Apple Starts the Year With a Bang


After ending last year with a bang, Apple is kicking off the new year in similar fashion. For the record, the Mac maker closed out 2012 with a 29.4% gain. That still qualifies as handily outperforming the broader market, even if shares gave up most of their gains in the final quarter of the year.

AAPL Chart
AAPL Chart

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Thanks to a fiscal cliff deal that's sparking a broader rally, Apple was enjoying gains upwards of nearly $23, or 4.3%, at today's high. There weren't a lot of company-specific headlines driving Apple bulls today, but let's look at what was making the rounds today.

Stop me if you've heard this one before
A fresh batch of rumors that Apple is preparing to move chip production to Taiwan Semiconductor made the rounds. The speculation has persisted for years without materializing yet, but investors continue to get closer to it becoming a reality. TSMC is said to be running production trials for the A6X chip found in the fourth-generation iPad starting this quarter.

Apple has been slowing moving away from Samsung as a supplier wherever possible, and few ingredients are as important as the applications processor. However, transitioning chip production is no easy task, and it could easily take upwards of 18 months to complete.

Another interesting possibility that's been discussed lately is Intel opening up its foundries to Apple, which would be ironic since it would be building ARM-based chips. Departing Intel CEO Paul Otellini recently said the company would consider expanding its foundry business for certain customers under specific conditions, a clear reference to Apple. However, Otellini made it clear that Chipzilla has no intention of competing with or becoming the next Taiwan Semiconductor.

An App Store by any other name
A U.S. District Judge has dismissed Apple's suit against over its usage of "Appstore." In March 2011, the Mac maker sued the e-tail giant over the term, since it owns the "App Store" trademark. Amazon's response was to use "Appstore" (one word) instead of "App Store" (two words) for its Android app repository.

According to Bloomberg, the judge found "no support for the proposition that Amazon has expressly or impliedly communicated that its Appstore for Android possesses the characteristics and qualities that the public has come to expect from the Apple APP Store and/or Apple products."

What's more important for Amazon than what it calls its storefront is continuing to grow its app count, as it still offers significantly less apps than Google Play.

Too soon?
Topeka Capital Markets analyst Brian White offered histhropinion that Apple may launch its next "iPhone 5S" with a wider range of colors and additional screen sizes. One particularly interesting tidbit is that White believes the new device will launch in either May or June.

Apple's product cycles have become less predictable in recent years, as the iPhone 4S and iPhone 5 were both launched in the falls of 2011 and 2012, respectively. Before those models, new iPhones were always unveiled at Apple's Worldwide Developer Conference, or WWDC, in June. A June launch would be a nine-month product cycle after the last launch in September.

Party like it's 2013
We're now in January, which also means that Apple's fiscal first quarter earnings release is just weeks away. Apple has yet to announce the official date, but it will be about three to four weeks from now, so investors need to stay tuned.

Investors can count on Apple posting record revenue in the quarter, with its own guidance calling for $52 billion in sales (topping the previous record first quarter with $46.3 billion in revenue). What's less clear is how the bottom line will fare, since guidance predicts negative earnings growth since the company is starting at the high end of numerous product cost curves. Even if the bottom line shrinks a little, it would only be a cyclical consequence of redesigning so many products at the same time, and not a structural trend that's here to stay.

Investors have a lot to look forward to in 2013.

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Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool owns shares of Apple,, Google, and Intel. Motley Fool newsletter services recommend Apple,, Google, and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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