VZ – Verizon Bought as a cash alternative Up ~$10/share Sell following iPhone announcement
Federal Chief Information Officer sees cloud computing as an IT solution to the cost inefficiencies of the nation’s IT infrastructure. Mandated that agencies of the federal government institute a "cloud first" IT procurement policy Looking to reduce the number of federal data centers by 40% by 2015. The goal is to shift $20B of the $80B/year federal IT budget to cloud solutions. From Business Week Right now, the cloud is small: It represented about 5 percent of the $1.5 trillion in corporate information technology spending last year, …. Cloud is real and is profoundly changing how companies buy computer technology There's a saying in the technology industry: People tend to overestimate what will happen two years from now and underestimate what will happen in 10. Well, the next 10 years have arrived. Current secular shifts in IT
Virtualization / Storage EMC/VMware Cloud computing / SaaS- Amazon & Oracle Mobility Apple How Do We Play "IT"?
AAPL: Enter Enterprise CIO’s are adopting tablets – This is Apple’s inroad to enterprise Next generation of corporate IT professionals in America use Apple Amazon: Disruptive Technology & Web Services EMC : More data will be created in the next two years than in history to date – IDC Oracle
Apple Company Profile Business profile: Apple designs, manufactures, and markets personal computers, computing and mobile communication devices, related software, and networking solutions. International vs. domestic: With $24.5billion in revenue for 2010, the Americas is the largest geographic section. Europe comes in second with $18.7billion for the same time period. The Europe and Asia/Pacific markets have 43% and 89% avg 2- year growth respectively as Apple enters new markets. Management quality: Excellent. Jobs, the COO and CFO have been managing the company since the late 1990s. Part of executive compensation is aligned with shareholder interests.
Prev Close:339.25 1y Target Est: 52wk Range: 199.25- 364.9 Avg Vol (3m): 19,790,730 Market Cap:311billion P/E (ttm):18.87 EPS (ttm):5.3 Div & Yield:none Forward P/E: 12.9 Investment Information
Investment Thesis Catalysts: 1. Tablet- Deltoitte expects companies to purchase 10million tablet devices in 2011 (APPL has 75% market share of tablets). Tablet has been tested or deplowed at 80% of Fortune 100 companies. Medtronic has given 5,000 iPads to sales reps and SAP has bought 3,500 for company use. Industry tracker iSuppli predicts Apple will ship 43.7 million iPads this year and 63.3 million in 2012. 2. Next generation of IT professionals- as more young people become familiar with apple computers, they will request these computers in the workforce. Macs have less viruses, spam, crashes and need for upgrade compared to PC
SWOT Analysis Strengths Brand Image iPhone and iPad run on same operating system Desktop/notebooks steadily increase revenue iTunes is largest music distributor in world Product release cycle Product Design and Utility Weaknesses Computer-Software Chief steps down A projected 50% of revenue will come from iPhone line by 2012 Not shareholder-friendly, sits on cash instead of giving a dividend. Very controlling over products. Opportunities Mac App Store Loyal customer base Apple TV Threats Steve Jobs’ Health Competition introducing similar products Over-priced products Google
Profile: Amazon is an online retailer that offers a wide range of products. They also offer web services for start-up companies. International vs. domestic : Revenue for North America hit $18.7billion in 2010. All other geographic areas reached $15.5billion. Average 2-yr growth was 35.62% and 31.68% respectively.
AWS contributed to $500million in revenue in 2010 Expected to bring in $2.5billion in revenue by 2014. With companies who have their own hardware assets, servers might reach a max utilization of 25%. Since AWS only charges for what a company uses, utilization is close to 100% Using AWS, a company will save security, upgrade, and personnel costs.
Prev Close:165.53 1y Target Est: 52wk Range: 191.6- 105.8 Avg Vol (3m): 19,790,73 0 Market Cap: 74.69billi on P/E (ttm):65.46 EPS (ttm):5.3 Div & Yield: none Forward P/E: 12.9
Amazon SWOT Analysis Strengths Brand Image Low-costs since company does not own retail stores. Superior customer service/ loyal customers Allowing 3 rd -parties sellers on amazon.com Last quarter saw record sales of $13billion 130 million active users (amazon.com) Weaknesses Computer-Software Chief steps down Outsources delivery Most of revenue from AWS has to be reinvested into hardware. Opportunities Android App Store Bought LOVEFiLM (Europe’s Netflix) Threats Evolution of media to digital formats Online sales tax Increase in gas prices
Valuations Valuation is relative AAPL vs HP - Are you willing to pay for growth?
Sector : Technology Industry Group: Software Current Holdings: GOOG, ADBE Target Sector Allocation: 15 Current Sector Allocation: Remaining Allocation: Portfolio Placement / Recommendation