Apple Is in Talks to Invest in SoftBank

Price movement

Apple (AAPL) rose 1.8% to close at $115.97 per share during the second week of December 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 1.8%, 5.4%, and 12.6%, respectively, as of December 16. AAPL is trading 3.8% above its 20-day moving average, 3.0% above its 50-day moving average, and 10.8% above its 200-day moving average.

Apple Is in Talks to Invest in SoftBank

Related ETF and peers

The Schwab US Broad Market ETF (SCHB) invests 2.5% of its holdings in Apple. The YTD price movement of SCHB was 12.8% on December 16. The market caps of Apple’s competitors are as follows:

  • Alphabet (GOOG) — $538.5 billion
  • Microsoft (MSFT) — $476.9 billion
  • IBM (IBM) — $159.1 billion

Latest news on Apple

In a press release on December 12, 2016, CNBC stated that “Apple and president-elect Donald Trump have something in common: They’ve both held talks with leaders of one of the world’s biggest technology investment funds, according to The Wall Street Journal. Apple held talks to invest up to $1 billion in SoftBank’s $100 billion technology fund, unnamed sources told The Wall Street Journal in a report published on Monday. The status of those talks are currently unclear and nothing has been finalized, the Journal reported.” It added that “a Reuters source also reported Apple and SoftBank are in talks about the investment in a new technology fund.”

Apple’s performance in fiscal 4Q16

Apple (AAPL) reported fiscal 4Q16[1. quarter ended September 24, 2016] net sales of $46.9 billion, a YoY (year-over-year) fall of 8.9% from its net sales of $51.5 billion in fiscal 4Q15. The company’s gross profit margin and operating margin narrowed 180 basis points and 310 basis points, respectively. Its net income and EPS (earnings per share) fell to $9.0 billion and $1.67, respectively, in fiscal 4Q16, compared with $11.1 billion and $1.96 in fiscal 4Q15.

Fiscal 2016 results

In fiscal 2016, AAPL reported net sales of $215.6 billion, a YoY fall of 7.7%. Its net income and EPS fell to $45.7 billion and $8.31, respectively, in fiscal 2016, compared with $53.4 billion and $9.22 in fiscal 2015.

AAPL’s cash and cash equivalents and inventories fell 2.8% and 8.7%, respectively, between fiscal 2015 and fiscal 2016. Its current ratio and debt-to-equity ratio rose to 1.4x and 1.5x, respectively, in fiscal 2016, compared with 1.1x and 1.4x in fiscal 2015.

Projections

Apple (AAPL) has made the following projections for fiscal 1Q17:

  • revenue of $76 billion–$78 billion
  • gross margin of 38.0%–38.5%

In the next part, we’ll look at Newell Brands (NWL).