S&P 500 ^GSPC · Ticker Current Beg. ... (Reuters). The biggest surprise during this period has been Cymer Inc. ... $78.96 in two weeks (Bloomberg)

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TEC

Ticker Current Beg. Stop-loss Target % Cap # Shares Current vs. Sectorvs. S&P 500

Price Price Price Price Gain Value

S&P 500 ^GSPC 1,411.94$ 1,428.59$ -1.17%

Sector ETF XLK $28.99 $29.92 -3.11% 8720 $252,792.80 -1.94%

Current Holdings

Apple Inc. AAPL $604.00 $629.71 $585.00 $740.00 -4.08% 90 $54,360.00 -0.97% -2.92%

Oracle ORCL 30.99$ 31.00$ 24.91$ 52.65$ -0.03% 1450 $44,935.50 3.08% 1.13%

Date: October 30, 2012

Analyst: Fausto Guillén Aguilar Jr.

CIF Sector Recommendation Report (Fall 2012)

Sector: Technology Review Period 10/15/2012-10/26/2012

Section (A) Sector Performance Review

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As you can see in the above two-week period graph, both the S&P 500 and Technology Sector

have underperformed due to their volatility. The technology sector started out doing better

than the S&P 500 by peaking at about 1.2%, but then falls to a low of -3.5%. The S&P 500 also

dropped to as low as -2%, slightly doing better than the technology sector.

Headline news: Hurricane Sandy disrupts Northeast U.S. telecom networks. The hurricane

interrupted coverage for cellphones, internet services, and television. Some major companies

that were affected were AT&T, Verizon Wireless, Time Warner Cable, and T-Mobile (Reuters).

The biggest surprise during this period has been Cymer Inc. It started at $46.64 and shot up to

$78.96 in two weeks (Bloomberg). Google was the worst mover by dropping its stock price from

over $750 down to $675 (Yahoo).

Apple Inc close price was $604.00. The price has been decreasing slowly and the new iPad sales

turned out to be less than expected. The recent report was not too impressive. Since this is a

cyclical market, performance may drop at times. However, with the holidays being just around

the corner I expect Apple’s stock price to raise.

Microsoft’s new Windows 8 software and Surface tablet did not help the stock much. During

the two-week period, the stock price dropped -4.41% (yahoo). Again, shopping season is just

beginning and I am expecting Microsoft’s stock price to go up.

The short-term outlook of the technology sector does not look too impressive, especially when

the majority of the earning reports for major companies were disappointed. However, sales

should go up due to Christmas, and the technology sector will improve.

Section (B) Sector Holding Updates

Company #1: Apple (AAPL)

Date Recommended: 10/18/2012

Date Re-evaluated: 11/1/2012

Company Update

In the last two weeks, Apple has not done great, but has maintained. The recent earning results

did not impress analysts. Earnings were lower than expected. Additionally, the release of the

new mini iPad was not as successful as expected. Just recently, Apple’s software products chief

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and Apple’s retail chief have decided to leave the company, only time will tell if this will affect

Apple. Furthermore, analysts continue to recommend buying and/or holding the Apple stock.

Relative Performance

In the last two weeks, the S&P 500 underperformed along with Apple. This is because of various

reasons. However, it is expected for the market to improve in the coming months. With this

said, we should see Apple outperform the market.

Price Charts

3 MONTH CHART

1 YEAR CHART

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Valuations Analysis

Original Analysis

Ratio Analysis Company Industry Sector

P/E (TTM) 15.07 12.31 19.74

P/S (TTM) 4.04 1.07 3.57

P/B (MRQ) 5.38 2.20 3.72

P/CF (TTM) 13.98 10.92 13.31

Re-evaluation Analysis


P/E (TTM) 13.68 11.94 21.74

P/S (TTM) 3.62 .99 9.21

P/B (MRQ) 4.80 2.08 3.50

P/CF (TTM) 12.58 10.33 11.99

The main difference from the original analysis to the re-evaluation analysis is that all the ratios

dropped for Apple, the industry, and the sector. Additionally, the stock is less expensive and the

changes are consistent across the four valuation metrics.

Historical Surprises

Original Analysis

Estimates vs Actual Estimate Actual Difference Surprise %

SALES (in millions)

Quarter Ending Jun-12 37,215.90 35,023.00 2,192.88 5.89

Quarter Ending Mar-12 36,808.00 39,186.00 2,377.95 6.46

Quarter Ending Dec-11 39,062.50 46,333.00 7,270.46 18.61

Quarter Ending Sep-11 29,685.50 28,270.00 1,415.55 4.77


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Earnings (per share)

Quarter Ending Jun-12 10.39 9.32 1.07 10.29

Quarter Ending Mar-12 10.04 12.30 2.26 22.55

Quarter Ending Dec-11 10.16 13.87 3.71 36.46

Quarter Ending Sep-11 7.39 7.05 0.34 4.54




SALES (in millions)

Quarter Ending Sep-12 35,802.70 35,966.00 163.30 0.46


Quarter Ending Mar-12 36,808.00 39,186.00 2,377.95 6.46

Quarter Ending Dec-11 39,062.50 46,333.00 7,270.46 18.61

Quarter Ending Sep-11 29,685.50 28,270.00 1,415.55 4.77




Quarter Ending Mar-12 10.04 12.30 2.26 22.55

Quarter Ending Dec-11 10.16 13.87 3.71 36.46


The re-evaluation demonstrates actual earnings are still beating estimates.

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Consensus Estimates

Original Analysis

CONSENSUS ESTIMATES ANALYSIS

Sales and Profit Figures in US Dollar (USD)

Earnings and Dividend Figures in US Dollar (USD)

# of Estimates Mean High Low 1 Year

Ago

SALES (in millions)

Quarter Ending Dec-12 39 54,716.10 59,739.00 49,314.40 41,498.00

Quarter Ending Mar-13 38 47,042.10 56,442.00 40,076.50 35,783.40

Year Ending Sep-12 52 156,777.00 161,978.00 152,300.00 134,955.00

Year Ending Sep-13 52 194,198.00 222,999.00 171,551.00 155,500.00


Quarter Ending Dec-12 40 15.41 18.47 11.69 9.67

Quarter Ending Mar-13 39 13.25 16.52 10.75 8.56

Year Ending Sep-12 55 44.43 46.29 43.48 32.88

Year Ending Sep-13 55 53.44 63.50 42.03 38.04

LT Growth Rate (%) 12 21.81 35.00 15.00 21.25

Re-Evaluation Analysis

CONSENSUS ESTIMATES ANALYSIS

Sales and Profit Figures in US Dollar (USD) Earnings and Dividend Figures in US Dollar (USD)


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Ago

SALES (in millions)

Quarter Ending Dec-12 43 54,467.00 59,553.00 51,710.00 43,843.50

Quarter Ending Mar-13 41 47,573.20 53,473.00 43,878.70 36,385.10

Year Ending Sep-12 52 156,274.00 158,582.00 152,300.00 --

Year Ending Sep-13 53 193,091.00 221,052.00 156,083.00 160,405.00

Year Ending Sep-14 38 222,730.00 250,478.00 193,130.00 168,366.00


Quarter Ending Dec-12 45 13.58 16.57 11.53 10.77

Quarter Ending Mar-13 44 12.51 14.98 10.44 8.90

Year Ending Sep-12 56 44.29 46.29 43.48 --

Year Ending Sep-13 56 50.40 63.50 45.48 38.75

Year Ending Sep-14 39 58.75 68.69 51.62 42.50

LT Growth Rate (%) 13 20.64 35.00 15.00 18.62

In the re-evaluation analysis, lt growth rate has dropped which shows some bearish signals for

the stocks outlook. Furthermore, estimates for sales have increased .

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Estimate Revision Analysis

Original Analysis (MM/DD/YYYY)

ESTIMATES REVISIONS SUMMARY

Last Week Last 4 Weeks

Number Of Revisions: Up Down Up Down

Revenue

Quarter Ending Dec-12 1 1 16 9

Quarter Ending Mar-13 1 1 17 7

Year Ending Sep-12 2 1 31 1


Earnings








Revenue


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Year Ending Sep-12 -- -- -- --



Earnings



Year Ending Sep-12 -- -- -- --



It appears that earning will drop in the near future.

Analysts’ Recommendations

Original Analysis

Not available in the original document.


ANALYST RECOMMENDATIONS AND REVISIONS

1-5 Linear Scale Current 1 Month

Ago 2 Month

Ago 3 Month

Ago

(1) BUY 27 27 27 26

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(2) OUTPERFORM 23 22 21 21

(3) HOLD 4 4 5 5

(4) UNDERPERFORM 1 1 1 1

(5) SELL 1 1 1 1

No Opinion 0 0 0 0

Mean Rating 1.68 1.67 1.69 1.70

The original analysis is not available. However, all recommendations are very bullis h and Apple

is expected to outperform the market.

Company #2: Oracle (ORCL)

Date Recommended: 10/18/2012

Date Re-evaluated: 11/1/2012

Company Update

In the last two weeks, Oracle has decided that it does need acquisitions in order to compete in

cloud service. Additionally, Apple has decided to drop Oracle’s Java due to security risks in the

Mac laptop.

Relative Performance

Price Charts

3 Month Chart

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1

Year Chart

Valuations Analysis

Original Analysis


P/E (TTM) 15.15 28.53 19.74

P/S (TTM) 3.99 3.14 3.57

P/B (MRQ) 3.41 4.35 3.72

P/CF (TTM) 11.23 15.43 13.31

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P/E (TTM) 15.36 91.19 21.74

P/S (TTM) 4.04 157.15 9.21

P/B (MRQ) 3.46 4.06 3.50

P/CF (TTM) 11.38 20.14 11.99

These changes show that the stock is doing better than when we purchased it. Hopefully, this

pattern continues out to the near future and beyond. Additionally, Oracles’s stocks are more

expensive and the cnages in the ratios are consisent.

Historical Surprises

Original Analysis


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SALES (in millions)

Quarter Ending Aug-12 8,419.30 8,209.00 210.30 2.50

Quarter Ending May-12 10,890.40 10,950.00 59.61 0.55

Quarter Ending Feb-12 9,023.73 9,062.00 38.27 0.42

Quarter Ending Nov-11 9,228.34 8,811.00 417.34 4.52

Quarter Ending Aug-11 8,353.85 8,398.00 44.15 0.53


Quarter Ending Aug-12 0.53 0.53 0.00 0.11

Quarter Ending May-12 0.78 0.82 0.04 4.91

Quarter Ending Feb-12 0.56 0.62 0.06 10.56

Quarter Ending Nov-11 0.57 0.54 0.03 5.25

Quarter Ending Aug-11 0.46 0.48 0.02 3.31

The original analysis is not much different from the re-evaluation analysis.

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Consensus Estimates

Original Analysis

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Ago

SALES (in millions)

Quarter Ending Nov-12 35 9,029.47 9,316.00 8,836.00 9,930.63

Quarter Ending Feb-13 35 9,465.79 9,752.00 9,128.00 10,188.80

Year Ending May-12 38 37,209.40 38,887.00 36,971.00 --

Year Ending May-13 38 38,293.40 38,987.00 37,765.00 41,475.10

Year Ending May-14 39 40,809.20 42,262.00 38,919.00 43,951.20


Quarter Ending Nov-12 37 0.61 0.63 0.59 0.61

Quarter Ending Feb-13 37 0.66 0.69 0.62 0.64

Year Ending May-12 40 2.42 2.45 2.34 --

Year Ending May-13 40 2.65 2.74 2.53 2.64

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Year Ending May-14 40 2.91 3.11 2.56 2.90

LT Growth Rate (%) 16 12.05 20.00 5.00 13.13

Once again, changes are minimal in both comparisons. This is a sign that the company is

performing well and has positive outlook.

Estimate Revision Analysis

Original Analysis (MM/DD/YYYY)

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Revenue

Quarter Ending Nov-12 0 0 2 1

Quarter Ending Feb-13 0 0 1 1

Year Ending May-12 -- -- -- --

Year Ending May-13 0 0 0 7


Earnings

Quarter Ending Nov-12 0 0 0 1

Quarter Ending Feb-13 0 0 0 1

Year Ending May-12 -- -- -- --



Earnings estimates are bullish and there not a lot of revisions in the new revision.

Analysts’ Recommendations

Original Analysis

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1-5 Linear Scale Current 1 Month

Ago 2 Month

Ago 3 Month

Ago

(1) BUY 10 12 14 13

(2) OUTPERFORM 19 19 18 18

(3) HOLD 15 14 12 12

(4) UNDERPERFORM 0 0 0 0

(5) SELL 0 0 0 0

No Opinion 0 0 0 0

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Mean Rating 2.11 2.04 1.95 1.98

It appears that a buy recommendation has gone down from 12 to 10 recommendations,

however outperform has gone up by one recommendation. Furthermore, it seems analysts still

believe Oracle will outperform the market.

Section (C) Sector Recommendations

Due to the recent poor performances of the Technology sector and S&P 500, I feel neutral on

the sector. However, I do believe the sector will recover soon and therefore I say we stay put

with our current sector holdings. I believe Oracle will continue to outperform the market and

master cloud service. Secondly, I think Apple’s stock will rise soon due to new products and

holiday shopping.

Section (D) Sector Holding Recommendations

Based on your analysis, are there stocks CIF currently owns from your sector you would

recommend to:

1. Sell neither.

2. Do not adjust target price or stop-loss price for either Oracle or Apple Inc.

Provide your recommendations in the following table

Company Name

Ticker Symbol

Date

Recommended

Date Re-

evaluated

Recommendation

(Explain Why)

Sell

Adjust

“Target Price”

Adjust

“Stop-loss Price”

Apple AAPL 10/18/2012 11/1/2012 No No No

Oracle ORCL 10/18/2012 11/1/2012 No No No

Sources

Yahoo Finance

http://finance.yahoo.com/q?s=XLK

http://finance.yahoo.com/q?s=XLK

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Routers

http://www.reuters.com/news/technology

CIF Website

http://www.business.wsu.edu/academics/finance/cougfund/Pages/CIF-

Reports.aspx?Paged=TRUE&p_SortBehavior=0&p_Sector=Health%20Care&p_Data_x002d_Type

=Stock%20Report&p_ID=63&PageFirstRow=31&&View={A1B97961-C66D-43C7-932F-

8FF3B54FD099}

Bloomberg Businessweek

http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=CYMI

http://www.reuters.com/news/technology

http://www.business.wsu.edu/academics/finance/cougfund/Pages/CIF-Reports.aspx?Paged=TRUE&p_SortBehavior=0&p_Sector=Health%20Care&p_Data_x002d_Type=Stock%20Report&p_ID=63&PageFirstRow=31&&View=%7bA1B97961-C66D-43C7-932F-8FF3B54FD099%7d




http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=CYMI

Documents

S&P 500 ^GSPC · Ticker Current Beg. ... (Reuters). The biggest surprise during this period has been Cymer Inc. ... $78.96 in two weeks (Bloomberg)