Though Apple earnings (
AAPL
,
quote
) for the second-quarter disappointed Wall Street,
long-term investors should view the price plunge of more than 5%
in after-hours trading as an opportunity to buy the stock at a
lower price with a higher dividend yield.
Not that long ago, Apple earnings were projected to hit
$1,001 over the next year by Brian White, an analyst who covers
the stock for Topeka Capital Markets.
The company's long-term appeal is reflected in its high profit
margin and robust return on equity. The recent Apple earnings
have done nothing to alter that. Indeed, sales are still rising,
just not as much as projected by the analyst community.
To truly understand the appeal of the iPhone, iPad, and other
Apple products, note that more than 20 fake Apple stores have
been busted in China this year. Apple earnings don't begin to
tell the whole story.
Where are the stores selling bootleg versions of Samsung (
SSNLF
,
quote
) and Nokia (
NOK
,
quote
) products, the number 1 and 2 sellers of mobile phones in the
world?
If there were two bootleg retail stores for Nokia, they would
double the Finnish communications company's market presence in
China, where it is presently shutting down other facilities as a
result of declining sales.
In the Apple earnings just released, quarterly sales of
smartphones were 28% higher than for the same quarter of 2011,
with 26 million iPhones being sold. However, that impressive
growth rate was down from the previous marks.
Apple's price drop is a buying opportunity for two reasons,
one external and the other internal. The external factor is
Apple's commitment to China and the
growth in that nation and other emerging
markets
. Chief executive officer Tim Cook has deemed the
Chinese market a top priority for the company
, which is building more Apple stores in China.
Morgan Stanley projects that 50% to 100% of Apple's growth
could emanate from the People's Republic, where the iPhone is a
highly desired status symbol. China just posted a 7.6% growth
rate for the second quarter of 2012, and consumer spending there
has increased by about one-third in the past five years.
The major internal event for Apple is the release of its
iPhone 5, due for the fall. No one, but no one, does a product
introduction better than Apple. Witness Nokia's disastrous
introduction of the Lumia 900 earlier this year (didn't know it
happened, did you? That's the point, and why Lumias are now half
off). Apple is shrewdly waiting for the "sweet spot" between the
end of the Summer Olympics and the start of peak tech buying
season around the holidays. That is when the share price rise
will begin, if not sooner.
