CF Apple Computer

I closed out the Apple (AAPL) position in my blog model portfolio in August at more than $180 per share after a 52% gain and also trimmed my clients’ AAPL holdings at that time, but after the stock has been beaten up in the latest sell-off, searching for a re-entry point seems like a worthy endeavor. Apple has always sandbagged guidance.

The market had gotten used to it and never really punished the stock after earnings reports that handily beat quarterly earnings but issued forward quarter guidance below expectations. That all changed three months ago after Apple issued guidance that was overly conservative, even by their standards, and the stock got crushed. Trading in the low 90’s during yesterday’s pre-earnings trading session, investors expected more of the same.

Apple’s guidance had been for $8.0 billion in sales and about $1.00 of earnings. The company actually reported $7.9 billion and $1.26. Analysts were at $1.65 for the current quarter and many figured Apple would guide to $1.30 or $1.40.

Given the uncertain economic environment, coupled with last quarter’s overly conservative guidance, I figured this quarter’s guidance would be equally uninspiring and investors would get a sell-off in the stock, perhaps well into the 80’s, which in my view would be a great entry point. As a result, I did not buy any Apple shares during yesterday’s weakness. Apple guided this quarter to between $1.06 and $1.35 last night. Compared with current consensus of $1.65, this looked perfect for my thesis.

I got the 2nd option. Have to wait till a few pay periods to get the Apple Care and the display port to DVI adapter. Glad I waited all summer. Good things do come to those who wait I guess. Bad thing is, won’t come till Oct 20-24. And they charged me for tax :-(. never did that for Colorado. But Can. Not. Wait.