A subscriber convinced me to post the 1st quarter's valuation bands (subscribers, see Apple Margin & Valuation Note 03/15/2012) for Apple to squelch the comments of those who are guessing what's behind the firewall. Our base case scenario was right on target, and during the target and after the earnings release I realized that we underestimated international (especially Asian) sell though and shifted the weight to out optimistic band which also proved fairly accurate. As all can notice, the pessimistic band is not show, and that is where the value lies here. I am now shifting my bias towards (that's towards, not to) the pessimistic band, for I feel Apple has now started to feel the competitive and margin pressures that I warned of, and has done so right at the deadline that I gave in 2010 (this is just as much a factor of luck as it is skill, alas, if it bears fruit it bears fruit). The latest valuation bands can be accessed by paying subscribers below (click here to subscribe):
Keep the following in mind as you peruse this post...
I discussed this in detail with Lauren Lyster on Capital Account. The margin discussion started at 7:55.
For those who haven't heard my description of Apple's arch competitor, Google's, business model, look here:
See Right On Time, My Prediction Of Apple Margin Compression 8 Quarters From My CNBC Warning Landed Right On The Money! for more on the mechanics of the margin compression theory for Apple.