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1、0.0,January 16,2013COMPANY UPDATEApple Inc.(AAPL),Buy,Equity Research,Expect a solid print to start a rebound,but bears remain persistent,Whats changed,Investment Profile,Apple is scheduled to report fiscal first quarter results on Wednesday,January 23 after the market close.We are forecasting reven
2、ues and EPS of$53.58 billion and$12.58 respectively,versus consensus of$54.6 billionand$13.35.Strong December quarter demand for iPhones could provide,LowGrowthReturns*MultipleVolatility,HighGrowthReturns*MultipleVolatility,upside to our revenue estimate,and rapid supply improvements also leave,Perc
3、entile,20th,40th,60th,80th,100th,room for upside to our 37%gross margin estimate.As for the productshipments,we are looking for the following:iPhones of 48.4 million,iPadsof 23.4 million,Macs of 5.1 million,and iPods of 12.3 million.,Apple Inc.(AAPL)Americas Technology Peer Group Average*Returns=Ret
4、urn on Capital For a complete description of theinvestment profile measures please refer tothe disclosure section of this document.,ImplicationsWe believe Apple can post healthy upside to consensus,particularly oniPhone units and overall gross margins,and this should allow the stock tobegin its reco
5、very after the recent sell-off.While Apple typically offersconservative guidance and this should not surprise investors,this is likelyto be a key focus for the bears amid the current concerns over slowing,Key dataPrice($)12 month price target($)Market cap($mn)Dividend yield(%)Net margin(%)Debt/total
6、 capital(%),Current506.09760.00475,323.82.124.1,iPhone momentum.With that said,we believe the stock is largely factoringin worst case scenarios at this point in time,and its difficult to imaginethis can persist for much longer.Upcoming catalysts could include:(1)alow-cost iPhone to accelerate emergi
7、ng market momentum;(2)anincreased dividend and share repurchase authorization;(3)an iOS-centricTV/set-top box strategy;(4)a partnership with China Mobile;and(5)a,Revenue($mn)EPS($)P/E(X)EV/EBITDA(X)ROE(%)EPS($),9/12156,508.044.1411.58.342.89/128.67,9/13E187,094.647.5910.67.433.512/12E12.58,9/14E230,
8、557.660.798.35.833.43/13E11.83,9/15E260,752.367.887.55.229.36/13E11.72,1H2013 refresh for the iPad and iPhone.,Price performance chart,750,1,600,ValuationApple remains our top pick in the sector,and we reiterate our CL-Buy and12-month price target of$760.Our price target is based on a 14X multipleon
9、 our CY2013 EPS estimate of$54.54.Key risks,700650600550500450400,1,5501,5001,4501,4001,3501,3001,250,Worsening macro conditions,supply chain disruptions,increased platformcompetition,and potential legal and regulatory restrictions.,Jan-12,Apr-12,Jul-12Apple Inc.(L),Oct-12S&P 500(R),INVESTMENT LIST
10、MEMBERSHIPAmericas Buy ListAmericas Conviction Buy ListGS SUSTAIN Focus ListCoverage View:NeutralBill Shope,CFA(212)902-6834 Goldman,Sachs&Co.Elizabeth Borbolla(212)357-4977 Goldman,Sachs&Co.Cristina Colon,CFA(212)902-9913 Goldman,Sachs&Co.Stephen Oshman(917)343-3128 Goldman,Sachs&Co.The Goldman Sac
11、hs Group,Inc.,Share price performance(%)3 month 6 month 12 monthAbsolute(22.1)(16.6)20.6Rel.to S&P 500(23.1)(23.3)5.5Source:Company data,Goldman Sachs Research estimates,FactSet.Price as of 1/16/2013 close.Goldman Sachs does and seeks to do business with companiescovered in its research reports.As a
12、 result,investors should beaware that the firm may have a conflict of interest that couldaffect the objectivity of this report.Investors should considerthis report as only a single factor in making their investmentdecision.For Reg AC certification and other importantdisclosures,see the Disclosure Ap
13、pendix,or go Analysts employed by non-US affiliates are not registered/qualified as research analystswith FINRA in the U.S.Global Investment Research,2,January 16,2013Apple Inc.:Summary Financials,Apple Inc.(AAPL),Profit model($mn)Total revenueCost of goods soldSG&AR&DOther operating profit/(expense
14、)ESO expenseEBITDADepreciation&amortizationEBITNet interest income/(expense),9/12156,508.0(87,846.0)(10,040.0)(3,381.0)0.0-58,518.0(3,277.0)55,241.0522.0,9/13E187,094.6(111,316.7)(12,118.4)(4,095.4)0.0-62,771.0(3,207.0)59,564.1835.0,9/14E230,557.6(134,228.0)(15,667.9)(5,118.8)0.0-79,481.2(3,938.3)75
15、,542.9520.0,9/15E260,752.3(154,061.0)(16,830.1)(5,447.5)0.0-88,864.6(4,450.7)84,413.8520.0,Balance sheet($mn)Cash&equivalentsAccounts receivableInventoryOther current assetsTotal current assetsNet PP&ENet intangiblesTotal investmentsOther long-term assetsTotal assets,9/1210,746.010,930.0791.016,803.
16、039,270.015,452.010,837.0110,505.00.0176,064.0,9/13E13,381.39,210.51,715.421,232.745,540.019,659.911,552.3143,038.00.0219,790.2,9/14E13,994.410,790.51,533.224,875.151,193.223,032.511,666.6190,411.10.0276,303.4,9/15E11,289.711,433.22,297.224,343.149,363.225,759.911,782.1249,969.50.0336,874.7,Income/(
17、loss)from associates,0.0,0.0,0.0,0.0,OthersPretax profitsProvision for taxesMinority interestNet income pre-preferred dividendsPreferred dividendsNet income(pre-exceptionals)Post tax exceptionals,0.055,763.0(14,030.0)0.041,733.00.041,733.00.0,0.060,399.1(15,261.1)0.045,138.00.045,138.00.0,0.076,062.
18、9(18,255.1)0.057,807.80.057,807.80.0,0.084,933.8(20,384.1)0.064,549.70.064,549.70.0,Accounts payableShort-term debtOther current liabilitiesTotal current liabilitiesLong-term debtOther long-term liabilitiesTotal long-term liabilitiesTotal liabilities,21,175.00.017,367.038,542.00.019,312.019,312.057,
19、854.0,23,123.10.021,155.244,278.20.024,418.124,418.168,696.3,28,899.60.024,183.453,083.00.028,199.328,199.381,282.3,32,475.50.027,047.159,522.70.031,661.831,661.891,184.5,Net income(post-exceptionals),41,733.0,45,138.0,57,807.8,64,549.7,Preferred shares,0.0,0.0,0.0,0.0,EPS(basic,pre-except)($)EPS(di
20、luted,pre-except)($),44.6444.14,48.0947.59,61.4260.79,68.5967.88,Total common equityMinority interest,118,210.00.0,151,093.90.0,195,021.10.0,245,690.20.0,EPS(basic,post-except)($),44.64,48.09,61.42,68.59,EPS(diluted,post-except)($),44.14,47.59,60.79,67.88,Total liabilities&equity,176,064.0,219,790.2
21、,276,303.4,336,874.7,Common dividends paidDPS($),-0.00,-10.60,-10.60,-10.60,Dividend payout ratio(%),0.0,22.0,17.3,15.5,Additional financials,9/12,9/13E,9/14E,9/15E,Net debt/equity(%)Interest cover(X),(9.1)NM,(8.9)NM,(7.2)NM,(4.6)NM,Growth&margins(%)Sales growthEBITDA growth,9/1244.664.4,9/13E19.57.
22、3,9/14E23.226.6,9/15E13.111.8,Inventory daysReceivable daysBVPS($),3.319.0125.86,4.119.6161.08,4.415.8206.38,4.515.6260.00,EBIT growth,63.5,7.8,26.8,11.7,Net income(pre-except)growthEPS growth,61.059.2,8.27.7,28.127.7,11.711.7,ROA(%)CROCI(%),28.546.7,22.835.5,23.335.5,21.135.0,Gross margin,43.9,40.5
23、,41.8,40.9,EBITDA marginEBIT margin,37.435.3,33.631.8,34.532.8,34.132.4,Dupont ROE(%)Margin(%),35.326.7,29.924.1,29.625.1,26.324.8,Turnover(X),0.9,0.9,0.8,0.8,Cash flow statement($mn),9/12,9/13E,9/14E,9/15E,Leverage(X),1.5,1.5,1.4,1.4,Net income,41,733.0,45,138.0,57,807.8,64,549.7,D&A add-back(incl.
24、ESO)Minority interest add-back,3,277.00.0,3,207.00.0,3,938.30.0,4,450.70.0,Free cash flow per share($)Free cash flow yield(%),45.538.6,50.6910.0,65.9113.0,75.3314.9,Net(inc)/dec working capitalOther operating cash flowCash flow from operationsCapital expendituresAcquisitionsDivestituresOthersCash fl
25、ow from investingDividends paid(common&pref)Inc/(dec)in debtOther financing cash flowsCash flow from financingTotal cash flow,1,084.04,762.050,856.0(8,295.0)(1,457.0)0.0(38,475.0)(48,227.0)(2,488.0)0.0790.0(1,698.0)931.0,2,101.57,051.957,498.4(9,916.0)(160.0)0.0(32,533.0)(42,609.0)(10,054.1)0.0(2,20
26、0.0)(12,254.1)2,635.3,3,764.78,735.574,246.3(12,219.6)(160.0)0.0(47,373.1)(59,752.7)(10,080.6)0.0(3,800.0)(13,880.6)613.1,5,565.010,148.784,714.1(13,819.9)(160.0)0.0(59,558.4)(73,538.2)(10,080.6)0.0(3,800.0)(13,880.6)(2,704.7),Note:Last actual year may include reported and estimated data.Source:Comp
27、any data,Goldman Sachs Research estimates.Analyst Contributors,Bill Shope,CFA,Stephen O,Elizabeth BCristina Colon,CFAGoldman Sachs Global Investment Research,3,January 16,2013,Apple Inc.(AAPL),Overview:Expect a solid print to start a rebound,but the bearsremain persistentApple is scheduled to report
28、 fiscal first quarter results on Wednesday,January 23 after themarket close.We are forecasting revenues and EPS of$53.58 billion and$12.58 for thequarter,versus consensus of$54.6 billion and$13.35.For the March quarter,we aremodeling revenues and EPS of$45.63 billion and$11.83,versus consensus of$46
29、.65 billionand$11.99.The most significant deviation between our estimates and consensus is likelyon the iPhone ASP line,where we assume ASPs will decline by 3%sequentially due to ahigh mix of iPhone 4 and 4S.Nevertheless,given the healthy supply ramp for the iPhone 5and what we believe was remarkabl
30、y strong demand,our ASP and unit assumptions couldprove too conservative.Rapid supply improvements also leave room for upside to our 37%gross margin estimate.As for the individual product segments,we are looking for thefollowing in the December quarter:iPhone units of 48.4 million,iPad units of 23.4
31、 million,Mac units of 5.1 million,and iPod units of 12.3 million.Given the remarkable compression in investor sentiment over the past several months andthe increasingly intense battle between bears and bulls,we believe it is clear that thisquarter will be a critical event for the stock.On a short-te
32、rm basis,we believe investors areconsidering three general scenarios for the print:(1)Apple reports healthy Decemberquarter upside,but issues typically conservative guidance that is below the current Marchquarter consensus;(2)Apple reports substantial upside(5%-plus revenue beat,with EPS of$15-plus)
33、,and conservative guidance that is near current March quarter consensusestimates;or(3)the company reports an in-line quarter or a slight miss versus consensusrevenues and EPS,with conservative March quarter guidance that is below the currentconsensus.In the first scenario,the stock would likely have
34、 found a healthy bottom and thebull case can start to gain some steam over the next several weeks;there would still be adebate,however,over whether the March quarter guidance was conservative or whether itjustifies recent concerns over iPhone demand trends in early 2013.In the second scenario,Apples
35、 outperformance would likely substantially damage the bear case and the stockcould begin a sharp rebound immediately.And finally,in the third scenario,the bear casewould likely gain steam and the stock may face further pressure in coming months.Webelieve the first scenario is most likely,as we belie
36、ve the company has the potential to beatconsensus iPhone unit and overall gross margin estimates.Furthermore,we believe thethird scenario(more specifically,a miss)is the least likely scenario.As such,we believethe worst of Apples selling pressure should begin to ease shortly after the print,andwe re
37、main bullish on the stock.Looking at the story beyond the near term,it is clear to us that investors are far moreconcerned with Apples competitive positioning than we previously appreciated.Morespecifically,we believe investors are concerned that Apples momentum in developedmarkets has peaked and th
38、at its potential for new user growth in emerging markets isbeing capped by increasing competitive pressures from vendors such as Samsung.Thecause of this concern appears to be a growing belief that Apples pace of hardwareinnovation has slowed,and perhaps more important,that its competitive lead in m
39、obileecosystems(particularly iCloud and broader web services)has been narrowedsubstantially.We strongly disagree with both of these concerns,but the burden of proof iscertainly on the shoulders of the bulls.While these issues can be partly resolved with asolid December quarter,we believe they cannot
40、 be fully eliminated until investors seestronger evidence that innovative new products are indeed in the pipeline,such as a low-end phone catering to emerging markets and an iOS-centric television/set-top box strategy.Furthermore,while we believe Apple has greatly enhanced its platform potential wit
41、hinnovations such as iCloud and Siri,we believe the company needs to more rapidlyenhance these innovations with new features and capabilities that further differentiateGoldman Sachs Global Investment Research,4,January 16,2013,Apple Inc.(AAPL),them from similar services on Android.We believe all of
42、this will occur and the bearargument will appear less and less legitimate,but it will take time and this is a process thatlikely runs through early 2013.Even considering all of these challenges and the growing skepticism of investors,webelieve its important to remember that Apples valuation appears
43、to have factored in theworst case scenarios.Indeed,Apple is now trading at 9X our CY2013 EPS estimate,or 7Xex-cash.This compares to our coverage group average P/E multiple of 13X.If we were toreduce forecasting risk and look at trailing multiples,Apple trades at 12X our CY2012 EPSestimate and 9X ex-
44、cash.This valuation seems unjustified to us,and it seems clear thatnegative momentum is out of line with current valuation.We do not believe this can persist,and we would be buyers.Apple remains our top pick in the sector,and we reiterate our CL-Buy and 12-month price target of$760.Our price target
45、is based on a 14X multiple on ourCY2013 EPS estimate of$54.54.Upcoming catalysts could include:(1)a low-cost iPhone toaccelerate emerging market momentum;(2)an increased dividend and share repurchaseauthorization;(3)an iOS-centric TV/set-top box strategy;(4)a partnership with ChinaMobile;and(5)a 1H2
46、013 refresh for the iPad and iPhone.Key risks include worsening macro conditions,supply chain disruptions,increasedplatform competition,and potential legal and regulatory restrictions.A deeper look at guidanceThe near-term bear case for Apples stock has been evolving over the past several months.Fir
47、st,the concern was that Apple wouldnt be able to ramp supply fast enough to meetiPhone 5 demand in the December quarter.Then the bear case was that weak Decemberquarter demand would lead to a shortfall.And finally,as data has continued to point to asolid December quarter iPhone figure(initial China
48、sales,Verizon,AT yet,the bears could point to a conservative outlook as“proof”of the recentdemand concerns.As such,the bears are likely to linger,even if Apple reports a healthyDecember quarter and issues guidance that is in line with its past practices.Nevertheless,for longer-term investors,it will
49、 be important to judge Apples guidance in the context ofits historical practices.We would note the following factors to consider:In the last five years,Apple has guided to an average sequential decline of 25-27%in revenues and 38-41%in EPS in the March quarter.This is partially skewed bythe fact tha
50、t iPhone releases were in June(as opposed to September/October)prior to the last two product generations.When considering comparison to justlast year,the December quarter of 2011 had an extra week,though this is partlycountered by the fact that this years iPhone 5 rollout was more front-end loaded.I
