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COMPANY UPDATE
3-5 Yr. EPS Gr. Rate 11% Our recent checks have uncovered several tidbits about Apple's forthcoming tablet.
52-Wk Range $208.71-$78.20 First, it appears Apple will begin ramping production in earnest in February,
Shares Outstanding 914.0M implying that the tablet could launch in late March or April (barring production
hiccups). Our checks also suggest that the tablet's display will be a 10.1" LTPS
Float 901.0M
based LCD screen, not an OLED display as some have suggested. Finally, contacts
Market Capitalization $170,846.1M in the US indicate Apple has been actively reaching out to book publishers with a
Avg. Daily Trading Volume 18,456,758 very attractive proposal for distributing their books on a forthcoming ebook platform
Dividend/Div Yield NA/NM (presumably the tablet). We have not updated our model to reflect the tablet but
Fiscal Year Ends Sep believe it could easily contribute $0.50-$0.75 in incremental EPS in C2H10.
Book Value $30.44 KEY POINTS
2010E ROE 20.8%
■ Our checks into Apple's supply chain indicate that the manufacturing cogs for
LT Debt $0.0M
the tablet are creaking into action and should begin to hit a mass market stride
Preferred $0.0M in February. At this stage Apple appears to be sizing its supply chain to support
Common Equity $27,832M production of as many as 1M units per month.
Convertible Available No
■ The February ramp schedule suggests a late March or April commercial
EPS Diluted Q1 Q2 Q3 Q4 Year Mult. release, since Apple will need to build at least 5-6 weeks of inventory before
2007A 1.14 0.87 0.92 1.01 3.93 48.3x going live. Our checks also indicate that the device will have a 10.1" multi-touch
display using LTPS LCD technology (as on the iPhone), not OLED.
2008A 1.76 1.16 1.19 1.26 5.36 35.4x
2009A 1.78 1.33 1.35 1.82 6.29 30.2x ■ Contacts in the US tell us Apple is approaching book publishers with a very
2010E 2.17 1.91 2.10 2.21 8.39 22.6x attractive proposal for distributing their content. Apple will split revenue 30/70
(Apple/publisher); give the same deal to all comers; and not request exclusivity.
We believe the typical Kindle/publisher split is 50/50, rising to 30/70 if Kindle is
given ebook exclusivity.
■ As innovative as it is, we believe the Kindle has disgruntled the publishing
industry (book, newspaper, and magazine) by demanding exclusivity,
disallowing advertising, and demanding a wolfish cut of revenue. The tablet is
set to change that. It should also make ebooks more relevant for education by
simplifying functions such as scribbling marginalia.
■ We have not adjusted our model to show the impact of the tablet, but we believe
it will be substantial. Conservatively assuming 1M-1.5M units per quarter at an
ASP of $1,000 and a corporate average net income margin of 22%, the tablet
could contribute $0.25-$0.38 of incremental EPS per quarter.
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.
COGS 15,852 21,334 6,635 5,192 5,314 6,256 23,397 7,943 6,725 7,029 7,318 29,015
Gross Profit $8,154 $11,145 $3,532 $2,971 $3,023 $3,614 $13,140 $4,468 $4,035 $4,326 $4,543 $17,372
Research and Development 782 1,109 315 319 341 358 1,333 385 409 420 439 1,653
Sales, General & Administrative 2,963 3,761 1,091 985 1,010 1,063 4,149 1,278 1,151 1,181 1,234 4,844
Total Operating Expenses 3,745 4,870 1,406 1,304 1,351 1,421 5,482 1,663 1,560 1,601 1,672 6,497
Operating Income $4,409 $6,275 $2,126 $1,667 $1,672 $2,193 $7,658 $2,805 $2,475 $2,725 $2,870 $10,875
Other Income $599 $620 $158 $63 $60 $45 $326 $34 $39 $41 $44 $157
Income Before Taxes $5,008 $6,895 $2,284 $1,730 $1,732 $2,238 $7,984 $2,839 $2,513 $2,766 $2,914 $11,032
Taxes on Income (benefit) 1,512 2,061 679 525 503 573 2,280 852 754 830 874 3,310
Net Income $3,496 $4,834 $1,605 $1,205 $1,229 $1,665 $5,704 $1,987 $1,759 $1,936 $2,040 $7,723
Diluted EPS $3.93 $5.36 $1.78 $1.33 $1.35 $1.82 $6.29 $2.17 $1.91 $2.10 $2.21 $8.39
Stock Based Comp - Total 242 $516 $170 $181 $179 $180 $710 $211 $212 $212 $213 $847
Net Income, ex. Option $3,738 $5,350 $1,775 $1,386 $1,408 $1,845 $6,414 $2,198 $1,971 $2,148 $2,252 $8,570
Diluted EPS ex. Options $4.20 $5.93 $1.97 $1.53 $1.55 $2.02 $7.07 $2.40 $2.14 $2.33 $2.44 $9.31
Diluted Shares 889 902 901 903 909 914 907 917 919 922 924 921
Source: Company Data, Oppenheimer & Co. Inc. Estimates.
2
Apple Inc.
Gross Margin 34.0% 34.3% 34.7% 36.4% 36.3% 36.6% 36.0% 36.0% 37.5% 38.1% 38.3% 37.5%
Research and Development 3.3% 3.4% 3.1% 3.9% 4.1% 3.6% 3.6% 3.1% 3.8% 3.7% 3.7% 3.6%
Sales, General & Administrative 12.3% 11.6% 10.7% 12.1% 12.1% 10.8% 11.4% 10.3% 10.7% 10.4% 10.4% 10.4%
Operating Margin 18.4% 19.3% 20.9% 20.4% 20.1% 22.2% 21.0% 22.6% 23.0% 24.0% 24.2% 23.4%
Effective Tax Rate 30.2% 29.9% 29.7% 30.3% 29.0% 25.6% 28.6% 30.0% 30.0% 30.0% 30.0% 30.0%
Net Income Margin 14.6% 14.9% 15.8% 14.8% 14.7% 16.9% 15.6% 16.0% 16.4% 17.1% 17.2% 16.6%
3
Apple Inc.
Computers
Desktop
Units 2,714 3,712 728 818 849 787 3,182 826 744 818 834 3,223
% of total 38% 38% 29% 37% 33% 26% 31% 26% 27% 27% 26% 26%
% QoQ Growth -22% 12% 4% -7% 5% -10% 10% 2%
% YoY Growth 12% 37% -25% -4% -10% -16% -14% 14% -9% -4% 6% 1%
ASP 1,481 1,509 1,433 1,284 1,330 1,380 1,354 1,283 1,283 1,258 1,258 1,270
% QoQ Growth -2% -10% 4% 4% -7% 0% -2% 0%
% YoY Growth 9% 2% -8% -19% -9% -5% -10% -10% 0% -5% -9% -6%
Revenue $4,020 $5,603 $1,043 $1,050 $1,129 $1,086 $4,308 $1,060 $954 $1,029 $1,049 $4,093
% QoQ Growth -81% 1% 8% -4% -2% -10% 8% 2%
% YoY Growth 21% 39% -31% -22% -18% -20% -23% 2% -9% -9% -3% -5%
Laptop
Units 4,337 6,003 1,796 1,398 1,754 2,266 7,214 2,379 2,022 2,225 2,336 8,962
% of total 62% 62% 71% 63% 67% 74% 69% 74% 73% 73% 74% 74%
% QoQ Growth 7% -22% 25% 29% 5% -15% 10% 5%
% YoY Growth 51% 38% 34% -2% 13% 35% 20% 32% 45% 27% 3% 24%
ASP 1,451 1,445 1,398 1,356 1,254 1,265 1,313 1,227 1,227 1,190 1,154 1,199
% QoQ Growth 4% -3% -7% 1% -3% 0% -3% -3%
% YoY Growth 3% 0% -8% -9% -13% -6% -9% -12% -9% -5% -9% -9%
Revenue $6,294 $8,673 $2,511 $1,895 $2,200 $2,866 $9,472 $2,919 $2,481 $2,647 $2,696 $10,744
% QoQ Growth 11% -25% 16% 30% 2% -15% 7% 2%
% YoY Growth 55% 38% 23% -12% -2% 27% 9% 16% 31% 20% -6% 13%
Total PC
Units 7,051 9,715 2,524 2,216 2,603 3,053 10,396 3,206 2,766 3,043 3,170 12,185
% QoQ Growth -3% -12% 17% 17% 5% -14% 10% 4%
% YoY Growth 33% 38% 9% -3% 4% 17% 7% 27% 25% 17% 4% 17%
ASP $1,463 $1,469 $1,408 $1,329 $1,279 $1,294 $1,326 $1,241 $1,242 $1,208 $1,182 $1,218
% QoQ Growth 2% -6% -4% 1% -4% 0% -3% -2%
% YoY Growth 0% -8% -13% -12% -7% -10% -12% -7% -6% -9% -8%
Revenue $10,314 $14,276 $3,554 $2,945 $3,329 $3,952 $13,780 $3,980 $3,436 $3,676 $3,746 $14,837
% QoQ Growth -2% -17% 13% 19% 1% -14% 7% 2%
% YoY Growth 40% 38% 0% -16% -8% 9% -3% 12% 17% 10% -5% 8%
Source: Company data, Oppenheimer & Co. Inc. estimates
4
Apple Inc.
iPhones
Units 1,389 11,627 4,363 3,793 5,208 7,367 20,731 9,500 5,500 7,500 8,500 31,000
% QoQ Growth -37% -13% 37% 41% 29% -42% 36% 13%
% YoY Growth 737% 88% 123% 626% 7% 78% 118% 45% 44% 15% 50%
ASP $487 $549 $591 $574 $565 $605 $586 $600 $600 $550 $550 $574
% QoQ Growth -7% -3% -1% 7% -1% 0% -8% 0%
% YoY Growth 13% 44% 35% 20% -5% 7% 2% 5% -3% -9% -2%
Revenue $123 $1,844 $1,247 $1,521 $1,689 $2,297 $6,754 $3,015 $3,350 $3,779 $4,053 $14,198
% QoQ Growth 55% 22% 11% 36% 31% 11% 13% 7%
% YoY Growth 1399% 417% 302% 303% 185% 266% 142% 120% 124% 76% 110%
Music
Revenue $2,496 $3,340 $1,011 $1,049 $958 $1,018 $4,036 $1,279 $1,327 $1,260 $1,323 $5,189
% QoQ Growth 22% 4% -9% 6% 26% 4% -5% 5%
% YoY Growth 32% 34% 25% 19% 17% 22% 21% 26% 26% 32% 30% 29%
5
Apple Inc.
Property & Equipment, Net $1,832 $2,455 $2,580 $2,546 $2,653 $2,954 $2,954 $3,087 $3,292 $3,433 $3,585 $3,585
Goodwill 38 207 207 207 207 206 206 206 206 206 206 206
Acquired Intangible Assets, net 299 285 277 268 259 247 247 247 247 247 247 247
Other assets 1,222 1,935 2,062 2,498 2,952 3,651 3,651 3,651 3,651 3,651 3,651 3,651
Total Assets $25,347 $39,572 $42,787 $43,237 $48,140 $53,851 $53,851 $59,340 $61,230 $65,464 $69,016 $69,016
Non-Current Liabilities $1,516 $4,450 5,121 5,175 5,591 6,737 $6,737 6,737 6,737 6,737 6,737 $6,737
Total Liabilities $10,815 $18,542 $19,878 $18,926 $22,252 $26,019 $26,019 $29,146 $28,832 $30,737 $31,818 $31,818
Stockholder's Equity $14,532 $21,030 22,909 24,311 25,888 27,832 $27,832 30,193 32,398 34,727 37,198 $37,198
Total Liabilities and Equity $25,347 $39,572 $42,787 $43,237 $48,140 $53,851 $53,851 $59,340 $61,230 $65,464 $69,016 $69,016
==> Check 1.455E-11 1.455E-11
Source: Company Data, Oppenheimer & Co. Inc. Estimates.
6
Apple Inc.
Net Change in Cash Equivalents $2,960 $2,523 ($4,639) ($2,770) $1,136 ($339) ($6,612) $4,699 $2,087 $2,821 $2,701 $12,307
Cash & Equivalents at Start of Period 6,392 9,352 11,875 7,236 4,466 5,605 11,875 5,263 9,962 12,048 14,869 5,263
Cash & Equivalents at End of Period 9,352 11,875 7,236 4,466 5,602 5,266 5,263 9,962 12,048 14,869 17,570 17,570
Free Cash Flow $4,735 $8,505 $3,599 $741 $2,021 $2,654 $9,015 $4,536 $1,853 $2,640 $2,482 $11,511
- - - - - - - -
Change in Cash and Near Equivalents
$5,613 $9,259 $3,647 $724 $2,234 $2,858 $9,463 $4,699 $2,087 $2,821 $2,701 $12,307
Cash and Near Equivalent at Start 10,110 15,723 24,982 28,629 29,353 31,587 24,982 34,445 39,144 41,230 44,051 34,445
Cash and Near Equivalent at End$15,723 $24,982 $28,629 $29,353 $31,587 $34,445 $34,445 $39,144 $41,230 $44,051 $46,752 $46,752
Source: Company Data, Oppenheimer & Co. Inc. Estimates.
7
Apple Inc.
Efficiency Ratios
A/R Days Sales Outstanding 24.9 27.2 19.4 21.3 29.0 30.6 33.6 21.2 22.7 29.0 30.6 31.8
A/P Days Sales Outstanding 113.9 93.7 65.1 70.1 81.2 79.6 87.6 63.8 69.6 81.1 80.3 82.2
Inventory Turns 45.8 41.9 68.0 67.5 56.7 55.8 51.4 68.0 67.5 56.7 55.8 54.5
Days of Inventory 8.0 8.7 5.4 5.4 6.4 6.5 7.1 5.4 5.4 6.4 6.5 6.7
Liquidity Ratios
Current Ratio 2.4 2.5 2.6 2.7 2.5 2.4 2.4 2.3 2.4 2.4 2.4 2.4
Quick Ratio 2.3 2.4 2.5 2.7 2.5 2.4 2.4 2.3 2.4 2.4 2.4 2.4
Net Working Capital $12,657 $20,598 $22,904 $23,967 $25,408 $27,511 $27,511 $29,739 $31,739 $33,927 $36,247 $36,247
Cash
Net Cash Per Share $17.30 $27.16 $31.22 $31.98 $34.23 $37.18 $37.48 $42.19 $44.35 $47.30 $50.11 $50.29
Source: Company Data, Oppenheimer & Co. Inc. Estimates.
8
Apple Inc.
COGS 16,199 24,040 7,272 5,432 5,714 7,047 25,465 9,013 6,611 7,256 7,608 30,488
Gross Profit $8,424 $13,611 $4,527 $3,624 $4,028 $5,206 $17,385 $6,482 $4,329 $4,734 $5,202 $20,748
Research and Development 782 1,109 315 319 341 358 1,333 385 409 420 439 1,653
Sales, General & Administrative 2,963 3,761 1,091 985 1,010 1,063 4,149 1,278 1,151 1,181 1,234 4,844
Total Operating Expenses 3,745 4,870 1,406 1,304 1,351 1,421 5,482 1,663 1,560 1,601 1,672 6,497
Operating Income $4,679 $8,741 $3,121 $2,320 $2,677 $3,785 $11,903 $4,819 $2,769 $3,133 $3,530 $14,251
Other Income $599 $620 $158 $63 $60 $45 $326 $34 $39 $41 $44 $157
Income Before Taxes $5,278 $9,361 $3,279 $2,383 $2,737 $3,830 $12,229 $4,853 $2,808 $3,174 $3,574 $14,408
Taxes on Income (benefit) 1,587 2,773 975 723 795 981 3,474 1,456 842 952 1,072 4,323
Net Income $3,691 $6,588 $2,304 $1,660 $1,942 $2,849 $8,755 $3,397 $1,965 $2,222 $2,502 $10,086
Diluted EPS $4.15 $7.31 $2.56 $1.84 $2.14 $3.12 $9.65 $3.70 $2.14 $2.41 $2.71 $10.96
$1.82 $2.17 $1.91 $2.10 $2.21
Stock Based Comp - Total $242 $516 $170 $181 $179 $180 $710 $211 $212 $212 $213 $847
Net Income, ex. Option $3,933 $7,104 $2,474 $1,841 $2,121 $3,029 $9,465 $3,608 $2,177 $2,434 $2,714 $10,933
Diluted EPS ex. Options $4.42 $7.88 $2.74 $2.04 $2.33 $3.31 $10.44 $3.93 $2.37 $2.64 $2.94 $11.88
Diluted Shares 889 902 901 903 909 914 907 917 919 922 924 921
Source: Company Data, Oppenheimer & Co. Inc. Estimates.
9
Apple Inc.
Pro Forma Gross Margin 34.2% 36.2% 38.4% 40.0% 41.3% 42.5% 40.6% 41.8% 39.6% 39.5% 40.6% 40.5%
Reported Gross Margin 34.0% 34.3% 34.7% 36.4% 36.3% 36.6% 36.0% 36.0% 37.5% 38.1% 38.3% 37.5%
Research and Development 3.2% 2.9% 2.7% 3.5% 3.5% 2.9% 3.1% 2.5% 3.7% 3.5% 3.4% 3.2%
Sales, General & Administrative 12.0% 10.0% 9.2% 10.9% 10.4% 8.7% 9.7% 8.3% 10.5% 9.8% 9.6% 9.5%
Operating Margin 18.4% 19.3% 26.5% 25.6% 27.5% 22.2% 21.0% 22.6% 23.0% 24.0% 24.2% 23.4%
Effective Tax Rate 30.2% 29.9% 29.7% 30.3% 29.0% 25.6% 28.6% 30.0% 30.0% 30.0% 30.0% 30.0%
Net Income Margin 14.6% 14.9% 19.5% 18.3% 19.9% 16.9% 15.6% 16.0% 16.4% 17.1% 17.2% 16.6%
10
Apple Inc.
Computers
Desktop
Units 2,714 3,712 728 818 849 787 3,182 826 744 818 834 3,223
% of total 38% 38% 29% 37% 33% 26% 31% 26% 27% 27% 26% 26%
% QoQ Growth 0% -22% 12% 4% -7%
% YoY Growth 12% 37% -25% -4% -10% -16% -14% 14% -9% -4% 6% 1%
ASP 1,481 1,509 1,433 1,284 1,330 1,380 1,354 1,283 1,283 1,258 1,258 1,270
% QoQ Growth 0% -2% -10% 4% 4%
% YoY Growth 9% 2% -8% -19% -9% -5% -10% -10% 0% -5% -9% -6%
Revenue $4,020 $5,603 $1,043 $1,050 $1,129 $1,086 $4,308 $1,060 $954 $1,029 $1,049 $4,093
% QoQ Growth 0% -81% 1% 8% -4%
% YoY Growth 21% 39% -31% -22% -18% -20% -23% 2% -9% -9% -3% -5%
Laptop 0
Units 4,337 6,003 1,796 1,398 1,754 2,266 7,214 2,379 2,022 2,225 2,336 8,962
% of total 62% 62% 71% 63% 67% 74% 69% 74% 73% 73% 74% 74%
% QoQ Growth 0% 0% 7% -22% 25% 29%
% YoY Growth 51% 38% 34% -2% 13% 35% 20% 32% 45% 27% 3% 24%
ASP 1,451 1,445 1,398 1,356 1,254 1,265 1,313 1,227 1,227 1,190 1,154 1,199
% QoQ Growth 0% 0% 4% -3% -7% 1%
% YoY Growth 3% 0% -8% -9% -13% -6% -9% -12% -9% -5% -9% -9%
Revenue $6,294 $8,673 $2,511 $1,895 $2,200 $2,866 $9,472 $2,919 $2,481 $2,647 $2,696 $10,744
% QoQ Growth 0% 0% 11% -25% 16% 30% 0% 2% -15% 7% 2% 0%
% YoY Growth 55% 38% 23% -12% -2% 27% 9% 16% 31% 20% -6% 13%
Total PC
Units 7,051 9,715 2,524 2,216 2,603 3,053 10,396 3,206 2,766 3,043 3,170 12,185
% QoQ Growth 0% -3% -12% 17% 17%
% YoY Growth 33% 38% 9% -3% 4% 17% 7% 27% 25% 17% 4% 17%
ASP $1,463 $1,469 $1,408 $1,329 $1,279 $1,294 $1,326 $1,241 $1,242 $1,208 $1,182 $1,218
% QoQ Growth 0% 2% -6% -4% 1%
% YoY Growth 0% 0% -8% -13% -12% -7% -10% -12% -7% -6% -9% -8%
Revenue $10,314 $14,276 $3,554 $2,945 $3,329 $3,952 $13,780 $3,980 $3,436 $3,676 $3,746 $14,837
% QoQ Growth 0% -2% -17% 13% 19%
% YoY Growth 40% 38% 0% -16% -8% 9% -3% 12% 17% 10% -5% 8%
Source: Company data, Oppenheimer & Co. Inc. estimates
11
Apple Inc.
iPhones
Units 1,389 11,627 4,363 3,793 5,208 7,367 20,731 9,500 5,500 7,500 8,500 31,000
% QoQ Growth 0% 0% -37% -13% 37% 41% 29% -42% 36% 13%
% YoY Growth 0% 737% 88% 123% 626% 7% 78% 118% 45% 44% 15% 50%
ASP $487 $549 $591 $574 $565 $605 $586 $600 $600 $550 $550 $574
% QoQ Growth 0% 0% -7% -3% -1% 7% -1% 0% -8% 0%
% YoY Growth 0% 13% 44% 35% 20% -5% 7% 2% 5% -3% -9% -2%
Revenue $677 $6,380 $2,579 $2,176 $2,944 $4,457 $12,156 $5,700 $3,300 $4,125 $4,675 $17,800
% QoQ Growth 0% 55% 22% 11% 36% 31% 11% 13% 7%
% YoY Growth 1399% 417% 302% 303% 185% 266% 142% 120% 124% 76% 110%
Other iPhone Revenue $201 $195 $229 $318 $942 $399 $231 $289 $327 $1,246
Plug $99 $43 ($79)
Total iPhone Revenue $2,879 $2,414 $3,094 $4,775 $13,162 $6,099 $3,531 $4,414 $5,002 $19,046
Music
Revenue $2,496 $3,340 $1,011 $1,049 $958 $1,018 $4,036 $1,279 $1,327 $1,260 $1,323 $5,189
% QoQ Growth 0% 0% 22% 4% -9% 6% 26% 4% -5% 5%
% YoY Growth 32% 34% 25% 19% 17% 22% 21% 26% 26% 32% 30% 29%
12
Apple Inc.
13
Apple Inc.
Rating and Price Target History for: Amazon.Com, Inc. (AMZN) as of 12-07-2009
03/05/07 04/25/07 07/17/07 07/25/07 01/30/08 01/31/08 06/23/08 09/18/08 09/22/08 01/30/09 03/09/09
I:N:$36 N:$45 N:$76 N:UR P:NA P:$68 P:NA NR:NA P:$81 P:$57 P:$0
150
120
90
60
30
0
2007 2008 2009
10/19/09
O:$130
Created by BlueMatrix
Rating and Price Target History for: Apple Inc. (AAPL) as of 12-07-2009
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
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.
Outperform(O) - Stock expected to outperform the S&P 500 within the next 12-18 months.
14
Apple Inc.
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.
IB Serv/Past 12 Mos.
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.
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.
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Apple Inc.
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