Plenty in Apple's Earnings to Justify Current Stock Price

4/24 - "When AT&T reported net adds of just 1.3 million, there were concerns about iPhone sales crossing the 1 million mark. However, unlocked iPhone sales seem to have bridged the gap..things are not so rosy in Europe. O2, the UK carrier, recently cut the iPhone price from £269 to £169 and T-Mobile had earlier in the month cut the price from €399 (£319) to €99. There are reports of Apple pushing for price cuts in France with the carrier Orange to increase sales. Apple will probably change its distribution model of exclusive carriers outside the US."

"Starting with just 4% market share when it was launched last year, Apple has now 9% of the smartphone market share against RIM’s 42% according to ChangeWave Research. And with the iPhone being made compatible for use in the enterprise, it would be interesting to watch its race with RIMM. For the moment, most of Apple’s market share wins are coming at the expense of Palm’s Treo and Motorola’s RAZR."

"Meanwhile reports of Apple’s $278 million acquisition of microprocessor design company PA Semi has overshadowed its earnings reports. PA Semi is known for its design of low-power chips...Apple has taken on a significant risk by vertically integrating into semiconductors with the hope that they can achieve differentiation in their core electronics, not only in design, OS and applications. If Apple’s move succeeds, then we’re going back to a vertically integrated computer industry, which is where it all started...We can always trust Steve Jobs to create drama. We can always trust Steve Jobs to be ambitious."

4/23 - "Apple beat and did it nicely. The gross margins, a closely watched figure was a bit disappointing as this shows the effects of higher priced parts and labor. It is becoming increasingly clear that the outrageous price of commodities is starting to trickle down (maybe it is a torrential downpour) to consumers.

The shipments of Mac computers was exceptionally strong, but the iPod sales were lackluster, at best...The cold truth is that any company beating numbers these days have done a great job at controlling costs. The fall of the dollar has benefited the international sales for Apple, yet there is that edge of wonder if that will continue."

"...Apple still has a few tricks up its sleeve. Remember that the iPhone is still not available worldwide and the 3G model has not been announced for the U.S. Add that to the enormous opportunity it has with the iTunes store and there is no reason that Apple should not continue to dominate and turn in good results in the context of a global slowdown."

4/24 - "Most of the Street commentary this morning is bullish - as you will see many analysts raised price targets - but the disappointing margins were all much discussed. Another factor noted by a few analysts was the boost to EPS from the lower than expected tax rate, at 29% versus a forecast 32%."

"Mike Abramsky, RBC Capital: “We believe investors will look past Q2 GM softness and focus on the stronger momentum, product cycle catalysts, share gains, iPhone 3G and Apple’s growing market opportunity,” he writes. Abramsky maintains an Outperform rating, and upped his price target to $200 from $190."

"Charlie Wolf, Needham: “There was only one story in the quarter - Mac sales. In a PC market that experienced 12% growth, Mac shipments rose 51%.” Maintains Buy rating and $235 target price."

"Toni Sacconaghi, Bernstein Research: “Gross margin failed to show the upside we expected…as expected, guidance for Q3 appears conservative.” Sacconaghi notes that iPhone revenue recognized was lower than he expected, at $378 million versus $416 million. He thinks that could indicate unlocked iPhones may be as high as 30%-50% of total sales...“We believe that Apple’s stock is relatively fairly valued at current levels, and would look to add only on pullbacks.”