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					                                                                                                                                                    EQUITY RESEARCH
                                                                                                                                                    COMPANY UPDATE

  March 8, 2010                                                           TECHNOLOGY/APPLIED TECHNOLOGY
  Stock Rating:
  OUTPERFORM
                                                                          Apple Inc.
  12-18 mo. Price Target                                       $265.00    One Lawsuit, Many Oil Slicks
  AAPL - NASDAQ                                                $219.08
                                                                           SUMMARY

  3-5 Yr. EPS Gr. Rate                                         11%        Our industry checks suggest that starting in January, Apple launched a series of
  52-Wk Range                                        $220.09-$82.57       C-Level discussions with tier-1 handset makers to underscore its growing
  Shares Outstanding                                        906.8M        displeasure at seeing its iPhone-related IP infringed. The lawsuit filed against HTC
                                                                          thus appears to be Apple's way of putting a public, lawyered-up exclamation point
  Float                                                     901.0M
                                                                          on a series of blunt conversations that have been occurring behind closed doors.
  Market Capitalization                                $198,660.6M        Our checks also suggest that these warning shots are meaningfully disrupting the
  Avg. Daily Trading Volume                             22,037,420        development roadmaps for would-be iPhone killers. Rival software and hardware
  Dividend/Div Yield                                        NA/NM         teams are going back to the drawing board to look for work-arounds. Lawyers are
  Fiscal Year Ends                                              Sep       redoubling efforts to gauge potential defensive and offensive responses. And
  Book Value                                                 $38.89       strategy teams are working to chart OS strategies that are better hedged.
  2010E ROE                                                  26.0%         KEY POINTS
  LT Debt                                                    $0.0M
                                                                          s    In reaching out to rival OEMs, Apple apparently pressed its case along all the
  Preferred                                                   $0.0M            axes that make the iPhone experience unique, from the interpretation of touch
  Common Equity                                           $35,768M             gestures, to object-oriented OS, to the nuts and bolts of hardware design. Near
  Convertible Available                                         No             term, it appears to have created an effective oil slick.
  EPS Diluted           Q1     Q2       Q3      Q4     Year      Mult.    s    Concurrently, the HTC suit, which is recognized as a proxy battle against
  2007A                 1.14   0.87    0.94    0.97     3.93      55.7x        Google, is causing OEMs to re-examine the strategic safety of relying overmuch
                                                                                                                                       .
                                                                               on Android, lest it prove vulnerable in terms of core IP This concern comes atop
  2008A                 1.82   1.22    1.25    2.48     6.79      32.3x
                                                                               pre-existing misgivings about Google's end-game in wireless. (To commoditize
  2009A                 2.50   1.79    2.01    2.77     9.08      24.1x
                                                                               the OEMs? To arrogate all value-added services?)
  2010E                3.67A   2.40    2.51    2.88 11.46         19.1x
                                                                          s    The worries about Google's becoming either too strong (the Windows of
    Prior (E)             --   2.32    2.50    2.75 11.24         19.5x
                                                                               wireless) or too weak (because of IP) have created a need for a strong
  2011E                   --     --       --      -- 12.88        17.0x
                                                                               alternative. Our checks suggest WinMo 7 is entering that breach, thanks both to
    Prior (E)             --     --       --      -- 12.65        17.3x        its capabilities and to assurances that it would join battle if customers are served
                                                                               on software IP  .
                                                                          s    Apple's legal maneuvering appears to have temporarily retarded its rivals' hot
                                                                               pursuit of the iPhone. But it also potentially brings Apple a step closer to a
                                                                               head-on legal confrontation with an array of gargantuan adversaries. Now that it
                                                                               has made its point, Apple may want to go back to saber rattling.
                                                                          s    Separately, we're slightly raising our estimates to reflect the likelihood of
                                                                               stronger than expected 2Q iPhone sales, partially offset by the delay of the iPad
                                                                               launch from late March (2Q10) to early April (3Q10).

                                                                          Stock Price Performance                                                   Company Description
                                                                                                                                                    Apple, Inc. designs, manufacturers, and sells
                                                                                          1 Year Price History for AAPL                             personal computers, portable digital music
                                                                                                                                              240
                                                                                                                                                    players, and mobile communication devices, as
                                                                                                                                                    well as related software, services, peripherals,
                                                                                                                                              200
                                                                                                                                                    and network solutions worldwide.
                                                                                                                                              160
                                                                                                                                              120
                                                                                                                                              80
                                                                                                                                              40
                                                                                     Q1          Q2        Q3                           Q1
                                                                           2009                                     2010
                                                                                                                          Created by BlueMatrix




                                                                          Oppenheimer & Co. Inc. does and seeks to do business with companies covered in its research reports. As
                                                                          a result, investors should be aware that the firm may have a conflict of interest that could affect the
Yair Reiner                           Michael Suh                         objectivity of this report. Investors should consider this report as only a single factor in making their
212 667-5505                          212-667-6035                        investment decision. See "Important Disclosures and Certifications" section at the end of this report for
Yair.Reiner@opco.com                  Michael.Suh@opco.com                important disclosures, including potential conflicts of interest. See "Price Target Calculation" and "Key Risks
                                                                          to Price Target" sections at the end of this report, where applicable.

                                                                          Oppenheimer & Co Inc. 300 Madison Avenue 4th Floor New York, NY 10017 Tel: 800-221-5588 Fax: 212-667-8229
Apple Inc.




             Saber Rattling Turns Up a Notch
             Our industry channel checks suggest that starting in January, Apple had a series of C-Level
             discussions with tier-1 handset makers to underscore its growing displeasure at seeing its
             iPhone-related IP infringed. The lawsuit filed against HTC thus appears to be Apple's way of putting a
             public, lawyered-up exclamation point on a series of conversations that have been occurring behind
             closed doors.


             Our checks also suggest that these warning shots are meaningfully disrupting the development
             roadmap for competitors' iPhone-like devices. Rival software and hardware teams have been sent
             back to the drawing board to look for feasible work-arounds. Lawyers are redoubling efforts to gauge
             potential defensive and counter-offensive responses. And strategy teams are working to chart OS
             strategies that are better hedged.


             The Message
             Apple initially signaled its willingness to fight for the protection of its iPhone-related patents during a
             conference call in January 2009, saying that when it came to companies trying to reproduce the
             iPhone's user experience, "we will not stand for having our IP ripped off and we'll use whatever
             weapons we have at our disposal. I don't know that I can be more clear than that."


             That original statement tended to be read relatively narrowly as referring to Apple's multi-touch
             technology, and as such it appeared to have some impact. In the months that followed, few multi-touch
             handsets appeared in the marketplace. Among these, the most prominent was the Palm Pre, a product
             that received plenty of accolades but which, given Palm's scale, did not yet represent a strategic threat.
             Major handset OEMs, including LG, Samsung, and Nokia, were still staying clear of multi-touch.


             The deference began to evaporate in late 2009, when a number of multi-touch Android devices,
             including the Motorola Droid and the HTC Eris, began appearing in the market. Top-tier handset
             makers continued to avoid implementing multi-touch, but Apple could safely assume that they were
             hanging back to gauge Apple's response to Motorola and HTC. If there wasn't one, the OEMs would
             likely read the silence as a green light, especially after Google also moved to enable multi-touch on its
             Nexus One phone.


             It was likely in order to counter that perception that Apple began reaching out to handset OEMs in
             January and explaining in no uncertain terms that it was now ready to do battle--and not just on
             multi-touch. It was ready to press its case along a number of axes that had made the iPhone
             experience unique, from the interpretation of touch gestures, to object-oriented OS design, to the nuts
             and bolts of how hardware elements were built and configured.


             Why Pick on HTC?
             In this context, we believe the suits filed against HTC were Apple's way of adding bite to the widely
             distributed bluster and putting all potential violators--present and future--on notice. As for the decision
             to focus fire on HTC rather than on some other would-be infringer, the reasoning was probably
             multiple. As the earliest, and arguably, the most aggressive implementer of Android--the operating
             system most squarely focused on bringing iPhone-like intuitiveness to other willing hardware
             makers--HTC serves as the perfect target for a proxy battle. Second, the depth of HTC's pockets, in
                                         ,
             terms of both cash and IP was likely less daunting than that of other potential targets. And finally,
             Apple and HTC do not have any supplier relationships with one another that could be upset by legal
             wrangling.




2
                                                                                                 Apple Inc.




Repercussions
Our checks suggest that the combination of warnings and legal actions are having their intended
effects and are causing a number of competing handset programs to be shaken off-course. Until
recently, most high-end smartphone programs were focused primarily on trying to match the iPhone's
user experience, and secondarily on avoiding any egregious violations of Apple's patents.


We believe this order of priorities has temporarily changed--along with the industry's appreciation for
how far Apple is willing to extend the fight. Few OEMs believe that simply staying clear of multi-touch
can, on its own, avert Apple's wrath. We believe a lot of software and hardware is being sent back to
engineering departments for work-arounds.


It's too early to know how Apple's legal action against HTC will ultimately play out, or whether Apple will
have the appetite to launch additional battles with other OEMs. But in the near term, Apple's legal
actions appear to have temporarily left competitors playing catch-up with their shoelaces tied.


Google Under a Cloud
We believe these developments are also causing handset OEMs to reassess their level of commitment
to the Android operating system. Even before Apple launched its suit against HTC, handset OEMs
were beginning to see Android as a mixed blessing. On the one hand, traditional handset
OEMs--whose core competency lies in hardware design--have seen Android as the easiest, cheapest
shortcut into the brave new world of software-centric/OS-centric smartphones. On the other hand, by
signing up with Android, handset OEMs risk creating a new hegemon (a Windows of the wireless
world), which could eventually turn them into commoditized hardware vendors, while arrogating the
value add of mobile connective--search, apps, etc.--for itself. Moreover, since the release of the
Google-branded Nexus One, Android OEMs have also had to grapple with the possibility that Google
might become a direct competitor.


Coming atop the latter issues, Apple's proxy war against HTC is helping to stoke mounting concerns
about the strategic danger for handset OEMs of relying too heavily on the Android operating system. In
order to mitigate risk, we believe handset OEMs that can afford to support multiple platforms will do so.
Regardless of how the HTC fight pans out, the strategic requirement of handset OEMs to support and
innovate across two competing operating systems could retard the industry's attempts to narrow the
gap with the iPhone. This bodes well for Apple's ability to protect its current iPhone pricing and margin
structure.


Softballs for Microsoft
The potential de-emphasizing of Android is also likely to benefit Win7 Mobile, which appears to be
gaining significant traction. Part of Win7's appeal is its capability as an OS. No less important,
however, is its strategic value as a hedge against the risk of Android's becoming too strong--or proving
too weak. Our checks indicate that Microsoft has been quick to sniff out this burgeoning opportunity
and has begun to aggressively promote the strength of its own IP portfolio, as well as its willingness to
join battle with customers that come under IP attack.


Ambiguous Long-Term Impact
In the near term, we believe Apple's legal maneuvering will retard competitors' attempts to close the
gap with the iPhone. Less clear, however, are the potential long-term implications of Apple's decision
to pursue and threaten suit. Its current docket of iPhone-related cases--with Nokia, HTC, and
Kodak--appears relatively manageable. But Apple may also be arraying itself against a much longer list
of potential heavyweights--including Google, Microsoft, and any handset OEM that has or will try to



                                                                                                         3
Apple Inc.




             make an iPhone-like device. Together, these companies bring to bear an impressive arsenal of IP,
             money, and public relations savvy, and with it the ability to administer considerable pain.


             Now that it has demonstrated its willingness to fight and begun to benefit from that demonstration,
             Apple may do well to return to saber rattling.


             Estimate Changes
             Separately, we are tweaking our earnings model to reflect what we believe to be better than expected
             iPhone sales in 2Q; and the slight delay in the iPad launch from late March (2Q10) to early April
             (3Q10).


             Moreover, our channel checks have confirmed recent media reports that the iPad has encountered
             production problems and has failed to ramp as expected. We now believe Apple will have 300K-400K
             units built by the end of March, compared to an earlier target of more than one million units. Our
             checks suggest that Apple continues to target production of 10 million units for the full calendar year.
             (We also believe the primary cause of the production delay relates to a component shortage. The
             reported yield issues at the assembler, Hon Hai, is a secondary problem, in our view.)

             s   Our 2Q10 estimates are raised to $12.2 billion in revenue and $2.40 in EPS from $11.8 billion and
                 $2.32.

             s   Our FY10 estimates are raised to $54.2 billion in revenue and $11.46 in EPS from $53.2 billion and
                 $11.24.

             s   Our FY11 estimates are raised to $60.9 billion in revenue and $12.88 in EPS from $59.8 billion and
                 $12.65.




             Other companies mentioned that are not rated by Oppenheimer & Co. (priced as of 3/8/10):


             Palm (PALM, $5.55)

             Kodak (EK, $5.95)

             LG Electronics (066570.KS 103,500 krw)

             Samsung Electronics (005930.KS 779,000 krw)

             HTC Corp. (2498.TW, NT$337.50)




4
                                                                                                                                                                        Apple Inc.

Apple Inc. - GAAP Model
Quarterly Consolidated Statement of Income Statement

                                      FY        FY        1Q09A     2Q09A     3Q09A     4Q09A      FY       1Q10A     2Q10E     3Q10E     4Q10E      FY         FY
                                    2007A     2008A       Dec-08A   Mar-09A   Jun-09A   Sep-09A   2009A     Dec-09A   Mar-10E   Jun-10E   Sep-10E   2010E     2011E
Net Sales                           $24,578   $37,491     $11,880    $9,084    $9,734   $12,207   $42,905   $15,683   $12,169   $12,433   $13,938   $54,223   $60,901

COGS                                 16,426    24,294       7,373     5,457     5,751     7,102    25,683     9,272     7,362     7,460     8,349    32,443    36,541

Gross Profit                         $8,152   $13,197      $4,507    $3,627    $3,983    $5,105   $17,222    $6,411    $4,807    $4,973    $5,589   $21,780   $24,361

  Research and Development              782     1,109         315       319       341       358     1,333       398       450       460       502     1,810     2,101
  Sales, General & Administrative     2,963     3,761       1,091       985     1,010     1,063     4,149     1,288     1,266     1,281     1,366     5,200     5,786
Total Operating Expenses              3,745     4,870       1,406     1,304     1,351     1,421     5,482     1,686     1,716     1,741     1,868     7,010     7,887

Operating Income                     $4,407    $8,327      $3,101    $2,323    $2,632    $3,684   $11,740    $4,725    $3,091    $3,233    $3,721   $14,770   $16,474

Other Income                          $599      $620         $158       $63       $60       $45     $326        $33       $30       $31       $33     $127      $465

Income Before Taxes                  $5,006    $8,947      $3,259    $2,386    $2,692    $3,729   $12,066    $4,758    $3,121    $3,263    $3,754   $14,897   $16,939

  Taxes on Income (benefit)           1,511     2,828       1,004       766       864     1,197     3,831     1,380       905       946     1,089     4,320     4,912
Net Income                           $3,495    $6,119      $2,255    $1,620    $1,828    $2,532    $8,235    $3,378    $2,216    $2,317    $2,666   $10,577   $12,027

Diluted EPS                           $3.93     $6.79      $2.50     $1.79     $2.01      $2.77     $9.08    $3.67     $2.40     $2.51      $2.88    $11.46    $12.88

Stock Based Comp - Total               242      $516         $170      $181      $179      $180     $710       $205      $230      $231      $231     $897      $913

Net Income, ex. Option               $3,737    $6,635      $2,425    $1,801    $2,007    $2,712    $8,945    $3,583    $2,446    $2,548    $2,897   $11,473   $12,939

Diluted EPS ex. Options               $4.20     $7.36       $2.69     $1.99     $2.21     $2.97     $9.86     $3.90     $2.65     $2.76     $3.13    $12.43    $13.86

Diluted Shares                         889       902          901       903       909       914      907        920       922       924       927      923       933
Source: Company Data, Oppenheimer & Co. Inc. Estimates.




                                                                                                                                                                                5
Apple Inc.

         Apple Inc. - GAAP Model
         Margin and Growth Metrics

                                                FY        FY       1Q09A      2Q09A     3Q09A     4Q09A      FY       1Q10A     2Q10E     3Q10E     4Q10E      FY        FY
                                               2007A     2008A     Dec-08A    Mar-09A   Jun-09A   Sep-09A   2009A     Dec-09A   Mar-10E   Jun-10E   Sep-10E   2010E     2011E

         Gross Margin                           33.2%     35.2%      37.9%      39.9%     40.9%     41.8%    40.1%      40.9%     39.5%     40.0%     40.1%    40.2%     40.0%

             Research and Development            3.2%      3.0%       2.7%       3.5%      3.5%      2.9%     3.1%       2.5%      3.7%      3.7%      3.6%     3.3%      3.5%
             Sales, General & Administrative    12.1%     10.0%       9.2%      10.8%     10.4%      8.7%     9.7%       8.2%     10.4%     10.3%      9.8%     9.6%      9.5%

         Operating Margin                       17.9%     22.2%      26.1%      25.6%     27.0%     30.2%    27.4%      30.1%     25.4%     26.0%     26.7%    27.2%     27.1%

           Effective Tax Rate                   30.2%     31.6%      30.8%      32.1%     32.1%     32.1%    31.8%      29.0%     29.0%     29.0%     29.0%    29.0%     29.0%
         Net Income Margin                      14.2%     16.3%      19.0%      17.8%     18.8%     20.7%    19.2%      21.5%     18.2%     18.6%     19.1%    19.5%     19.7%

         Sequential Growth Rates
         Revenue                                                       3.1%    -23.5%      7.2%     25.4%               28.5%    -22.4%      2.2%     12.1%
         Gross Profit                                                  1.4%    -19.5%      9.8%     28.2%               25.6%    -25.0%      3.5%     12.4%
         Operating Profit                                             -1.4%    -25.1%     13.3%     40.0%               28.3%    -34.6%      4.6%     15.1%
         Net Income                                                    0.4%    -28.2%     12.8%     38.5%               33.4%    -34.4%      4.6%     15.0%
         EPS                                                           0.7%    -28.3%     12.1%     37.7%               32.6%    -34.6%      4.3%     14.8%
         WA Shares Outstanding                    2.4%      1.9%     -0.4%      0.2%       0.7%      0.6%      0.6%     0.6%       0.3%      0.3%      0.3%      1.8%     1.1%
         Year-on-Year Growth Rates
         Revenue                                27.2%     52.5%      13.9%      13.8%     28.7%      6.0%    14.4%      32.0%     34.0%     27.7%     14.2%    26.4%     12.3%
         Gross Profit                           45.6%     61.9%      32.4%      39.1%     45.2%     14.9%    30.5%      42.2%     32.5%     24.9%      9.5%    26.5%     11.8%
         Operating Profit                       79.7%     88.9%      41.1%      60.4%     71.5%     17.1%    41.0%      52.4%     33.1%     22.8%      1.0%    25.8%     11.5%
         Net Income                             75.7%     75.1%      37.5%      47.1%     61.6%     12.7%    34.6%      49.8%     36.8%     26.8%      5.3%    28.4%     13.7%
         EPS                                    73.4%     72.6%      37.3%      46.5%     60.6%     11.5%    33.8%      46.8%     34.0%     24.7%      3.9%    26.2%     12.5%

         Source: Company Data, Oppenheimer & Co. Inc. Estimates.




6
                                                                                                                                                                                  Apple Inc.

Apple Inc. - GAAP Model
Product Breakdown

                                   FY          FY         1Q09A      2Q09A      3Q09A      4Q09A       FY         1Q10A      2Q10E      3Q10E      4Q10E       FY         FY
                                2007A        2008A        Dec-08A    Mar-09A    Jun-09A    Sep-09A    2009A       Dec-09A    Mar-10E    Jun-10E    Sep-10E    2010E      2011E
Revenue by Product
Desktops                          $4,023      $5,622       $1,045     $1,056     $1,134     $1,089    $4,324       $1,692     $1,269     $1,306     $1,332    $5,599     $5,702
Laptops                            6,313       8,732        2,520      1,904      2,220      2,891     9,535        2,758      2,399      2,677      2,908    10,742     11,859
iPods                              8,305       9,153        3,371      1,665      1,492      1,563     8,091        3,391      1,677      1,545      1,545     8,157      8,074
Music                              2,496       3,340        1,011      1,049        958      1,018     4,036        1,164      1,208      1,147      1,205     4,724      5,574
iPhone                              630        6,742        2,940      2,427      3,060      4,606    13,033        5,578      4,614      4,105      4,943    19,240     21,470
iPad                                                                                                                               0        630        851     1,481      3,402
Peripherals and other HW           1,303       1,694          387        357        340        391     1,475          469        422        443        488     1,822      2,040
SW, Services, and Other            1,508       2,208          606        626        530        649     2,411          631        581        581        668     2,460      2,779

Revenue Contribution by Product
Desktops                            16%          15%           9%        12%        12%         9%       10%          11%        10%        11%        10%       10%           9%
Laptops                             26%          23%          21%        21%        23%        24%       22%          18%        20%        22%        21%       20%        19%
iPods                               34%          24%          28%        18%        15%        13%       19%          22%        14%        12%        11%       15%        13%
Music                               10%             9%         9%        12%        10%         8%          9%         7%        10%         9%         9%          9%         9%
iPhone                                  3%       18%          25%        27%        31%        38%       30%          36%        38%        33%        35%       35%        35%
iPad                                                                                                                              0%         5%         6%          3%         6%
Peripherals and other HW                5%          5%         3%         4%         3%         3%          3%         3%         3%         4%         3%          3%         3%
SW, Services, and Other                 6%          6%         5%         7%         5%         5%          6%         4%         5%         5%         5%          5%         5%

Computers
Desktop
 Units                             2,714       3,712          728        818        849        787     3,182        1,234        926        972        991     4,122      4,329
  % of total                         38%         38%          29%        37%        33%        26%       31%          37%        33%        31%        29%       33%        31%
  % QoQ Growth                                               -22%        12%         4%        -7%                    57%       -25%         5%         2%
  % YoY Growth                      12%          37%         -25%        -4%       -10%       -16%      -14%          70%        13%        14%        26%       30%         5%
ASP                                1,482        1,515        1,435      1,291      1,336      1,384     1,359        1,371      1,371      1,344      1,344     1,358      1,317
  % QoQ Growth                                                -2%       -10%         3%         4%                    -1%         0%        -2%         0%
  % YoY Growth                       9%           2%          -7%       -18%        -9%        -5%      -10%          -4%         6%         1%        -3%        0%        -3%
Revenue                           $4,023       $5,622       $1,045     $1,056     $1,134     $1,089    $4,324       $1,692     $1,269     $1,306     $1,332    $5,599     $5,702
  % QoQ Growth                                               -81%         1%         7%        -4%                    55%       -25%         3%         2%                   2%
  % YoY Growth                      21%          40%         -31%       -22%       -18%       -20%      -23%          62%        20%        15%        22%       29%         2%

Laptop
 Units                             4,337       6,003        1,796      1,398      1,754      2,266     7,214        2,128      1,851      2,129      2,385     8,493      9,767
  % of total                         62%         62%          71%        63%        67%        74%       69%          63%        67%        69%        71%       67%        69%
  % QoQ Growth                                                 7%       -22%        25%        29%                    -6%       -13%        15%        12%
  % YoY Growth                      51%          38%          34%        -2%        13%        35%       20%          18%        32%        21%         5%       18%        15%
ASP                                1,456        1,455        1,403      1,362      1,266      1,276     1,322        1,296      1,296      1,257      1,219     1,265      1,214
  % QoQ Growth                                                 3%        -3%        -7%         1%                     2%         0%        -3%        -3%
  % YoY Growth                       3%           0%          -8%        -9%       -13%        -6%       -9%          -8%        -5%        -1%        -4%       -4%        -4%
Revenue                           $6,313       $8,732       $2,520     $1,904     $2,220     $2,891    $9,535       $2,758     $2,399     $2,677     $2,908   $10,742    $11,859
  % QoQ Growth                                                11%       -24%        17%        30%                    -5%       -13%        12%         9%                  10%
  % YoY Growth                      56%          38%          23%       -12%        -1%        27%          9%         9%        26%        21%         1%       13%        10%

Total PC
Units                              7,051       9,715        2,524      2,216      2,603      3,053    10,396        3,362      2,777      3,101      3,376    12,615     14,096
  % QoQ Growth                                                -3%       -12%        17%        17%                    10%       -17%        12%         9%
  % YoY Growth                       33%         38%           9%        -3%         4%        17%        7%          33%        25%        19%        11%       21%        12%
ASP                               $1,466      $1,478       $1,412     $1,336     $1,289     $1,304    $1,333       $1,324     $1,321     $1,284     $1,256    $1,295     $1,246
  % QoQ Growth                                                 1%        -5%        -4%         1%                     2%         0%        -3%        -2%
  % YoY Growth                                    1%          -8%       -13%       -11%        -6%       -10%         -6%        -1%         0%        -4%        -3%        -4%
Revenue                         $10,336      $14,354       $3,565     $2,960     $3,354     $3,980    $13,859      $4,450     $3,668     $3,982     $4,240    $16,341    $17,561
  % QoQ Growth                                                -2%       -17%        13%        19%                    12%       -18%         9%         6%
  % YoY Growth                      40%          39%           0%       -16%        -8%         9%          -3%       25%        24%        19%         7%       18%           7%
Source: Company Data, Oppenheimer & Co. Inc. Estimates.
                                                                                                                                                                                          7
Apple Inc.

         Apple Inc. - GAAP Model
         Product Breakdown, Cont.

                                           FY           FY         1Q09A      2Q09A      3Q09A      4Q09A       FY        1Q10A      2Q10E      3Q10E      4Q10E       FY         FY
                                          2007A       2008A        Dec-08A    Mar-09A    Jun-09A    Sep-09A    2009A      Dec-09A    Mar-10E    Jun-10E    Sep-10E    2010E      2011E
         iPods                                                      13,433     37,414     45,414                           73,640
         Units                             51,630       54,828       22,727     11,013     10,215     10,177    54,132      20,970     10,066      9,562      9,562    50,160     50,662
           % QoQ Growth                                               106%       -52%         -7%         0%                 106%       -52%         -5%         0%
           % YoY Growth                      31%           6%            3%         3%        -7%        -8%       -1%         -8%        -9%        -6%        -6%       -7%        1%
         ASP                                 $161         $167         $148       $151       $146       $154      $149        $162       $167       $162       $162      $163       $159
           % QoQ Growth                                                 -1%         2%        -3%         5%                    5%         3%        -3%         0%
           % YoY Growth                     -17%           4%         -18%       -11%         -4%         2%     -10%           9%       10%        11%          5%       9%        -2%
         Revenue                           $8,305       $9,153       $3,371     $1,665     $1,492     $1,563    $8,091      $3,391     $1,677     $1,545     $1,545    $8,157     $8,074
           % QoQ Growth                                               103%       -51%       -10%          5%                 117%       -51%         -8%         0%
           % YoY Growth                         8%        10%         -16%         -8%      -11%         -6%     -12%           1%         1%         4%        -1%         1%      -1%

         iPhones
         Units                             1,389       11,627        4,363      3,793      5,208      7,367    20,731       8,737      7,000      6,500      8,500    30,737     38,000
           % QoQ Growth                                               -37%       -13%        37%        41%                   19%       -20%        -7%        31%
           % YoY Growth                                  737%          88%       123%       626%         7%       78%        100%        85%        25%        15%       48%        24%
         ASP                                $453         $549         $600       $580       $560       $605      $588        $600       $600       $600       $550      $586       $535
           % QoQ Growth                                                -5%        -3%        -3%         8%                   -1%         0%         0%        -8%
           % YoY Growth                                   21%          47%        36%        19%        -5%         7%         0%         3%         7%        -9%         0%        -9%
         iPhone device revenue              $595       $6,089       $2,509     $2,105     $2,786     $4,273    $11,673     $5,024     $4,025     $3,413     $4,463    $16,924    $19,000
           % QoQ Growth                                                                                                                            -15%        31%
           % YoY Growth                                  923%                                                      92%                              22%         4%        45%      278%
         iPhone other revenue                                         $431       $322       $274       $333     $1,360       $554       $414       $205       $268     $1,441     $1,140
         Total iPhone Revenue               $630       $6,742       $2,940     $2,427     $3,060     $4,606    $13,033     $5,578     $4,614     $4,105     $4,943    $19,458    $21,470
           % QoQ Growth                                               -33%       -17%        26%        51%                   21%       -17%       -11%        20%
           % YoY Growth                                  970%         184%       197%       534%         5%       93%         90%        90%        34%         7%       49%       285%

         iPad
         Units                                                                                                                                    1,000      1,350     2,350      6,000
           % QoQ Growth                                                                                                                                        35%
           % YoY Growth                                                                                                                                                            155%
         ASP                                                                                                                                       $630       $630      $630       $567
           % QoQ Growth                                                                                                                                         0%
           % YoY Growth                                                                                                                                                            -10%
         Revenue                                                                                                                                   $630       $851     $1,481     $3,402
           % QoQ Growth                                                                                                                                       35%
           % YoY Growth                                                                                                                                                            130%

         Music
         Revenue                           $2,496       $3,340       $1,011     $1,049      $958      $1,018    $4,036      $1,164     $1,208     $1,147     $1,205    $4,724    $5,574
           % QoQ Growth                                                22%         4%        -9%         6%                   14%         4%        -5%         5%
           % YoY Growth                      32%          34%          25%        19%       17%         22%       21%         15%        15%        20%        18%       17%        18%

         Peripherals and Other Hardware
         Revenue                           1,303        1,694         $387       $357        $340       $391    1,475        $469       $422       $443       $488     1,822     $2,040
           % QoQ Growth                                               -11%        -8%         -5%       15%                  20%        -10%         5%        10%
           % YoY Growth                      18%          30%          -1%       -16%       -24%       -10%      -13%        21%         18%        30%        25%       24%        12%

         Software, Services and Other
         Revenue                          1,508         2,208         $606       $626        $530       $649    2,411        $631       $581       $581       $668     2,460     $2,779
           % QoQ Growth                                                10%         3%       -15%        22%                   -3%        -8%         0%        15%
           % YoY Growth                     18%           46%          -4%        18%         6%        18%          9%        4%        -7%        10%         3%          2%      13%
         Source: Company Data, Oppenheimer & Co. Inc. Estimates.




8
                                                                                                                                                                        Apple Inc.

Apple Inc. - GAAP Model
Balance Sheet

                                     FY        FY         1Q09A     2Q09A     3Q09A     4Q09A      FY       1Q10A     2Q10E     3Q10E     4Q10E      FY         FY
                                   2007A     2008A        Dec-08A   Mar-09A   Jun-09A   Sep-09A   2009A     Dec-09A   Mar-10E   Jun-10E   Sep-10E   2010E      2011E
Assets
 Cash & Cash Equivalents            $9,352   $11,875       $7,236    $4,466    $5,605    $5,263    $5,263    $7,609    $8,966   $11,769   $14,293   $14,293   $28,000
 Short-Term Investments              6,034    12,615       20,909    24,412    25,516    28,729    28,729    32,211    32,211    32,211    32,211    32,211    32,211
 Accounts Receivable                 1,637     2,422        2,196     1,932     2,686     3,361     3,361     3,090     3,067     3,431     3,838     3,838     4,310
 Inventories, net                      346       509          396       312       380       455       455       576       421       493       535       535       585
 Deferred Tax Assets                   788     1,044        1,097     1,065     1,095     1,135     1,135     1,180     1,180     1,180     1,180     1,180     1,180
 Other Current Assets                3,544     3,920        2,890     2,676     3,015     3,140     3,140     3,690     3,690     3,690     3,690     3,690     3,690
Total Current Assets               $21,701   $32,385      $34,724   $34,863   $38,297   $42,083   $42,083   $48,356   $49,534   $52,774   $55,747   $55,747   $69,976

 Property & Equipment, Net          $1,832    $2,455       $2,580    $2,546    $2,653    $2,954    $2,954    $3,115    $3,406    $3,677    $3,931    $3,931    $4,664
 Goodwill                               38       207          207       207       207       206       206       253       253       253       253       253       253
 Acquired Intangible Assets, net       299       285          277       268       259       247       247       241       241       241       241       241       241
 Other assets                        1,008       839          832     1,264     1,585     2,011     2,011     1,961     1,961     1,961     1,961     1,961     1,961
Total Assets                       $24,878   $36,171      $38,620   $39,148   $43,001   $47,501   $47,501   $53,926   $55,395   $58,906   $62,133   $62,133   $77,095

Liabilities and Equity
 Accounts Payable                   $4,970    $5,520       $4,715    $3,976    $4,854    $5,601    $5,601    $6,511    $5,364    $6,296    $6,584    $6,584    $7,205
 Accrued Expenses                    3,023     4,224        4,391     3,661     3,805     3,852     3,852     3,996     3,996     3,996     3,996     3,996     4,312
 Deferred Revenue                    1,113     1,617        1,771     1,742     1,920     2,053     2,053     2,590     2,590     2,590     2,590     2,590     2,590
Total Current Liabilities           $9,106   $11,361      $10,877    $9,379   $10,579   $11,506   $11,506   $13,097   $11,950   $12,882   $13,170   $13,170   $14,107

Deferred Revenue - Non-Current         554       768          814       771       788       853       853       922       922       922       922       922       922
Other Non-Current Liabilities        $687     $1,745        2,179     2,444     2,870     3,502    $3,502     4,139     4,139     4,139     4,139    $4,139     4,139
Total Liabilities                  $10,347   $13,874      $13,870   $12,594   $14,237   $15,861   $15,861   $18,158   $17,011   $17,943   $18,231   $18,231   $19,168

Stockholder's Equity               $14,531   $22,297       24,750    26,554    28,764    31,640   $31,640    35,768    38,384    40,963    43,901   $43,901    57,928

Total Liabilities and Equity  $24,878       $36,171       $38,620   $39,148   $43,001   $47,501   $47,501   $53,926   $55,395   $58,906   $62,133   $62,133    $77,095
==> Check                                                                                                                                                     -1.46E-11
Source: Company Data, Oppenheimer & Co. Inc. Estimates.




                                                                                                                                                                                9
Apple Inc.

         Apple Inc. - GAAP Model
         Cash Flow Statement

                                               FY          FY       1Q09A       2Q09A       3Q09A       4Q09A         FY        1Q10A       2Q10E      3Q10E      4Q10E        FY          FY
                                              2007A      2008A      Dec-08A     Mar-09A     Jun-09A     Sep-09A     2009A       Dec-09A     Mar-10E    Jun-10E    Sep-10E     2010E      2011E
         Cash Flow from Operations                                   $2,255      $1,620       $1,828      $2,532                 $3,378      $2,216      $2,317     $2,666
         Net income                           $3,495     $6,119      $2,255      $1,620       $1,828      $2,532     $8,235      $3,378      $2,216      $2,317     $2,666   $10,577     $12,027
         Adjustments:
          D&A                                    317        496         168         181         182         203          734        209         209        229        247        893        893
          Stock-based comp                       242        516         170         181         179         180          710        205        $230        231        231        897        913
          Deferred income taxes                   73        398         276         294         202         268        1,040        425           -          -          -        425          -
          Loss on PPE                             12         22           7           1          10           8           26          6           -          -          -          6          -
         Changes in op. assets/liabilities:
          Accounts receivable                   (385)      (785)        226         264        (754)        (675)      (939)        271          23       (364)      (407)      (477)       (473)
          Inventories                            (76)      (163)        113          84         (68)         (75)        54        (121)        155        (72)       (42)       (80)        (50)
          Other current assets                (1,279)      (274)      1,097         137        (384)        (101)       749        (517)          -          -          -       (517)          -
          Other assets                           285        289           7        (368)       (241)        (300)      (902)         47           -          -          -         47           -
          Accounts payable                     1,494        596        (767)       (760)        879          740         92         956      (1,147)       932        288      1,029       $620
          Deferred revenue                       566        718         200         (72)        195          198        521         606           -          -          -        606            -
          Other liabilities                      716      1,664         186        (721)        242          132       (161)        316           -          -          -        316         316
         Net cash from operations             $5,460     $9,596      $3,938        $841      $2,270       $3,110    $10,159      $5,781      $1,687     $3,272     $2,983    $13,722     $14,246


         Cash Flow from Investing Activities
         Purchase of investments           ($11,736)    ($23,003)   ($13,120)   ($10,417)   ($11,220)   ($12,068)   ($46,825)   ($12,928)        $0         $0         $0    ($12,928)        $0
         Proceeds from investments            9,424       16,243       4,894       6,843      10,160       8,781      30,678       9,415          -          -          -       9,415          -
         Purchase of PPE                       (735)      (1,091)       (339)       (100)       (246)       (459)     (1,144)       (376)      (500)      (500)      (500)     (1,876)    (1,627)
         Payment of Acquisition Intangibles    (251)        (328)        (14)        (16)        (26)        (13)        (69)         (5)         -          -          -          (5)         -
         Other                                   49          (10)        (60)          5          (7)        (12)        (74)        (64)      (230)      (231)      (231)       (756)      (913)
         Net CF from Investing              ($3,249)     ($8,189)    ($8,639)    ($3,685)    ($1,339)    ($3,771)   ($17,434)    ($3,958)     ($730)     ($731)     ($731)    ($6,150)   ($2,539)

         Cash Flow from Financing Activities
         Payment of long-term debt             $0            $0          $0          $0          $0          $0          $0          $0          $0         $0         $0         $0          $0
         Common stock issues                 365            483          77          45         166         187         475         374         200        131        137        841       1,000
         Tax benefit, stock option exercise  377            757          19          28          77         146         270         252         200        131        137        719       1,000
         Stock Repurchase                      (3)         (124)        (34)          1         (35)        (14)        (82)       (103)          -          -          -       (103)          -
                                            $739
         Net Cash Flow from Financing Activities         $1,116         $62         $74        $208        $319        $663        $523        $400       $262       $273     $1,458      $2,000


         Net Change in Cash Equivalents       $2,950     $2,523      ($4,639)    ($2,770)    $1,139        ($342)    ($6,612)    $2,346      $1,357     $2,803     $2,525     $9,030     $13,706

         Cash & Equivalents at Start of Period 6,392      9,342      11,875        7,236       4,466       5,605     11,865        5,263      7,609      8,966     11,769      5,253      14,293
         Cash & Equivalents at End of Period 9,342       11,865       7,236        4,466       5,605       5,263      5,253        7,609      8,966     11,769     14,293     14,283      28,000

         Free Cash Flow                       $4,725     $8,505      $3,599       $741       $2,024      $2,651      $9,015      $5,405     $1,187     $2,772      $2,483    $11,846     $12,619
                                                                           -          -            -           -                       -          -          -           -                     -
         Change in Cash and Near Equivalents
                                         $5,613          $9,259       $3,647       $724       $2,234      $2,858     $9,463       $5,869     $1,357     $2,803      $2,525   $12,553     $13,706

         Cash and Near Equivalent at Start 10,110      15,723        24,982      28,629      29,353       31,587     24,982      34,445      40,314     41,671     44,474     34,445      46,998
         Cash and Near Equivalent at End$15,723      $24,982        $28,629     $29,353     $31,587      $34,445    $34,445     $40,314     $41,671    $44,474    $46,998    $46,998     $60,705
         Source: Company Data, Oppenheimer & Co. Inc. Estimates.




10
                                                                                                                                                                                    Apple Inc.

Apple Inc. - GAAP Model
Consolidated Ratios

                                   FY          FY         1Q09A      2Q09A      3Q09A      4Q09A*      FY          1Q10A      2Q10E      3Q10E      4Q10E       FY           FY
                                  2007A      2008A        Dec-08A    Mar-09A    Jun-09A    Sep-09A    2009A        Dec-09A    Mar-10E    Jun-10E    Sep-10E    2010E        2011E
Profitability Ratios
Annualized Return On Equity        24.1%       27.4%        36.4%      24.4%      25.4%      32.0%     26.0%         37.8%      23.1%      22.6%      24.3%     24.1%        20.8%
Annualized Return On Assets        14.0%       16.9%        23.4%      16.6%      17.0%      21.3%     17.3%         25.1%      16.0%      15.7%      17.2%     17.0%        15.6%
Annualized Return On Net Assets    14.2%       17.2%        23.6%      16.7%      17.2%      21.5%     17.5%         25.3%      16.1%      15.9%      17.3%     17.2%        15.7%

Efficiency Ratios
A/R Days Sales Outstanding           24.3         23.6        16.6       19.1       24.8       24.8         28.6       17.7       22.7       24.8       24.8         25.8      25.8
A/P Days Sales Outstanding          109.9         82.4        58.5       66.6       75.1       70.2         79.8       62.4       67.0       75.2       70.6         73.9      71.9
Inventory Turns                      47.5         47.7        75.5       70.9       61.4       63.3         56.4       65.3       70.9       61.4       63.3         60.7      62.4
Days of Inventory                     7.7          7.6         4.8        5.1        5.9        5.8          6.5        5.6        5.1        5.9        5.8          6.0       5.8

Liquidity Ratios
Current Ratio                          2.4         2.9         3.2        3.7        3.6        3.7        3.7          3.7        4.1        4.1        4.2        4.2          5.0
Quick Ratio                            2.3         2.8         3.2        3.7        3.6        3.6        3.6          3.6        4.1        4.1        4.2        4.2          4.9
Net Working Capital               $12,595     $21,024      $23,847    $25,484    $27,718    $30,577   $30,577       $35,259    $37,584    $39,891    $42,577   $42,577      $55,870

Cash
Net Cash Per Share                 $17.30      $27.16       $31.22     $31.98     $34.23     $37.18    $37.48        $43.29     $44.66     $47.58     $50.18    $50.37       $64.51
Source: Company Data, Oppenheimer & Co. Inc. Estimates.




                                                                                                                                                                                           11
Apple Inc.




     Investment Thesis
     We believe Apple has a unique gift for devising consumer technology platforms that are enormously complex but embarrassingly easy to
     use. The key to this gift is Apple's heavy reliance on internal development, an ethos which has given it a wealth of cross-functional
     expertise and a singular ability to innovate along multiple axes—software, hardware, design, and service model—while focusing on
     delivering a holistic user experience. The formula created the iPod, is helping Mac gain ground on Windows, and gave birth to the
     iPhone platform that is revolutionizing mobile computing and connectivity. Apple's fundamental strategy of concentrating all its forces on
     a few projects and then swinging for the fences is not without risk. But with the iPhone revolution still in early innings, the iPad on the
     cusp of release, and the innovation engines of many key competitors still reeling from the recent economic calamity, Apple appears as
     well positioned as ever to deliver another series of home runs.


     Price Target Calculation
     Our $265 price target is achieved by applying 18x to our upwardly revised FY11E NOPAT of $12.53/shr and adding back approximately
     $43 of cash per share. We believe our price target is conservative, since our 18x target multiple is below Apple's five-year average P/E
     of 29x and since our earnings model is based on what we believe to be conservative iPad estimates.


     Key Risks to Price Target
     Risks to our price target include further weakening of consumer demand; increased competition from Apple's traditional PC hardware
     and software rivals as well as from new competitors in the wireless handset market; the potential for large, unexpected increases in
     component costs, which could negatively impact margins; slower than anticipated acceptance of the iPhone or reduced subsidization by
     wireless service providers; Apple's potential inability to gain PC market share in line with our expectations; and a sudden change in
     leadership.



     Important Disclosures and Certifications
     Analyst Certification - The author certifies that this research report accurately states his/her personal views about the
     subject securities, which are reflected in the ratings as well as in the substance of this report.The author certifies that no
     part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views
     contained in this research report.
     Potential Conflicts of Interest:
     Equity research analysts employed by Oppenheimer & Co. Inc. are compensated from revenues generated by the firm
     including the Oppenheimer & Co. Inc. Investment Banking Department. Research analysts do not receive compensation
     based upon revenues from specific investment banking transactions. Oppenheimer & Co. Inc. generally prohibits any
     research analyst and any member of his or her household from executing trades in the securities of a company that such
     research analyst covers. Additionally, Oppenheimer & Co. Inc. generally prohibits any research analyst from serving as an
     officer, director or advisory board member of a company that such analyst covers. In addition to 1% ownership positions in
     covered companies that are required to be specifically disclosed in this report, Oppenheimer & Co. Inc. may have a long
     position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in
     options, futures or other derivative instruments based thereon. Recipients of this report are advised that any or all of the
     foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of
     interest.
     Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by
     Oppenheimer & Co. Inc:
     Stock Prices as of March 8, 2010
     Google, Inc. (GOOG - Nasdaq, 562.48, OUTPERFORM)
     Microsoft Corporation (MSFT - Nasdaq, 28.63, OUTPERFORM)
     Nokia Corporation (NOK - NYSE, 14.17, PERFORM)
     Motorola, Inc. (MOT - NYSE, 6.91, OUTPERFORM)




12
                                                                                                                                                     Apple Inc.




                           Rating and Price Target History for: Google, Inc. (GOOG) as of 03-05-2010

06/25/07   10/12/07   10/19/07     11/05/07     01/24/08     02/01/08     02/28/08    04/18/08     07/15/08      10/14/08             10/17/08
 B:$625     B:$700     B:$745       B:$850       O:$850       O:$715       O:$600      O:$620       O:$570        O:$485               O:$510


                                                                                                                                             750



                                                                                                                                             600



                                                                                                                                             450



                                                                                                                                             300



                                                                                                                                             150
2007                                 2008                                     2009                                      2010

12/10/08   01/23/09   04/13/09     04/17/09     07/13/09     10/07/09     10/21/09    01/21/10
 O:$375     O:$390     O:$410       O:$440       O:$490       O:$565       O:$650      O:$700




                                                                                                              Created by BlueMatrix




                      Rating and Price Target History for: Microsoft Corporation (MSFT) as of 03-05-2010

04/27/07   01/14/08   11/20/08     04/24/09     06/24/09     10/26/09
  SP:NA      I:P:NA     O:$22        O:$25        O:$29        O:$36


                                                                                                                                                 40



                                                                                                                                                 32



                                                                                                                                                 24



                                                                                                                                                 16



                                                                                                                                                 8
2007                                 2008                                      2009                                         2010




                                                                                                              Created by BlueMatrix




                                                                                                                                                            13
Apple Inc.




                                Rating and Price Target History for: Nokia Corporation (NOK) as of 03-05-2010

        03/12/07   04/20/07   05/14/07        06/01/07         06/15/07        08/02/07           08/13/07    09/10/07   09/17/07      10/16/07             10/19/07
          B:$26      B:$28      B:$30           B:$32            B:$34           B:$36              B:$39       B:$41      B:$45         B:$43                B:$47


                                                                                                                                                                       40


                                                                                                                                                                       32


                                                                                                                                                                       24


                                                                                                                                                                       16


                                                                                                                                                                       8


                                                                                                                                                                       0
        2007                                    2008                                                   2009                                       2010

        01/14/08   03/11/08   06/13/08        06/23/08         09/05/08        10/16/08           11/14/08
          I:P:NA     O:$40      O:$34           O:$30            O:$26           O:$22               P:NA




                                                                                                                                    Created by BlueMatrix




                                   Rating and Price Target History for: Motorola, Inc. (MOT) as of 03-05-2010

        10/25/07   01/14/08   01/23/08        02/25/08         06/04/08        07/31/08           03/11/09    04/16/09   06/16/09      10/19/09             01/28/10
          B:$23     I:O:$21     O:$15            P:NA            U:NA             P:NA               O:$5        O:$7       O:$8         O:$10                 O:$9


                                                                                                                                                                       20


                                                                                                                                                                       16


                                                                                                                                                                       12


                                                                                                                                                                       8


                                                                                                                                                                       4


                                                                                                                                                                       0
        2007                                    2008                                                   2009                                       2010




                              Research coverage transferred to Ittai Kidron on January 14,2008.
                                                                                                                                    Created by BlueMatrix




14
                                                                                                                                                             Apple Inc.




                                    Rating and Price Target History for: Apple Inc. (AAPL) as of 03-05-2010

    05/21/08     07/22/08    10/10/08      12/17/08     01/06/09     01/15/09     04/22/09    06/03/09        07/22/09      10/01/09             10/20/09
     I:O:$235     O:$213      O:$145          P:NA       O:$135       O:$120       O:$140      O:$160          O:$185        O:$210               O:$235


                                                                                                                                                        240


                                                                                                                                                        200


                                                                                                                                                        160


                                                                                                                                                        120


                                                                                                                                                        80


                                                                                                                                                        40
    2007                                     2008                                     2009                                         2010

    01/26/10     01/27/10
     O:$255       O:$265




                                                                                                                         Created by BlueMatrix



All price targets displayed in the chart above are for a 12- to- 18-month period. Prior to March 30, 2004, Oppenheimer &
Co. Inc. used 6-, 12-, 12- to 18-, and 12- to 24-month price targets and ranges. For more information about target price
histories, please write to Oppenheimer & Co. Inc., 300 Madison Avenue, New York, NY 10017, Attention: Equity Research
Department, Business Manager.




Oppenheimer & Co. Inc. Rating System as of January 14th, 2008:


Outperform(O) - Stock expected to outperform the S&P 500 within the next 12-18 months.


Perform (P) - Stock expected to perform in line with the S&P 500 within the next 12-18 months.


Underperform (U) - Stock expected to underperform the S&P 500 within the next 12-18 months.


Not Rated (NR) - Oppenheimer & Co. Inc. does not maintain coverage of the stock or is restricted from doing so due to a potential
conflict of interest.


Oppenheimer & Co. Inc. Rating System prior to January 14th, 2008:


Buy - anticipates appreciation of 10% or more within the next 12 months, and/or a total return of 10% including dividend payments,
and/or the ability of the shares to perform better than the leading stock market averages or stocks within its particular industry sector.


Neutral - anticipates that the shares will trade at or near their current price and generally in line with the leading market averages due to
a perceived absence of strong dynamics that would cause volatility either to the upside or downside, and/or will perform less well than
higher rated companies within its peer group. Our readers should be aware that when a rating change occurs to Neutral from Buy,
aggressive trading accounts might decide to liquidate their positions to employ the funds elsewhere.


Sell - anticipates that the shares will depreciate 10% or more in price within the next 12 months, due to fundamental weakness
perceived in the company or for valuation reasons, or are expected to perform significantly worse than equities within the peer group.




                                                                                                                                                                    15
Apple Inc.




                                                     Distribution of Ratings/IB Services Firmwide


                                                          IB Serv/Past 12 Mos.

         Rating                         Count   Percent    Count      Percent

         OUTPERFORM [O]                  344      49.60       134        38.95
         PERFORM [P]                     321      46.30        90        28.04
         UNDERPERFORM [U]                29        4.20         4        13.79




     Although the investment recommendations within the three-tiered, relative stock rating system utilized by Oppenheimer & Co. Inc. do not
     correlate to buy, hold and sell recommendations, for the purposes of complying with FINRA rules, Oppenheimer & Co. Inc. has assigned
     buy ratings to securities rated Outperform, hold ratings to securities rated Perform, and sell ratings to securities rated Underperform.




     Company Specific Disclosures
     Oppenheimer & Co. Inc. expects to receive or intends to seek compensation for investment banking services in the next 3
     months from MOT.

     Oppenheimer & Co. Inc. makes a market in the securities of AAPL, GOOG, MSFT, and PALM.




     Additional Information Available


     Please log on to http://www.opco.com or write to Oppenheimer & Co. Inc., 300 Madison Avenue, New York, NY 10017,
     Attention: Equity Research Department, Business Manager.




     Other Disclosures
     This report is issued and approved for distribution by Oppenheimer & Co. Inc., a member of all Principal Exchanges and SIPC. This
     report is provided, for informational purposes only, to institutional and retail investor clients of Oppenheimer & Co. Inc. and does not
     constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such offer or solicitation would be
     prohibited. The securities mentioned in this report may not be suitable for all types of investors. This report does not take into account
     the investment objectives, financial situation or specific needs of any particular client of Oppenheimer & Co. Inc. Recipients should
     consider this report as only a single factor in making an investment decision and should not rely solely on investment recommendations
     contained herein, if any, as a substitution for the exercise of independent judgment of the merits and risks of investments. The analyst
     writing the report is not a person or company with actual, implied or apparent authority to act on behalf of any issuer mentioned in the
     report. Before making an investment decision with respect to any security recommended in this report, the recipient should consider
     whether such recommendation is appropriate given the recipient's particular investment needs, objectives and financial circumstances.
     We recommend that investors independently evaluate particular investments and strategies, and encourage investors to seek the advice
     of a financial advisor.Oppenheimer & Co. Inc. will not treat non-client recipients as its clients solely by virtue of their receiving this
     report.Past performance is not a guarantee of future results, and no representation or warranty, express or implied, is made regarding
     future performance of any security mentioned in this report. The price of the securities mentioned in this report and the income they
     produce may fluctuate and/or be adversely affected by exchange rates, and investors may realize losses on investments in such
     securities, including the loss of investment principal. Oppenheimer & Co. Inc. accepts no liability for any loss arising from the use of
     information contained in this report, except to the extent that liability may arise under specific statutes or regulations applicable to




16
                                                                                                                                 Apple Inc.




Oppenheimer & Co. Inc.All information, opinions and statistical data contained in this report were obtained or derived from public
sources believed to be reliable, but Oppenheimer & Co. Inc. does not represent that any such information, opinion or statistical data is
accurate or complete (with the exception of information contained in the Important Disclosures section of this report provided by
Oppenheimer & Co. Inc. or individual research analysts), and they should not be relied upon as such. All estimates, opinions and
recommendations expressed herein constitute judgments as of the date of this report and are subject to change without notice.Nothing
in this report constitutes legal, accounting or tax advice. Since the levels and bases of taxation can change, any reference in this report
to the impact of taxation should not be construed as offering tax advice on the tax consequences of investments. As with any investment
having potential tax implications, clients should consult with their own independent tax adviser.This report may provide addresses of, or
contain hyperlinks to, Internet web sites. Oppenheimer & Co. Inc. has not reviewed the linked Internet web site of any third party and
takes no responsibility for the contents thereof. Each such address or hyperlink is provided solely for the recipient's convenience and
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access such third-party web sites or follow such hyperlinks do so at their own risk.

This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Oppenheimer & Co. Inc.
Copyright © Oppenheimer & Co. Inc. 2010.




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