The reduction adjusted his valuation on the stock to reflect a variety of adjustments he made in his model on the value of the parts of Apple's business.
- The growth in excess cash added $18.70 a share to his estimate on the company's valuation.
- He estimates the value of the company's iTunes, software and services segment at $83.48 a share.
- Wolf cuts his estimated value of the iPad business by $11.83 a share to reflect the lower margins for the iPad Mini than the full-sized iPad.
- He trims his estimate on the value of the iPhone segment by $14.56 a share to reflect his view that the iPhone's worldwide share will stabilize at 20%, rather than his previous estimate of 22%.
- For the Mac, he reduced his estimate value by a whopping 42.9%, "in belated recognition that neither Mac nor Windows sales would continue to rise at past rates because of the onslaught of the iPad and other tablets." I'd note that in the December quarter, Mac unit sales missed Street estimate by about 1 million.
Adds Wolf: "The lingering risk in the Apple story is that the company may no longer innovate at the same pace and with the same disruption that characterized the era when Steve Jobs was at the helm. With respect to our valuation model, any deterioration in the iPhone’s market share or gross margin would have an outsized impact on our price target."
Wolf continues to sees profits of $45.70 a share in FY 2013, and $52.20 in FY 2014.
Apple is down 23 cents, at $450.58.
