,601
24.6
6.9
79.0
-47.6
53.3
1.0
1,051
5,510
12,015
24.8
7.0
81.3
-49.5
52.5
1.1
928
6,329
15,049
21.2
5.8
78.6
-51.7
63.5
1.1
1,039
7,083
16,842
20.6
4.9
79.0
-53.5
74.9
1.0
1,167
7,957
18,920
20.7
4.9
79.8
-54.1
74.2
0.9
576
3,090
6,511
20.7
6.4
74.3
-47.2
56.8
1.0
885
6,027
14,301
21.8
5.7
81.3
-53.8
63.9
1.1
1,097
7,480
17,785
22.7
5.4
87.7
-59.6
67.4
1.1
1,214
8,275
19,676
23.5
5.6
90.1
-61.0
65.7
0.9
19,412.0
13,895.8
30,705.2
21,787.0
35,460.6
24,965.4
40,328.2
28,293.8
14,127.0
9,219.3
22,661.0
16,441.6
32,745.9
23,166.4
36,636.1
25,766.6
EBITDA
12,474.0
NOPAT
8,012.5
Source: Ticonderoga Securities LLC estimates, Company Data
Apple Inc.
8
Networking & IT Hardware
January 19, 2011
TICONDEROGA SECURITIES LLC
BRIAN J. WHITE, CFA 212-906-7461
bwhite@ticonsec.com
APPLE, INC. (FY: SEPT)
($ millions)
FY11E
FY12E
FY13E
BALANCE SHEET
Assets:
Current Assets:
Cash and cash equivalents
Short-term marketable securities
Accounts receivable
Inventories
Deferred tax assets
Other current assets
Total Current Assets
1QFY11A
2QFY11E
3QFY11E
4QFY11E
1QFY12E
2QFY12E
3QFY12E
4QFY12E
1QFY13E
2QFY13E
3QFY13E
4QFY13E
10,734
16,243
6,027
885
1,724
8,314
43,927
13,127
16,243
5,118
751
1,456
7,075
43,770
18,371
16,243
5,492
805
1,562
7,591
50,064
25,461
16,243
6,329
928
1,800
8,748
59,510
34,439
16,243
7,480
1,097
2,128
10,339
71,725
35,957
16,243
5,900
865
1,678
8,155
68,799
41,681
16,243
6,255
917
1,779
8,645
75,520
49,312
16,243
7,083
1,039
2,015
9,790
85,482
59,158
16,243
8,275
1,214
2,354
11,438
98,680
61,191
16,243
6,590
967
1,874
9,109
95,973
68,008
16,243
7,019
1,030
1,997
9,702
103,999
76,972
16,243
7,957
1,167
2,263
10,999
115,601
Long-term marketable securities
Property, plant and equipment
Goodwill
Acquired intangible assets, net
Other assets
Total Assets
32,730
5,868
741
522
2,954
86,742
32,730
6,793
741
522
2,502
87,058
32,730
7,743
741
522
2,685
94,485
32,730
8,718
741
522
3,094
105,315
32,730
9,718
741
522
3,657
119,093
32,730
10,743
741
522
2,884
116,419
32,730
11,793
741
522
3,058
124,364
32,730
12,868
741
522
3,463
135,806
32,730
13,918
741
522
4,045
150,637
32,730
14,943
741
522
3,222
148,131
32,730
15,943
741
522
3,432
157,367
32,730
16,918
741
522
3,890
170,402
Liabilities and Shareholders' Equity:
Current Liabilities:
Short-term debt
Accounts payable
Accrued expenses
Deferred revenue
Total Current Liabilities
0
14,301
5,953
3,541
23,795
0
12,171
5,073
3,003
20,246
0
13,058
5,443
3,222
21,723
0
15,049
6,273
3,713
25,034
0
17,785
7,413
4,388
29,587
0
14,029
5,848
3,461
23,338
0
14,872
6,199
3,669
24,741
0
16,842
7,020
4,155
28,018
0
19,676
8,201
4,855
32,731
0
15,669
6,531
3,866
26,066
0
16,691
6,957
4,118
27,766
0
18,920
7,886
4,668
31,475
Long-term debt
Deferred revenue - non-current
Other non-current liabilities
Total Liabilities
0
1,216
7,065
32,076
0
1,024
6,006
27,276
0
1,098
6,444
29,265
0
1,266
7,426
33,726
0
1,496
8,776
39,859
0
1,180
6,923
31,441
0
1,251
7,339
33,330
0
1,417
8,311
37,745
0
1,655
9,709
44,095
0
1,318
7,732
35,116
0
1,404
8,236
37,406
0
1,591
9,336
42,403
Shareholders' Equity:
Common stock
Deferred stock compensation
Retained earnings
Accumulated other comprehensive income
Total Shareholders' Equity
11,502
0
43,050
114
54,666
11,802
0
47,867
114
59,783
12,107
0
52,999
114
65,220
12,417
0
59,058
114
71,589
12,732
0
66,388
114
79,234
13,052
0
71,812
114
84,978
13,377
0
77,543
114
91,034
13,707
0
84,239
114
98,060
14,042
0
92,385
114
106,541
14,382
0
98,518
114
113,014
14,727
0
105,120
114
119,961
15,077
0
112,809
114
128,000
Liabilities and Shareholders' Equity
86,742
87,058
94,485
105,315
119,093
116,419
124,364
135,806
150,637
148,131
157,367
170,402
Source: Ticonderoga Securities LLC estimates, Company
Apple Inc.
9
Networking & IT Hardware
January 19, 2011
TICONDEROGA SECURITIES LLC
BRIAN J. WHITE, CFA 212-906-7461
bwhite@ticonsec.com
APPLE, INC. (FY: SEPT)
($ millions)
CASH FLOW STATEMENT
FY05
FY06
FY07
FY08
FY09
FY10
FY11E
FY12E
FY13E
1,328.0
0.0
1,989.0
0.0
3,495.0
0.0
6,119.0
0.0
8,235.0
0.0
14,013.0
0.0
22,011.9
0.0
25,181.5
0.0
28,569.4
0.0
179.0
49.0
0.0
50.0
428.0
9.0
0.0
0.0
225.0
163.0
0.0
53.0
0.0
15.0
0.0
0.0
327.0
242.0
0.0
73.0
0.0
12.0
0.0
0.0
496.0
516.0
0.0
398.0
0.0
22.0
0.0
0.0
734.0
710.0
0.0
1,040.0
0.0
26.0
0.0
0.0
1,027.0
879.0
0.0
1,440.0
0.0
24.0
0.0
0.0
1,556.0
1,214.0
0.0
746.8
0.0
0.0
0.0
0.0
1,950.0
1,290.0
0.0
-214.5
0.0
0.0
0.0
0.0
2,350.0
1,370.0
0.0
-248.6
0.0
0.0
0.0
0.0
-121.0
-64.0
-150.0
-35.0
328.0
0.0
534.0
2,535.0
-357.0
-105.0
-1,626.0
-1,040.0
1,611.0
319.0
973.0
2,220.0
-385.0
-76.0
-1,279.0
285.0
1,494.0
566.0
716.0
5,470.0
-785.0
-163.0
-274.0
289.0
596.0
718.0
1,664.0
9,596.0
-939.0
54.0
749.0
-902.0
92.0
521.0
-161.0
10,159.0
-2,142.0
-596.0
-4,232.0
-120.0
6,307.0
1,217.0
778.0
18,595.0
-818.9
122.8
-991.9
-573.1
3,093.6
855.7
1,333.4
28,550.4
-754.3
-110.6
-1,042.6
-368.7
1,793.5
593.4
1,632.6
29,950.1
-874.0
-128.2
-1,208.1
-427.3
2,078.2
687.6
1,891.8
34,060.8
-11,470.0
8,609.0
586.0
0.0
0.0
-260.0
0.0
-21.0
-2,556.0
-7,255.0
7,226.0
1,086.0
-25.0
0.0
-657.0
-28.0
10.0
357.0
-11,719.0
6,483.0
2,941.0
-17.0
0.0
-735.0
-251.0
49.0
-3,249.0
-22,965.0
11,804.0
4,439.0
-38.0
-220.0
-1,091.0
-108.0
-10.0
-8,189.0
-46,724.0
19,790.0
10,888.0
-101.0
0.0
-1,144.0
-69.0
-74.0
-17,434.0
-57,793.0
24,930.0
21,788.0
-18.0
-638.0
-2,005.0
-116.0
-2.0
-13,854.0
-19,575.0
3,279.0
6,853.0
0.0
0.0
-5,264.0
-49.0
-23.0
-14,779.0
0.0
0.0
0.0
0.0
0.0
-6,100.0
0.0
0.0
-6,100.0
0.0
0.0
0.0
0.0
0.0
-6,400.0
0.0
0.0
-6,400.0
Cash Flow from Financing Activities:
Decrease in notes payable to banks
Payment of long-term debt
Proceeds from issuance of common stock
Excess tax benefits from stock-based compenstation
Cash used to net share settle equity awards/stock repurchase
NET CASH GENERATED BY (USED IN) FINANCING ACTIVITIES:
0.0
0.0
543.0
0.0
0.0
543.0
0.0
0.0
318.0
361.0
-355.0
324.0
0.0
0.0
365.0
377.0
-3.0
739.0
0.0
0.0
483.0
757.0
-124.0
1,116.0
0.0
0.0
475.0
270.0
-82.0
663.0
0.0
0.0
912.0
751.0
-406.0
1,257.0
0.0
0.0
208.0
454.0
-233.0
429.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Net Increase (decrease) in cash and cash equivalents
522.0
2,901.0
2,960.0
2,523.0
-6,612.0
5,998.0
14,200.4
23,850.1
27,660.8
2,969.0
3,491.0
6,392.0
9,352.0
11,875.0
5,263.0
11,261.0
25,461.4
49,311.5
3,491.0
6,392.0
9,352.0
11,875.0
5,263.0
11,261.0
25,461.4
49,311.5
76,972.3
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
Depreciation, amortization and accretion
Stock-based compensation expense
Non-cash restructuring
Deferred income taxes expense/(benefit)
Tax benefits from stock options
Loss on disposition of property, plant and equipment
Gains on sales of investments, net
In-process research and development
Changes in operating assets and liabilities:
Accounts receivable
Inventories
Other current assets
Other assets
Accounts payable
Deferred revenue
Other liabilities
NET CASH GENERATED BY OPERATING ACTIVITIES:
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 and equipment
Payment for acquistion of intangible assets
Other
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of fiscal year
Source: Ticonderoga Securities LLC estimates, Company data
Apple Inc.
10
Networking & IT Hardware
January 19, 2011
TICONDEROGA SECURITIES LLC
BRIAN J. WHITE, CFA 212-906-7461
TICONDEROGA SECURITIES LLC
BRIAN J. WHITE, CFA 212-906-7461
bwhite@ticonsec.com
bwhite@ticonsec.com
APPLE, INC. (FY: SEPT)
APPLE, INC. (FY: SEPT)
($ millions)
($ millions)
PRODUCT SEGMENTS
PRODUCT SEGMENTS
Revenue by Product ($ millions):
Mac - Desktops
Mac - Portables
Total Mac
iPod
Other music related products and services
iPhone and related products and services
iPad and Related Products and Services
Peripherals and other hardware
Software, service, and other sales
Total Revenue
1QFY11A
1,731
3,699
5,430
3,425
1,431
10,468
4,608
593
786
26,741
2QFY11E
1,611
3,223
4,833
1,691
1,503
10,154
3,195
563
810
22,749
3QFY11E
1,659
3,828
5,487
1,469
1,578
10,240
4,265
535
834
24,408
4QFY11E
1,708
4,169
5,877
1,422
1,657
12,894
4,848
573
859
28,128
1QFY12E
1,777
4,593
6,369
2,315
1,822
14,705
6,547
584
902
33,244
2QFY12E
1,689
3,910
5,599
1,142
1,895
11,705
4,409
543
929
26,223
3QFY12E
1,738
4,568
6,306
992
1,990
11,806
5,231
516
957
27,798
4QFY12E
1,773
4,884
6,657
979
2,089
14,275
5,948
547
985
31,480
1QFY13E
1,844
5,380
7,225
1,544
2,298
16,139
7,978
558
1,035
36,777
2QFY13E
1,753
4,581
6,334
761
2,390
12,845
5,373
519
1,066
29,288
3QFY13E
1,805
5,351
7,156
661
2,510
12,958
6,323
493
1,098
31,197
4QFY13E
1,840
5,722
7,562
651
2,635
15,673
7,191
523
1,131
35,365
Revenue by Product ($ millions):
Mac - Desktops
Mac - Portables
Total Mac
iPod
Other music related products and services
iPhone and related products and services
iPad and Related Products and Services
Peripherals and other hardware
Software, service, and other sales
Total Revenue
FY09
4,324
9,535
13,859
8,091
4,036
13,033
NA
1,475
2,411
42,905.0
FY10
FY11E
FY12E
FY13E
6,201
6,708
6,976
7,242
11,278
14,919
17,955
21,034
17,479
21,627
24,931
28,276
8,274
8,007
5,428
3,617
4,948
6,168
7,797
9,833
25,179
43,756
52,492
57,615
4,958
16,915
22,134
26,864
1,814
2,264
2,190
2,092
2,573
3,288
3,773
4,329
65,225.0 102,025.9 118,745.3 132,627.4
% of Revenue by Product:
Mac - Desktops
Mac - Portables
Total Mac
iPod
Other music related products and services
iPhone and related products and services
iPad and Related Products and Services
Peripherals and other hardware
Software, service, and other sales
Total Revenue
1QFY11A
6.5%
13.8%
20.3%
12.8%
5.4%
39.1%
17.2%
2.2%
2.9%
100.0%
2QFY11E
7.1%
14.2%
21.2%
7.4%
6.6%
44.6%
14.0%
2.5%
3.6%
100.0%
3QFY11E
6.8%
15.7%
22.5%
6.0%
6.5%
42.0%
17.5%
2.2%
3.4%
100.0%
4QFY11E
6.1%
14.8%
20.9%
5.1%
5.9%
45.8%
17.2%
2.0%
3.1%
100.0%
1QFY12E
5.3%
13.8%
19.2%
7.0%
5.5%
44.2%
19.7%
1.8%
2.7%
100.0%
2QFY12E
6.4%
14.9%
21.4%
4.4%
7.2%
44.6%
16.8%
2.1%
3.5%
100.0%
3QFY12E
6.3%
16.4%
22.7%
3.6%
7.2%
42.5%
18.8%
1.9%
3.4%
100.0%
4QFY12E
5.6%
15.5%
21.1%
3.1%
6.6%
45.3%
18.9%
1.7%
3.1%
100.0%
1QFY13E
5.0%
14.6%
19.6%
4.2%
6.2%
43.9%
21.7%
1.5%
2.8%
100.0%
2QFY13E
6.0%
15.6%
21.6%
2.6%
8.2%
43.9%
18.3%
1.8%
3.6%
100.0%
3QFY13E
5.8%
17.2%
22.9%
2.1%
8.0%
41.5%
20.3%
1.6%
3.5%
100.0%
4QFY13E
5.2%
16.2%
21.4%
1.8%
7.5%
44.3%
20.3%
1.5%
3.2%
100.0%
% of Revenue by Product:
Mac - Desktops
Mac - Portables
Total Mac
iPod
Other music related products and services
iPhone and related products and services
iPad and Related Products and Services
Peripherals and other hardware
Software, service, and other sales
Total Revenue
FY09
10.1%
22.2%
32.3%
18.9%
9.4%
30.4%
NA
3.4%
5.6%
100.0%
FY10
9.5%
17.3%
26.8%
12.7%
7.6%
38.6%
7.6%
2.8%
3.9%
100.0%
FY11E
6.6%
14.6%
21.2%
7.8%
6.0%
42.9%
16.6%
2.2%
3.2%
100.0%
FY12E
5.9%
15.1%
21.0%
4.6%
6.6%
44.2%
18.6%
1.8%
3.2%
100.0%
FY13E
5.5%
15.9%
21.3%
2.7%
7.4%
43.4%
20.3%
1.6%
3.3%
100.0%
Q/Q Revenue by Product:
Mac - Desktops
Mac - Portables
Total Mac
iPod
Other music related products and services
iPhone and related products and services
iPad and Related Products and Services
Peripherals and other hardware
Software, service, and other sales
Total Revenue
1QFY11A
3.3%
15.8%
11.5%
131.9%
15.1%
18.7%
65.0%
24.3%
18.7%
31.5%
2QFY11E
-6.9%
-12.9%
-11.0%
-50.6%
5.0%
-3.0%
-30.7%
-5.0%
3.0%
-14.9%
3QFY11E
3.0%
18.8%
13.5%
-13.1%
5.0%
0.8%
33.5%
-5.0%
3.0%
7.3%
4QFY11E
3.0%
8.9%
7.1%
-3.3%
5.0%
25.9%
13.7%
7.0%
3.0%
15.2%
1QFY12E
4.0%
10.2%
8.4%
62.9%
10.0%
14.0%
35.0%
2.0%
5.0%
18.2%
2QFY12E
-5.0%
-14.9%
-12.1%
-50.7%
4.0%
-20.4%
-32.7%
-7.0%
3.0%
-21.1%
3QFY12E
3.0%
16.8%
12.6%
-13.2%
5.0%
0.9%
18.7%
-5.0%
3.0%
6.0%
4QFY12E
2.0%
6.9%
5.6%
-1.3%
5.0%
20.9%
13.7%
6.0%
3.0%
13.2%
1QFY13E
4.0%
10.2%
8.5%
57.8%
10.0%
13.1%
34.1%
2.0%
5.0%
16.8%
2QFY13E
-5.0%
-14.9%
-12.3%
-50.7%
4.0%
-20.4%
-32.7%
-7.0%
3.0%
-20.4%
3QFY13E
3.0%
16.8%
13.0%
-13.2%
5.0%
0.9%
17.7%
-5.0%
3.0%
6.5%
4QFY13E
2.0%
6.9%
5.7%
-1.4%
5.0%
21.0%
13.7%
6.0%
3.0%
13.4%
Y/Y Revenue by Product:
Mac - Desktops
Mac - Portables
Total Mac
iPod
Other music related products and services
iPhone and related products and services
iPad and Related Products and Services
Peripherals and other hardware
Software, service, and other sales
Total Revenue
FY09
-23.1%
9.2%
-3.4%
-11.6%
20.8%
93.3%
NA
-12.9%
9.2%
14.4%
FY10
43.4%
18.3%
26.1%
2.3%
22.6%
93.2%
NA
23.0%
6.7%
52.0%
FY11E
8.2%
32.3%
23.7%
-3.2%
24.7%
73.8%
241.2%
24.8%
27.8%
56.4%
FY12E
4.0%
20.3%
15.3%
-32.2%
26.4%
20.0%
30.9%
-3.3%
14.7%
16.4%
FY13E
3.8%
17.1%
13.4%
-33.4%
26.1%
9.8%
21.4%
-4.5%
14.7%
11.7%
Y/Y Revenue by Product:
Mac - Desktops
Mac - Portables
Total Mac
iPod
Other music related products and services
iPhone and related products and services
iPad and Related Products and Services
Peripherals and other hardware
Software, service, and other sales
Total Revenue
1QFY11A
2.3%
34.1%
22.0%
1.0%
22.9%
87.7%
NA
26.4%
24.6%
70.5%
2QFY11E
5.1%
44.6%
28.5%
-9.1%
13.2%
86.5%
NA
19.4%
27.7%
68.5%
3QFY11E
27.5%
23.6%
24.7%
-4.9%
30.0%
92.0%
96.9%
35.1%
29.1%
55.5%
4QFY11E
1.9%
30.5%
20.7%
-3.8%
33.3%
46.2%
73.6%
20.1%
29.7%
38.3%
1QFY12E
2.6%
24.2%
17.3%
-32.4%
27.3%
40.5%
42.1%
-1.5%
14.7%
24.3%
2QFY12E
4.8%
21.3%
15.8%
-32.4%
26.1%
15.3%
38.0%
-3.6%
14.7%
15.3%
3QFY12E
4.8%
19.3%
14.9%
-32.5%
26.1%
15.3%
22.7%
-3.6%
14.7%
13.9%
4QFY12E
3.8%
17.1%
13.3%
-31.2%
26.1%
10.7%
22.7%
-4.5%
14.7%
11.9%
1QFY13E
3.8%
17.1%
13.4%
-33.3%
26.1%
9.8%
21.9%
-4.5%
14.7%
10.6%
2QFY13E
3.8%
17.1%
13.1%
-33.3%
26.1%
9.7%
21.9%
-4.5%
14.7%
11.7%
3QFY13E
3.8%
17.1%
13.5%
-33.4%
26.1%
9.8%
20.9%
-4.5%
14.7%
12.2%
4QFY13E
3.8%
17.1%
13.6%
-33.5%
26.1%
9.8%
20.9%
-4.5%
14.7%
12.3%
Source: Ticonderoga Securities LLC estimates, Company data
Apple Inc.
Source: Ticonderoga Securities LLC estimates, Company data
11
Networking & IT Hardware
January 19, 2011
TICONDEROGA SECURITIES LLC
BRIAN J. WHITE, CFA 212-906-7461
TICONDEROGA SECURITIES LLC
BRIAN J. WHITE, CFA 212-906-7461
bwhite@ticonsec.com
bwhite@ticonsec.com
APPLE, INC. (FY: SEPT)
APPLE, INC. (FY: SEPT)
($ millions)
($ millions)
PRODUCT SEGMENTS
PRODUCT SEGMENTS
Units Sales by Product (thousands):
Mac - Desktops
Mac- Portables
Total Mac
iPod
iPhone
iPad
1QFY11A
1,227
2,907
4,134
19,446
16,235
7,331
2QFY11E
1,153
2,558
3,712
9,723
15,748
5,132
3QFY11E
1,200
3,070
4,269
8,556
16,220
6,928
4QFY11E
1,247
3,377
4,624
8,385
20,275
7,967
1QFY12E
1,272
3,647
4,919
13,835
22,709
10,915
2QFY12E
1,222
3,136
4,358
6,918
18,621
7,422
3QFY12E
1,270
3,701
4,971
6,088
19,180
8,906
4QFY12E
1,309
3,997
5,305
6,088
23,016
10,242
1QFY13E
1,335
4,317
5,651
9,740
25,547
13,930
2QFY13E
1,281
3,712
4,994
4,870
20,949
9,472
3QFY13E
1,333
4,381
5,713
4,286
21,577
11,272
4QFY13E
1,373
4,731
6,104
4,286
25,893
12,963
Units Sales by Product (thousands):
Mac - Desktops
Mac- Portables
Total Mac
iPod
iPhone
iPad
FY09
3,182
7,214
10,396
54,132
20,731
NA
FY10
4,627
9,035
13,662
50,312
39,989
7,458
FY11E
4,827
11,912
16,739
46,110
68,479
27,357
FY12E
5,073
14,481
19,554
32,928
83,525
37,486
FY13E
5,321
17,141
22,462
23,182
93,966
47,636
Q/Q Unit Sales Growth:
Mac - Desktops
Mac- Portables
Total Mac
iPod
iPhone
iPad
1QFY11A
-1.2%
10.0%
6.4%
114.8%
15.1%
75.0%
2QFY11E
-6.0%
-12.0%
-10.2%
-50.0%
-3.0%
-30.0%
3QFY11E
4.0%
20.0%
15.0%
-12.0%
3.0%
35.0%
4QFY11E
4.0%
10.0%
8.3%
-2.0%
25.0%
15.0%
1QFY12E
2.0%
8.0%
6.4%
65.0%
12.0%
37.0%
2QFY12E
-4.0%
-14.0%
-11.4%
-50.0%
-18.0%
-32.0%
3QFY12E
4.0%
18.0%
14.1%
-12.0%
3.0%
20.0%
4QFY12E
3.0%
8.0%
6.7%
0.0%
20.0%
15.0%
1QFY13E
2.0%
8.0%
6.5%
60.0%
11.0%
36.0%
2QFY13E
-4.0%
-14.0%
-11.6%
-50.0%
-18.0%
-32.0%
3QFY13E
4.0%
18.0%
14.4%
-12.0%
3.0%
19.0%
4QFY13E
3.0%
8.0%
6.8%
0.0%
20.0%
15.0%
Y/Y Unit Sales Growth:
Mac - Desktops
Mac- Portables
Total Mac
iPod
iPhone
iPad
FY09
-14.3%
20.2%
7.0%
-1.3%
78.3%
NA
FY10
45.4%
25.2%
31.4%
-7.1%
92.9%
NA
FY11E
4.3%
31.8%
22.5%
-8.4%
71.2%
266.8%
FY12E
5.1%
21.6%
16.8%
-28.6%
22.0%
37.0%
FY13E
4.9%
18.4%
14.9%
-29.6%
12.5%
27.1%
Y/Y Unit Sales Growth:
Mac - Desktops
Mac- Portables
Total Mac
iPod
iPhone
iPad
1QFY11A
-0.6%
36.6%
23.0%
-7.3%
85.8%
NA
2QFY11E
0.6%
42.4%
26.1%
-10.7%
79.9%
NA
3QFY11E
19.5%
24.4%
23.0%
-9.0%
93.1%
111.9%
4QFY11E
0.4%
27.8%
19.0%
-7.4%
43.8%
90.2%
1QFY12E
3.7%
25.5%
19.0%
-28.9%
39.9%
48.9%
2QFY12E
5.9%
22.6%
17.4%
-28.9%
18.2%
44.6%
3QFY12E
5.9%
20.6%
16.4%
-28.9%
18.2%
28.6%
4QFY12E
4.9%
18.4%
14.7%
-27.4%
13.5%
28.6%
1QFY13E
4.9%
18.4%
14.9%
-29.6%
12.5%
27.6%
2QFY13E
4.9%
18.4%
14.6%
-29.6%
12.5%
27.6%
3QFY13E
4.9%
18.4%
14.9%
-29.6%
12.5%
26.6%
4QFY13E
4.9%
18.4%
15.0%
-29.6%
12.5%
26.6%
Source: Ticonderoga Securities LLC estimates, Company data
Apple Inc.
Source: Ticonderoga Securities LLC estimates, Company data
12
Networking & IT Hardware
January 19, 2011
Important Disclosures
General Disclosures
This report has been prepared by Ticonderoga Securities LLC, by the specific legal entity named above.Where this report has been approved for distribution in the US, such
distribution is by either: (i) Ticonderoga Securities LLC; or (ii) other Ticonderoga Securities LLC companies to US Institutional Investors and Major US Institutional Investors
only; or (iii) if the report relates to non-US exchange traded futures, Ticonderoga Securities LLC. Ticonderoga Securities LLC, accepts responsibility for this report in the US.
Any US persons wishing to effect a transaction through Ticonderoga Securities LLC (a) in any security mentioned in this report may only do so through Ticonderoga Securities
LLC, telephone: (212) 906-7500; or (b) in a non-US exchange traded future may only do so through Ticonderoga Securities LLC, telephone: (212) 906-7501.Any forecasts or
price targets shown for companies and/or securities discussed in this report may not be achieved due to multiple risk factors including without limitation market volatility, sector
volatility, corporate actions, the unavailability of complete and accurate information and/or the subsequent transpiration that underlying assumptions made by Ticonderoga
Securities LLC or by other sources relied upon in the report were inapposite.The material herein is based on sources that we consider reliable, but it is not guaranteed to be
accurate or complete. It is published for informational purposes only and should not be construed as an offer, or the solicitation of an offer to buy or sell any security. Prices
and opinions expressed herein are subject to change without notice, and Ticonderoga Securities LLC is under no obligation to update or keep the information current. The
securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors.The relevant research analyst(s) named on this report may not be
registered / qualified as research analysts with FINRA if they are not associated persons of the Ticonderoga Securities LLC and therefore may not be subject to the FINRA
Rule 2711 and Incorporated NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst
account.
Rating and Price Target History for: Apple Inc. (AAPL) as of 01-18-2011
10/04/10
I:B:$430
10/19/10
B:$450
400
320
240
160
80
Q1
Q2
2008
Q3
Q1
Q2
Q3
2009
Q1
Q2
0
Q1
Q3
2010
2011
Created by BlueMatrix
Ratings Definition
Ticonderoga Securities LLC assigns research equity ratings of Buy, Neutral or Sell. Buy ratings reflect an estimated increase in share price of 15% or more. Neutral ratings
reflect a variation in share price between a 15% appreciation and a 15% decline. Sell ratings reflect an estimated underperformance and a decrease in share price of 15% or
more. Except where noted, all ratings indicate expected performance over the next 12-months.
On October 15, 2009 to better convey the analyst's opinion to our customers, Ticonderoga Securities changed its overall research ratings system from "Buy, Hold, Sell" to
"Buy, Neutral, Sell." Definitions of each rating are included in these disclaimers.
Buy: 12 months, estimated 15% or more appreciation.
Neutral: 12 months, between 15% appreciation and 15% decline expected.
Sell: 12 months, estimated 15% or more decline.
IB Serv./Past 12 Mos.
Rating
Count
Percent
Count
Percent
BUY [BUY]
23
40.40
0
0.00
NEUTRAL [NEUTRAL]
27
47.40
0
0.00
7
12.30
0
0.00
SELL [SELL]
Stocks Disclosures
Ticonderoga Securities LLC makes a market in AAPL security. Ticonderoga Securities LLC, in its market making capacity, sells to or buys from customers the securities of this
company on a principal basis.
Apple Inc.
13