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Apple: A Buy At Current Levels Or A Buy At Higher Prices?

This article is more than 7 years old.

According to Gartner and IDC, Apple picked up PC market shares in the holiday quarter that ended December 2016, despite the overall PC industry turning in yet another weak 2016.

Late Wednesday, Gartner put out its 2016 Worldwide PC shipment report that showed that the PC industry market is in its fifth consecutive year-on-year decline. For 2016, PC shipments totaled 270 million units, a decrease of 6.2% from 2015. PC shipments have declined every year since 2012.

According to Gartner, Apple shipped 5,440,000 PC units in the December 2016 quarter for a global market share of 7.5%, which tied the company for fourth place with Asus. In the same quarter in 2015, Apple had shipped 5,312,000 units for a global market share of 7%. Not only was Apple able to grow its global market share in 2016 v. 2015, it was also able to increase its own shipment growth by 2.4% year-on-year. Lenovo came in first with 21.7% market share in Q4:16, followed by HP and Dell with 20.4% and 14.8% market share respectively. This data does not include iPads and Chromebooks.

Even more impressive given the relentless "negative noise" we hear about Apple is the fact that as far as U.S. PC shipments (not including iPads), Apple saw its market share increase, as well, to 12.8% in Q4:16 versus 11.8% in Q4:15. Apple shipped 2,111,000 PCs in this past holiday quarter compared to 1,180,000 shipped in Q4:15. The year-on-year increase in PC sales for Apple was 6.4%.

Within the U.S., Apple maintained its Number 4 position with the Top 3, as HP, Dell and Lenovo had market shares of 29.9%, 25.2% and 13.8%, respectively. Interestingly, Apple is only a percentage point behind Lenovo in terms of market share, and if the company revamps and seriously updates it PC offerings (expected throughout 2017), it shouldn't be too difficult for Apple to climb up the pole to third place by the time the 2017 holiday quarter is over.

Also Wednesday, IDC said in a report that global PC sales were down 1.5% year-on-year in the holiday quarter, which was a huge improvement over the 10.6% decline seen in the same quarter in 2015 over the same quarter in 2014. IDC said Apple shipped 5.3 million PC in Q4:2016, a slightly lower than the number estimated by Gartner (above).

In the last month we have also received several additional important data points (call them clues, if you like) as to how Apple could have fared in the December quarter, beginning with the most recent first, Jabil Circuit's earnings report less than a month ago.

Then we had the somewhat mysterious delay in Apple AirPod's, which could have been intentional to stoke demand and by all reports seem to have been a big hit.

In December, we also had Broadcom's earnings and Taiwan Semiconductor's November sales data that could have provided additional clues to investors as to the state of Apple's December quarter.

In early December, Tim Cook responded to a negative report by IDC on the Apple Watch by stating the following, “Our data shows that Apple Watch is doing great and looks to be one of the most popular holiday gifts this year. Sales growth is off the charts. In fact, during the first week of holiday shopping, our sell-through of Apple Watch was greater than any week in the product’s history. And as we expected, we’re on track for the best quarter ever for Apple Watch."

While touring the NYSE while on vacation in New York City, Cook said the company's new Airpod headphones "are a run away success." He added that Apple is “making them just as fast as we can” in order to meet demand.

So, the question investors need to ask themselves is the following, "Do I buy/add Apple here or do I buy/add Apple at some point in the future at what will more than likely be a higher price?"

(Long aapl, long and short aapl options)

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