Apple (AAPL) reported December quarter (first quarter fiscal 2012) earnings yesterday after the New York close that blew away Wall Street estimates. And then the company raised guidance for the March 2012 quarter. The stock is up 6.9% as of 11:45 a.m. in New York in a generally lackluster U.S. market.

Should you buy? Well, the stock is still very cheap—especially once you subtract the company’s nearly $100 billion in cash. But you might get a better entry point sometime in the next three months—the March quarter is always weak for Apple. And while that weakness is absolutely predictable, many investors still sell on that worry. The only reason to rush in today is if you think that Apple will do something soon with its cash—like pass out a special dividend—that would send the stock up even further in the short-term.

Earnings for the December quarter of $13.87 a share handily beat Wall Street expectations of $10.07 and the company’s guidance of $9.30. (You might think that the company set guidance so low to make sure that new Apple CEO Tim Cook would be able to report a huge surprise to make up for Apple missing Wall Street projections last quarter, Cook’s first as CEO after the resignation of Steve Jobs. If you think that, I wouldn’t argue with you.)  Revenue for the quarter came in at $46.3 billion, well above Wall Street projections for $38.8 billion in revenue.

I can’t find a product segment that disappointed in the quarter. Read more

Apple’s shares start to recover from their earnings miss–but I’m still in bargain-hunting mode

Could today mark the turn for Apple (AAPL)? Apple shares are up 2.3% today, November 15, as of 2:45 p.m. New York time. An up day has been unusual for the stock ever since it fell short of analyst expectations when it announced earnings for the fiscal fourth quarter (that ended on September 24) on October 18. But today the shares have advanced on reports of October retail sales that show solid growth in sales of consumer electronics. And that has raised hopes for holiday sales of electronics—including the iPhone and the iPad.

Even with today’s gain the shares are down 8.2% since the October 18 high at $422.24.

I think it’s too soon to say that Apple shares are headed straight up from here. A stock doesn’t shake off its first earnings miss in six years quite that easily. I think Apple still has to prove that last quarter was a fluke by reporting stronger than expected earnings for the fourth quarter.

But I think we’re seeing the beginning of the retreat of the pessimism that has surrounded the shares ever since the death of Steve Jobs.

The molehill problem in third quarter earnings—that Apple had sold fewer iPhones than projected probably because the new iPhone 4S had cannibalized sales of older models—has somehow turned into a mountain that Apple shares haven’t been able to climb. Read more

Serves Apple (AAPL) right for selling 4 million of its new iPhone 4S handsets over this past weekend. Yesterday after the market closed Apple announced that anticipation for the new phone cut into iPhone sales for the company’s fiscal fourth quarter that ended in September and held the company to a 54% gain in earnings.

That kept earnings per share to just $7.05, well below the $7.38 a share that Wall Street had been expecting. (But up from the $4.64 a share reported in the fiscal fourth quarter of 2010.) Revenue climbed to $28.3 billion, a 39% increase. Wall Street projections had called for revenue of $29.7 billion.

The iPhone problem started with Apple’s developer conference in June when the company introduced a new iPhone operating system and set off rampant speculation that a new iPhone was in the works for ….

Well, that was the trouble. Read more

Banks down, techs up today equals good news for earnings season that begins next week

Today the U.S. stock market is paying attention to sectors. Technology is up. Financials are down. I think that’s good news for investors are we head into earnings season with Alcoa (AA) kicking off third quarter reports after the close on Tuesday, October 11.

Today, as of 2:30 p.m. New York time the Technology Select Sector SPDR (XLK) is up 1.9%. That performance is a major reason that the technology heavy NASDAQ Composite, up 1.69%, is out performing the Standard & Poor’s 500 and the Dow Jones Industrial Average today.

The Financial Select Sector SPDR (XLF), on the other hand, is headed in the other direction, down 0.2% today.

So why is today’s performance by these two sectors good news? Because it shows that investors might be able to push fear to the side for long enough to pay attention to earnings for the next few weeks. I expect financial stocks to deliver disappointing earnings for the third quarter and for technology stocks to surprise to the upside.

For that to turn into actual movements in stock prices, though, investors have to actually pay attention to the results.

Big banks are looking at hits to earnings coming at them from every direction. Read more

As technology rallies go, the rally of the last week and month is suggestive but not yet totally convincing.

For the week ended on September 16, a number of stocks in the sector such as Nvidia (NVDA), Intel (INTC), Oracle (ORCL) and Marvell Technology Group (MRVL) convincingly beat the 5.42% gain for the Standard & Poor’s 500 Stock Index. Nvidia was up 11.38%, Intel up 11.52%, Oracle 12.42%, and Marvell 10.81%, according to Morningstar.com.

That’s not especially surprising. High beta stocks, like most technology stocks, should rise faster than the general market when the broad market is climbing. Nvidia, for example, has a beta of 1.61, meaning that it is 1.61 times as volatile as the broad market. (By definition the broad market of stocks has a beta of 1.) Add in the way that technology stocks have been pounded in 2011–even after this rally Marvell Technology is down 18.22% for 2011 and Oracle is down 6.07%–and you’ve got a recipe for a tasty bounce.

But the technology rally is suggestive since it’s a reminder of the coming seasonal sweet spot for technology shares. Technology companies see a huge positive swing in revenue every year in the third and fourth quarters. I suspect we’re going to get some kind of November/December rally in stocks this year once the global economy (and especially the EuroZone)  has managed to survive September and October’s very rough spot without falling apart. The historical seasonal pattern for technology shares—added to the underperformance of technology stocks in 2011—will push the sector to the front in any rally. The sector’s performance could actually be quite explosive since the sector is under owned—for many investors technology shares have fallen off the radar screen—and any rally strong enough to generate “believers” will have a very strong bank wagon effect.

In most years sometime around October 20 or so is a good time for checking the technology weighting in your portfolio. This year last week’s rally says that you ought to start that checkup—and start adding to your technology weighting–a little early.

A technology rally would lift all boats but not equally. Microsoft (MSFT) was up only 5.36% last week, actually trailing the S&P 500 and Cisco Systems (CSCO) was up just 5.06%. On the other hand, Broadcom (BRCM) rose 6.67% and EMC (EMC) 6.9%, both more than the S&P 500.

I think this week’s rally in technology shares—even if it doesn’t hold long enough to roll right into an end-of-the year rally–provides a pretty good template for where to put your money this year. (Just to be completely clear, I’m not saying that the U.S. stock market is about to launch another big nine month rally or that any end of the year rally in U.S. stocks is sustainable. I think we’re all too aware of the big problems that are still lurking out there. All I’m looking for is a relief rally if, as I continue to think likely, European governments get their act together enough to kick the Greek and Italian debt crisis down the road into 2012 or 2013. In other words, don’t fall in love with anything you might buy now and look to take profits when the news flow of not-quite-so-bad-as-expected news starts to diminish in January or so.

Okay what did last week’s technology rally tell us about where to place our technology bets for the last quarter of 2011? Read more