|Bid||0.00 x 1000|
|Ask||0.00 x 3200|
|Day's range||57.36 - 59.00|
|52-week range||48.56 - 76.50|
|Beta (3Y monthly)||1.60|
|PE ratio (TTM)||N/A|
|Earnings date||30 Jan 2019|
|Forward dividend & yield||2.48 (4.30%)|
|1y target est||68.50|
Apple (AAPL) has been facing troubles in the fourth quarter due to factors ranging from reports of weakening new iPhone sales to fears about tariffs on its Chinese imports into the US. The company’s stock is approaching its six-month low again. Today around 10:30 AM EST, the stock posted a day low of $166.11, down 2.8% from its previous day’s closing price. This level was not far away from Apple’s six-month low of $163.33 posted on Monday this week.
The U.S. company was responding to a Chinese court that ruled this week Apple infringed two Qualcomm patents and issued injunctions against the sale of six older versions of the iPhone. Apple, which has filed a request for consideration, argues the decision harms China’s interests by potentially raising the royalties and fees that phonemakers pay Qualcomm. Apple’s response underscores the importance of the Chinese market, as well as Qualcomm’s crucial role as a technology provider to the likes of Huawei Technologies Co. and Xiaomi Corp. On Friday, Apple said it will push out a software update for its Chinese users early next week, to address functions covered by the patents in question.
Apple (AAPL) is continuing to lose investors’ confidence in the fourth quarter. Apple stock has already fallen 24.3% sequentially as of December 13. Apple investors (XLK) are concerned about weak new iPhone sales and tariffs in the fourth quarter. On December 14 at 10:10 AM EST, Apple stock fell 2.2% from the previous session’s closing price.
In 2015, Broadcom (AVGO) started improving its revenue and profit through acquisitions, sending its stock upward. Early on, Broadcom stock fell as its acquisition of Qualcomm (QCOM) was blocked by Donald Trump. While the acquisition news impacted Broadcom’s stock, its earnings continued to rise, improving its valuation.
Broadcom (AVGO) is restructuring its newly acquired CA Technologies to align it with its own business model. It aims to change its perpetual licensing to a fully ratable subscription model subject to renewal at specific intervals, which could make licensing more flexible and affordable to customers. Broadcom plans to report CA Technologies’ earnings in its newly created Infrastructure Software segment, which comprises the mainframe, enterprise, and SAN (storage area network) businesses.
Apple is attempting to resolve China’s ban on sales of certain iPhones with a software update for users in the region, in its latest move in a legal battle with Qualcomm over patent infringement. banning Chinese imports and sales of seven Apple smartphone models, from 2015’s iPhone 6s through to last year’s iPhone X. The order said the phones had violated two Qualcomm patents related to photo manipulation and using apps on a touchscreen.
The U.S. company said it was taking that step to ensure it complies fully with the ruling, which resulted in sales injunctions against six older versions of Apple’s most important device. The Chinese court’s ruling handed an initial victory to Qualcomm, which is locked in a worldwide dispute with Apple over the licensing fees it charges for the use of technology that underpins all modern phone systems. The iPhone maker argues the San Diego-based company abuses its position as the biggest supplier of smartphone chips, while Qualcomm counters that Apple is using its intellectual property without paying for it.
Qualcomm finally has a win in its legal battle with Apple and it wants to make sure the iPhone maker obeys an order by a Chinese court.
Tech giant Apple (AAPL) is up over 1% today after it revealed its plans to build a new campus in Texas with an investment of $1 billion. The move could be an attempt to please President Donald Trump, who recently indicated that he planned to impose tariffs on Apple’s Chinese imports. At 11:01 AM EST on December 13, Apple stock was up 1.2% from its previous day’s closing price despite a minor fall of 0.1% in the S&P 500 Index (SPY) at the same time.
Broadcom (AVGO) has been growing its cash flow by acquiring companies that are market leaders with high cash flow. The company is known for successfully integrating businesses and delivering strong returns to shareholders. In fiscal 2019, it is set to integrate CA Technologies, which it acquired in November. As part of the integration, Broadcom plans to change CA Technologies’ business model and include its earnings in its newly created Infrastructure Software segment. CA Technologies licenses its mainframe products to the world’s largest enterprises, which also spend the most on information technology.
Previously, we saw that Broadcom (AVGO) has been growing its FCF (free cash flow) steadily by acquiring companies with high cash flow. The company’s strategy is to increase its cash flow and give returns to shareholders through dividends, buybacks, and strategic acquisitions. In November 2017, Broadcom tried to acquire Qualcomm (QCOM) but failed, resulting in it compensating shareholders by announcing a $12 billion stock buyback in April.
The U.S. lawmakers are reportedly advancing a bill to ban the sale of components by local companies to Chinese telecom firms that violate sanctions.
On November 30, the Intermediate People’s Court in Fuzhou granted a preliminary injunction banning Chinese imports and sales of seven Apple smartphone models, from 2015’s iPhone 6s through to last year’s iPhone X.
The U.S. International Trade Commission said Wednesday it would take a closer look at a recommendation by a judge in September that an import ban would hurt America’s competitive edge in the development of the next generation of mobile technology, known as 5G. It also will look at the judge’s finding that Apple infringed one of three Qualcomm patents in the case, though confirmed that two other patents weren’t infringed. Qualcomm and Apple both rose less than 1 percent in extended trading, building on their gains during the regular session.
As of December 11, Apple stock has lost about 25.3% sequentially compared to a 9.5% and 12.1% drop seen in the S&P 500 Index (SPY) and the NASDAQ Composite Index (QQQ), respectively. On December 12, Apple seems to be on a recovery path. At 10:11 AM EST, Apple was trading at $171.03 with 1.4% gains.
Broadcom (AVGO) has grown significantly over the last few years under the leadership of CEO Hock Tan, both organically and through acquisitions. Broadcom’s fiscal 2018 earnings again showed how synergies have boosted Broadcom, which acquired Brocade Communications in November 2017.
In early November, Broadcom (AVGO) closed the acquisition of CA Technologies for an equity value of ~$18.9 billion. Broadcom’s all-cash CA Technologies deal was made to please shareholders after it failed to make the biggest ever technology deal with Qualcomm (QCOM).
Among the 27 analysts covering Qualcomm (QCOM), 13 recommended a “buy,” while 14 recommended a “hold.” None of the analysts recommended a “sell.” The company will likely continue to perform well despite the trade war and other global headwinds. Analysts have set a target price of $68.50 for the stock and a median consensus estimate of $68.00. Qualcomm was trading at $57.11 on December 4—a 16.0% discount to its consensus median target estimate.
Chip maker Broadcom (AVGO) has strong cash flows and has been rewarding its shareholders with dividends and share buybacks. In the fourth quarter of fiscal 2018, the company’s cash flow from operations was $2.64 billion compared to $2.25 billion in the previous quarter and $1.96 billion in the previous year’s quarter. Broadcom generally returns 50% of the previous fiscal year’s free cash flow to stockholders in the form of cash dividends.