Unfounded Apple Earnings Worry

Investing

Published: April 24, 2012 6:26 am

Apple (NASDAQ: AAPL) announces earnings at the close today. The sell-off in the company’s shares so far this month shows that many investors believe that the sale of iPhone and iPads will not be up to expectations. There is even more concern that Apple’s forecasts for the current quarter and the balance of the year will be soft. Apple normally guides toward the low end of expectations, and then beats them. This quarter, that trend may end.

By most measures, Apple’s value is not really extraordinary. Its PE on a trailing twelve month basis is only 16, which is modest for a growth stock which controls market share in most of its businesses.

Apple also has an important card it will play soon. The iPhone 5 will be released in the next several months. It has an important advantage over its recent predecessors. The iPhone 5 will run on the wildly successful 4G networks deployed by AT&T (NYSE: T) and Verizon Wireless. The desire for consumers to own a smartphone which combines high-speed wireless with a new iPhone will be irresistible.

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