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Goaded by the tech-savvy in recent times for an apparent dearth of innovation in the wake of Steve Jobs, rivals such as Google, Amazon, Microsoft and Samsung have forged ahead in developing competing smartphones and tablets to the detriment of the Apple brand, and indeed the share price.
Revenue excepted at higher end of range
Current share price levels are quite some distance from the high reached back in September 2012 of over $700 per share, yet the 36% increase in share value over the past four months from the sub-$400 level is something to heed. In July, Apple gave some guidance as to what to expect: revenue of $34-37 billion; gross margin of 36-37% and operating expense of $3.9-3.95 billion. Based from Apple updates last month, there is an expectation that revenues and margins will come in at the higher end of these ranges. Certainly, one could expect that the recent launch of the iPhone 5S and 5C should help to boost revenues. iPad sales may be a little less weighty but in terms of outlook, the new iPad release next month is likely to spur the fashion conscious and tech-savvy shopper into action just before Christmas.
The $146 billion that the smartphone maker has in its coffers is something of a bone of contention for investor Carl Icahn, who has acquired 0.5% in the company. He is now pushing the company to engage in a larger share buy-back than the currently budgeted $60 billion. We can expect to hear more on how this is progressing in due course. One could argue that Apple would be better off spending this on innovation and research and continue the trend that it initially set; as a growth stock rather than a value one.
Stock displays bullish signs
A stock trading above all three major moving averages is definitely a bullish sign and the golden cross (the crossing of the 50 DMA through the 200 DMA) last month only helps to reinforce this bullish sentiment. In addition, price action has kept a steady head recently above the psychological $500 mark, which is now clearly an area of support. The $550-560 level is now the target and it may find the going tough in breaching this mark in the near term.
Apple plans to conduct a conference call to discuss its fourth-quarter financial results after the US closing bell on Monday 28 October. Analysts, on average, expect earnings of $7.91 per share on revenue of $36.8 billion. In the same period a year ago, Apple earned $8.2 billion, or $8.67 per share, on $36 billion in revenue.
Trade Apple out-of-hours
IG clients can now trade out-of-hours on Apple's share price moves following the release of its earnings on Monday evening.