Bookmark and Share 1, Apple Downgraded To Screwed

New York, NY, April 1, 2014 – Lehman Brothers said its analyst Will Higgins lowered his rating on Apple, Inc. (Nasdaq: AAPL) from "Outperform" to "Screwed". Higgins summarized, "They're screwed! I don't know what the hell they're going to do!"

Apple's preliminary earnings report, out today, portends a -750 percent surprise in gross margins. Higgins said in a research note that the company was still working hard to make the quarter, and that there is a 17 percent chance that Apple will report positive gross margins. "But there's only a 3 percent chance of that," he added. "Man, are they up a creek." Higgins declined to characterize them as either with or without a paddle.

The report stopped short of declaring AAPL's demise imminent. "It would absolutely amaze you how long they can limp along like this," it stated, while cautioning that further downgrades were possible in the near future. According to Dataquest analyst Steve Shmaltz, "Most people are only aware of a few of the investment rating categories used by Lehman, from 'Strong Buy' to 'Strong Sell', but actually there are twelve. 'Screwed' is level 9 -- just one level below 'Worthless' -- and is currently applied to only two companies, AAPL and Manzana, Venezuela's state-run 'phone' company." Should AAPL be further downgraded, it would be the first time in decades that they have used one of the lower ratings: "Really Screwed", "Hopelessly Screwed", and "Absolutely Completely Totally Screwed."

AAPL's preliminary earnings report noted that its fourth quarter restructuring charge of about $85 billion will enable the company to focus on new colors for their products. AAPL sees gross margins heading into the negatives, while one-time charges continue to grow, topping off at 80 percent of total expenses sometime next year. Investors tend to view such one-time charges as a positive, instead of the strong negative associated with operating losses.

Apple, long a darling of Wall Street, is widely hailed for its innovation in finance juggling and phone colors. But some observers are saying that Apple may be out of tricks. "They could lay off their entire work force. That would let them write off this quarter's payroll as a one-time charge, and hiring them back next quarter will make for even bigger 'restructuring' charges," suggested Lehman Brothers analyst Marco Zalari. "Beyond that, they're screwed! I don't know what the hell they're going to do!"

Alternatively, Apple could move its entire work force to the island nation of Vanuatu where AAPL has amassed a cash hoard of $600 billion that can't be repatriated to the U.S. due to tax issues. "It's a lovely island and the new solar-powered intergalactic space ship Apple is building there is providing thousands of high-paying jobs to the fishermen who live there." said Rob Gustin, Apple's Senior Vice President of Tax Avoidance.

"We plan to address these issues immediately," said Tim Cook, Apple's CEO. "To accelerate our transition to blah bla-blah, blah retina, bla-blah blah innovative blah colors like blue. Bla blah investments blah blah position bla-blah blah industry leader blah blah growing blah blah iPods. Blah blah I'm not wearing any pants! Blah focus blah aggressively pursue blah blah blah exciting new colors in 2015. Blah blah nurse! Where's my colostomy bag? Blah bla-bla blah we're screwed! I don't know what the hell we're going to do! Where the hell is Steve?"

"Maybe they can blame it on Asia this quarter," said Piper Jaffray 'analyst' Gene Munster, noted Apple cheerleader. He sees a positive side to negative margins and losses. "Beyond a certain point, you can't have such tremendous one-time charges without also having consolidated losses." Munster reiterated his Strong Buy rating on the company. "I like this high-growth, high-risk, high-reward company with a multi-colored product line." AAPL losses grew 87 percent this year, and analysts say they could grow even more next year. Added Munster, "What are you looking at? You can't make me say they're screwed. Nya-nyah!"


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