The Loudest Voices Hate Apple's Guts: Should Investors?

NEW YORK (TheStreet) -- With an avalanche of Apple (AAPL) information pouring down on investors every day, it's sensible to use the BS filter and examine what is material for long-term investors.

Unless you're a short-term swing trader or active trader, there's little reason to pay attention to events causing knee-jerk reactions. If you take a look, you will see that most releases have done nothing but elevate investor stress levels.

Long-term investors shouldn't care about a single quarter's results. Watching patterns develop over several quarters is the only way to avoid overconfidence (or "overpessimism"). Active traders can roll in and out of positions at incredible speed because a company's worth doesn't matter. What matters to them is the expectation of price movement and direction today.

If you're a long-term investor, here are the key takeaways from the earnings release. These are the primary points I am focused on and used as influences for my decision to go long.

Gross Margin: In Bobbing for Another Apple, I wrote about the naysayers using any metrics they could find including gross margin to "prove" Apple was finished.

I pointed out that Apple has higher margins than Nokia ( NOK) at 1-2%, Research In Motion ( RIMM) at 3-6%, Microsoft ( MSFT) at 28-32%, and Sirius XM ( SIRI) at 25-26%. If relative margins are so important, why do these companies have greater valuations based on earnings, yet lower operating margins?

It doesn't make logical sense (I know, it doesn't need to), but Apple came in at 38.6%. Remember hearing opinions about other smartphones becoming indistinguishable and approaching commodity status? Apple apparently didn't get the memo.

Even with competitive pressure from Nokia, Microsoft, and Google's ( GOOG) Android, Apple still outshone its peers. But that's not the truly amazing part.

More astonishing is that margins may increase, not decrease as many are predicting. The increase in new products and updates Apple launched last quarter clued analysts in on potential margin pressure. Launching products is expensive in terms of capital, human resources, logistics, and marketing.

If the desirability of Apple's iProducts continues, fewer launches in the current quarter should result in improving margins. Expectations for Apple are falling faster than a Wisconsin thermometer on a winter night. Watch for a "surprise" jump in margins for our current quarter.

Revenue: If you thought the gross margins weren't examined closely enough, revenue numbers will really leave you scratching your head. Apple reported the second-best quarter in the history of the company, and the average amount of revenue per day was a record.

The only reason this quarter wasn't the best quarter ever for Apple was due to fewer days in the quarter than the year-ago period. On a daily basis, Apple sold more than any previous quarter.

In a nutshell, the year-ago period as the comparable is not a true comparison. After adjusting for the number of days, Apple enjoyed its best revenue and earnings quarter ever, and Tim Cook is now executing at a higher level than Steve Jobs based on earnings per share per day.

Apple's average weekly revenue in the same quarter last year was $3.3 billion, compared to $4.2 billion this year, an increase in holiday revenue of 27%. RIM and Nokia aren't selling records amounts of phones. Google, a company I am very bullish on, isn't making as much per phone sold as Apple.

Future Growth: A shortage of "OMG" products, Google's Android, Apple iStuff lacks "cool points," and countless other reasons will have you believing Apple faces delisting and liquidation by summer if you let the media fearmongers have their way. The reported and estimated numbers don't support that thesis.

Counting Mainland China, Hong Kong, and Taiwan as "Greater China," Apple increased revenue by 67% (don't forget the reporting period is one less week this year, so the growth rate is even more impressive). LTE support is expanding to 36 new carriers in countries Apple where doesn't currently offer support.

The iPad Mini seems to be adding to sales, not cannibalizing sales. iPad sales averaged 1.1 million per week in the same period a year ago compared to 1.7 million this reported quarter. Call me crazy, but I just don't get a sense of impending doom.

What's more, Apple is sitting on a Mt. Everest-sized pile of cash. About 30% of the market cap is dead presidents. I never use the full amount of cash to discount P/E and ROI, but even with a 50% haircut to be conservative, the 2.1% dividend may be the safest dividend on the planet.

I prefer to buy "crashes" using options for risk mitigation, but afterhours, trading options are not available (why option exchanges leave that money on the table is beyond my understanding), so I bought small at an average cost of $460.96.

I know Apple can, in theory, keep falling, but I will sleep well knowing that if Cook continues to execute at the level he is now, Apple won't stay under $600, much less $500 for long.

Author does not hold a position in any stock mentioned other than long Apple.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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