AAPL: Promise, Pain in Fundamentals, Technicals

As Apple (AAPL) shares slip to new lows today, a couple of observers with different perspectives, one from a fundamental standpoint, the other from a technical standpoint, weighed in.

Apple is stock is currently off $10.29, or 2%, at $431.11, after hitting a new low of $430.77.

First off, Andr� J. Bakhos, director of market analysis with New York-based Lek Securities, offers up some negative-sounding technicals:

The Apple chart never triggered positively with our work since the turndown; now, the relief rally failed and more doom and gloom appear likely. I present the weekly chart first, followed by the daily. The 50-w SMA is beginning a down slope. I could not pluck a positive out of this chart even if I were paid to do so. The daily chart broke the last low of 435 today on a gap down. We are now in the up gap of January 25, 2012. The next key level is 425�and how AAPL trades, that could be in minutes. Not a promising chart.

Here's Bakhos's chart (click for larger image):

On the other, Laurence Isaac Balter of Oracle Investment Research, who has a Strong Buy on the stock and thinks it's worth $670, observes that Apple executives must buy three times their salary in stock, and that raising the dividend would be a great way for those executives to pay the bank loan interest of 4% to 5% to purchase the shares. From that he deduces the following:

Although we are not privy to details, we imagine that a market interest rate loan of 4-5% for an executive to buy 3x their salary in stock is a great deal. But how does one pay the interest on such a loan? The dividend of course. Should Apple increase their pay out to the average S&P 500 ratio of 34%, this would equate to ~$14-15 Billion in annual dividends. A back of the napkin calculation leads us to assign an average S&P dividend multiple (2.2%/$14B= $636B). Throw in some new products, a refresh cycle and we easily get to a $670 target price.

Balter also offers the following Apple factoids he's come up with:

• Of the $858 Billion in Earnings generated by the S&P 500, Apple generates 4.7% of the total.
• Of the $975 Billion in Free Cash Flow generated by the S&P 500, Apple generates 4.3%.
• Of the $283 Billion in total dividends paid by the S&P 500, Apple share is 3.5%.
• Of the $1500 Billion sitting in cash of the S&P 500, Apple has 9.1% of the total.
• Apple pays out just $1 Billion more dividends than Exxon but has double the free cash flow.
• At current prices, Apple is only 2.8% of the market cap of the S&P 500.
• Apple could payout over 5% of the S&P 500 dividends, yet only pays 2.8%. Room to double.