Apple Cored Below $500 As Nomura Slams Margins

Tyler Durden's picture


The defense of $500 was valiant, but as we expected, brief. And as of moment ago, Apple was finally trading well below the psychological barrier, or at $496 $495 $494: some $30 below Joe Terranova's "generational buy." The catalyst? Nothing unknown, but a big downgrade from Nomura which cut the Price Target from $660 to $530 did not help. What certainly did not help is that Nomura also sees $400 as a downside case, roughly in line with where Jeff Gundlach has said for many months is what his personal target on the faddy stock is. As for the record 230 uber-levered hedge funds who are still long the name: good luck with exiting in an orderly fashion.

* * *

Remember this? Oops

From Nomura:

iPhone estimates cut, iPad raised

To reflect signs of weaker-than-expected iPhone 5 sales, we have cut unit estimates by 5% in FY13E and by 8% for FY14E. Our iPad unit estimates are raised by 12% and 13%, respectively, albeit entirely due to iPad mini sales, which rise to 70% of total iPad sales.

Estimates 7% and 13% below consensus for FY13E and FY14E

We now forecast EPS of $45 for FY13E and $50 for FY14E, respectively, 7% and 13% below consensus. We are more cautious than sell-side forecasts for revenue and gross margin, mostly driven by our expectation that iPhone gross margins and ASPs are unsustainably high.

Analysis shows EPS likely capping out at $45 - $51

Our scenario analysis shows that if iPhone gross margins fall from a recent high of 55% (estimated) to 45%, EPS for FY14E and FY15E will likely peak at $46 to $48, with $4-5 downside if margins fall to 40% – the historic peak for mobile phone vendors.

Valuing the stock at $400 to $660

Our blended average fair value based on falling iPhone gross margins comes to $495 – $579 (ex / with excess cash), with potential downside to $400 and upside to $660.

Near-term catalysts appear weak

Launch of iPhone 5S or iPad mini with Retina display could be positive but seems unlikely to materially boost demand. iOS7 launch may prove more critical (likely due in June), but recent management changes may limit extent of enhancements. China Mobile upside may take until 2014.

Target cut to $530 – Neutral retained

Downside risk is likely limited by low multiples, likely low buy-side estimates relative to sell-side consensus, and scope for dividend increase. Positive catalysts are likely more H2 weighted – e.g., high-end iPhone and 5S, iOS refresh – but impact of $300 iPhone could reinforce gross margin concerns.


Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 01/15/2013 - 10:40 | 3153861 duo
duo's picture

More gold to be sold to cover AAPL margin calls?

Tue, 01/15/2013 - 10:44 | 3153872 GetZeeGold
GetZeeGold's picture



They need to come out with a trillion dollar iPhone.......just sayin.

Tue, 01/15/2013 - 10:58 | 3153914 The Juggernaut
The Juggernaut's picture

An alert to all you NYer's:  Gov Cuomo's power is coming down on you by "infringing on your Second Amendment Rights."  Call his ass to tell him to stop that shit: (518) 474-8390


Gov's violation of the 2nd:



Tue, 01/15/2013 - 11:34 | 3154029 Almost Solvent
Almost Solvent's picture

As a Western NYer, I can tell you with 100% certainty that nothing will stop Andy from signing that bill.


Not a fucking alien invasion, not a fucking Canadian invasion.


Not even a fucking zombie invasion would stop this shit.


Anyone from upstate NY already knows that we live here for either (1) family (2) job (3) lifetime welfare or a combination thereof. Otherwise, we'd be in NC or GA or FL with the rest of the former NYers.


A real change would be to cap public benefits at 36 months. If you can't get your shit together in 3 years, get the fuck out and move to Pennsltucky.

Tue, 01/15/2013 - 12:17 | 3154197 fonzannoon
fonzannoon's picture

t about Dr/client privacy stuff?

Tue, 01/15/2013 - 12:18 | 3154199 fonzannoon
fonzannoon's picture

what about Dr/client privacy stuff?

Tue, 01/15/2013 - 14:30 | 3154647 fourchan
fourchan's picture

next stop 420$

Tue, 01/15/2013 - 15:26 | 3154858 pods
pods's picture

NY is screwed.  Everyone that can has moved out.  It is slowly rotting on the vine.  Every time I go back up it looks the same but a little bit older.  Upstate the people look depressed and beaten down.  No other way to put it.

Now I don't even know if I will go back up each Nov to plunk down $140 for an out of state big game license.  Don't want the hassle of bringing in a weapon.

Fuck em, you make the bed, you sleep in it.

Almost puked when I saw that Sheldon Silver is still running the show.  He was in charge when I left in early 2001.

And yeah, I am in NC.


Tue, 01/15/2013 - 16:15 | 3155096 Almost Solvent
Almost Solvent's picture


Tue, 01/15/2013 - 11:22 | 3154005 Al Huxley
Al Huxley's picture

Maybe they could sell some to Germany - oh wait, the Germans probably want physical gold, not paper....

Tue, 01/15/2013 - 10:40 | 3153863 buzzsaw99
buzzsaw99's picture

that'll leave a welt. just. another. momo.

Tue, 01/15/2013 - 10:42 | 3153865 LongSoupLine
LongSoupLine's picture

News on my Samsung confirms aapl below $500.

Fuck you aapl you piece of shit child labor fucking hedge fund ass dildo.

Tue, 01/15/2013 - 10:46 | 3153879 Unprepared
Unprepared's picture

Two years ago, when I rode public transit, every one who had a phone in their hands had an iPhone. Fast forward to today, at least 50% now have a Sumsung.

Tue, 01/15/2013 - 11:40 | 3154001 TWSceptic
TWSceptic's picture

you piece of shit child labor fucking hedge fund ass dildo.


Wait you think that Apple is the only one that doesn't care much about the labor standards in factories that deliver their parts and products? Think again Samsung boy:


Abuse of Underage Workers

Samsung: "At least 3 factories—TSMD, SEHZ, and SSKMT—have been discovered hiring workers under 18 years of  age, requiring them to do the same work as adults without providing extra protection for these children," explains the report. 

Foxconn: Underage workers are no longer a problem at Foxconn, according to that same Marketplace report.


Samsung, the new Apple!

Tue, 01/15/2013 - 10:45 | 3153866 LawsofPhysics
LawsofPhysics's picture

technical analysis in a casino.  while you are at it, you might consider the following information;


Tue, 01/15/2013 - 10:46 | 3153884 Irelevant
Irelevant's picture

Tentative Outright Treasury Operation, LOL, they sure have a good PR team. It`s not money printing, it`s tentative operations!

Tue, 01/15/2013 - 10:58 | 3153928 LawsofPhysics
LawsofPhysics's picture

even worse, direct monetization.  Look at their "selling" schedule compared to the "buying" schedule.  The quadrilling dollar question is what happens when The Fed is the only buyer/seller and the dollar is no longer accepted for oil or other real goods and services.  could be a while, but not as long as people might think.

Tue, 01/15/2013 - 11:39 | 3154052 AgAu_man
AgAu_man's picture

The answer is in your moniker.

It kinda reminds me of an aging sun that's fusing lighted elements to make heavier ones (solar corporatism?). When will it make iron? Then the gig is up.

Tue, 01/15/2013 - 10:43 | 3153868 fonzannoon
fonzannoon's picture

Whatever. Stocks don't matter anymore. If someone told me to guess where the Nasdaq would be if apple were at $495 I would guess 2,500. Instead we are at 3,100. The S&P is 1465.

I could never ever prove it. But I have no doubt etf's have provided a way to keep all indexes higher even as individual stocks crumble.

Tue, 01/15/2013 - 15:52 | 3154970 fuu
fuu's picture

Although I cannot prove it I am sure that when banks can buy stocks directly out of customer transaction accounts with excess reserves the ETF's don't matter either.

The market is what they say it is.

Tue, 01/15/2013 - 10:43 | 3153871 LeisureSmith
LeisureSmith's picture

Suit up Ben.

Tue, 01/15/2013 - 11:14 | 3153888 buzzsaw99
buzzsaw99's picture

Ben is coming off the bench, he's going to take on the Heat all by himself. dribble dribble dribble lulz lulz lulz

Tue, 01/15/2013 - 10:46 | 3153880 Temporalist
Temporalist's picture

Apples have lots of fiber and someone is gonna shit.

Tue, 01/15/2013 - 10:47 | 3153881 tawse57
tawse57's picture

Isn't there a vast amount of Apple options about to expire worthless on Saturday if Apple closes on Friday below 500 bucks?

Isn't that worth collectively to various banks and hedgies billions of dollars?

If true a naive person might think there was a conspiracy this week to drive down Apple's stock price.

I own no Apple stock nor any Apple products. I could not tell you the last time I clicked on an itunes icon.

Tue, 01/15/2013 - 11:00 | 3153933 Dapper Dan
Dapper Dan's picture

Well if you saw it, say it.

See something, say something and all that.


Tue, 01/15/2013 - 10:47 | 3153885 Racer
Racer's picture

"Valuing the stock at $400 to $660"

So basically they are saying it could go up or down from here... very informative I must say..... ROFL

Tue, 01/15/2013 - 10:53 | 3153913 yrbmegr
yrbmegr's picture

Analysts are paid handsomely to predict the obvious using words only they understand.  In many cases, they are paid even more to predict the past using those same words.  Great work if you can get it.

Tue, 01/15/2013 - 11:54 | 3154111 davinci7_gis
davinci7_gis's picture

Hey, when APPl gets back down to $75 a share, I may consider buying it...right now, we're all stacking baby, stacking away!!!!

Tue, 01/15/2013 - 10:46 | 3153886 orangegeek
orangegeek's picture

All and those poor pensions that just lost billions - those pensions that pay for government workers to retire at 55.


Such a shame.

Tue, 01/15/2013 - 10:47 | 3153887 CoolBeans
CoolBeans's picture

I had to chuckle - last week at a high school soccer game, a student was waving around his new iPhone 5 and talking about its bells and whistles (didn't take long) and the peer response (including my oldest son's) was basically one big fat YAWN.  First time I've seen this response since iPhoneUno.  Based upon that small test sector - more trouble to come.

Tue, 01/15/2013 - 10:48 | 3153891 SheepDog-One
SheepDog-One's picture

AH the bubbles sure don't last as long as they used to.

Tue, 01/15/2013 - 10:49 | 3153897 pragmatic hobo
pragmatic hobo's picture

ipad-mini worked out like price cut for ipad ... not a good idea at all. Also, ... FB is having some kind of announcement today? Probably a good bet to short FB as well.

Tue, 01/15/2013 - 10:51 | 3153902 Inthemix96
Inthemix96's picture

I have an old Nokia 5000 series phone, you know the one with the green backlit screen that you can play the snake game on?

Guess what?  You can phone people on it, and fucking text them as well.  Its more than ten years old and had more abuse than I know what and still works.

Fuck apple, stupid fucking sheep buying toys they dont need, with money they dont have.  Idiots.

Tue, 01/15/2013 - 11:03 | 3153938 Spastica Rex
Spastica Rex's picture

You're not playing right.

Tue, 01/15/2013 - 11:10 | 3153949 GetZeeGold
GetZeeGold's picture



I have an old LG phone. No idea what the model is. The cool thing about it is you can take out the battery and become invisible.

Tue, 01/15/2013 - 12:05 | 3154156 Bangin7GramRocks
Bangin7GramRocks's picture

You can use that phone to call the typewriter repairman and talk to friends about the programs you watch on your 12 inch black and white television.
That's right. FUCK PROGRESS!

Tue, 01/15/2013 - 12:12 | 3154175 Inthemix96
Inthemix96's picture

Damn straight Bangin7,

Thems were the best of days, and sometimes the worst of days, but by God, they were the best of days them days.


Tue, 01/15/2013 - 14:30 | 3154648 reTARD
reTARD's picture

After all, Apple IS a cult religion. A sub-sect of the consumerism religion. "I must buy it..."

Tue, 01/15/2013 - 10:51 | 3153903 Racer
Racer's picture

Very few shorts on AAPL either, so downside not going to be buffered much at all by the evil shorters

Tue, 01/15/2013 - 10:51 | 3153904 arkel
arkel's picture

now that steve jobs is gone  apple is now just like any other tech company. as another post  said, the creative engine is gone.

apple will now go down just like they did in the mid 90s after they first let jobs go. 


Tue, 01/15/2013 - 11:58 | 3154124 edifice
edifice's picture

Steve Jobs didn't create anything at Apple, except the "reality distortion field." He was a brilliant marketer, though.

Tue, 01/15/2013 - 10:51 | 3153907 dime2962
dime2962's picture

I love slamming my short in JT's smug face

Tue, 01/15/2013 - 10:52 | 3153909 SuperDeDuper
SuperDeDuper's picture

I have an iphone 4S.  Do I need to upgrade to a 5? no.  Do i need to upgrade to a 6? no.  If i have an ipad, do i need another? no.  The market is getting saturated and the benefits of having a new iphone are not worth the price.  Just like flat screen TV's.  Everyone had to have one, and now everyone does and look at the prices.  Same thing is going to happen to apple.  You make a product everything the customer wants they have no use to buy new products.  You just have to laugh the analyst who said it was going to $1000/share last year.

Tue, 01/15/2013 - 10:56 | 3153926 tawse57
tawse57's picture

It is the same with my Samsung S2 - do I need an S3 or an S4? No.

Do I want to use my mobile phone as a credit card in the future? No.


Tue, 01/15/2013 - 11:01 | 3153936 Temporalist
Temporalist's picture

Of course you want to use your phone as a credit card!!!  All the college students are doing it and they are in college so they must be smart.

Tue, 01/15/2013 - 11:18 | 3153987 tawse57
tawse57's picture

Can't I just use one of their phones then?

Tue, 01/15/2013 - 10:53 | 3153910 kaa1016
kaa1016's picture

Yesterday on fast money Terranova sounded like he wsa about to cry when he talked about how he leveraged up too much on AAPL. Keep the emotional attachments out of trading. That's why so many people are getting smoked on this stock right now.

Tue, 01/15/2013 - 11:11 | 3153959 gmrpeabody
gmrpeabody's picture

I got your smoking stalk....

Tue, 01/15/2013 - 10:53 | 3153918 vote_libertaria...
vote_libertarian_party's picture

yepper, I remember the Stone Ages when Motorola Razr was the 'it' phone.

Tue, 01/15/2013 - 12:17 | 3154158 fredquimby
fredquimby's picture

I have had a new mobile with every advancement in mobiles during the last 15 years including the Nokia 7650 (my first with a phonecam) so in all, I have about 15 mobiles in my drawer. Not including the 5 or so I have lost/had stolen.

Now I have the iphone 5 (after having my first iphone, the 4s, stolen on a train.) I can honestly say, i wont willingly ever buy another mobile, unless they make one that makes a nice cuppa tea of course.

I still have and love my original ipad, won't ever replace it as I don't need to. Luckily I have not updated the IOS and still have google maps on it :)

For me the new technology buzz in mobiles ended with the 7650 and the phonecam; everything since then has really been just a software update. I have always said the best mobile phone would be a camera with a phone in it. Not viceversa. Finally 10 years on someone agreed. and with skype and free IP telephony and IM's like Whats app etc still growing, I wouldn't think any of the big carriers are a buy either

Edit about camera/phone link above: "even though you can't actually make a standard mobile call on it." My bad, sorry!



Do NOT follow this link or you will be banned from the site!