<table><tr><th>From: </th><th>jeffrey E. &lt;jeevacation@gmail.com&gt;</th></tr><tr><td>Sent: </td><td>Friday, April 20, 2018 10:02 AM</td></tr><tr><td>To: </td><td>Richard Kahn</td></tr><tr><td>Subject: </td><td>Re: Apple, Inc.: Cautious Into The Print; Buy Any Post-Earnings Dip</td></tr></table>

i think we got sucked in to the chrisites auction. =C2 I reviewed past auctions and statues like this make the origna= 500k or such. total for the whole auctions are aroudn 4=. the value of our two . -- not our pr=blem but we are on notice

On Fri, Apr 20, 2018 at 6:00 AM, Richard Kahn =span dir="ltr"><██████████████
<mailto:█████████████████> > wrote:

Richard Kahn
HBRK Associates Inc.
████████████████████████████████████████████████████>

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<http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com> Apple, Inc.: Cautious Into
The Print; Buy Any Post=Earnings Dip <http://linkback.morganstanley.com/we=/sendlink/webapp/f/agbj40e4-3q24-
g000-824e-
005056028303?store=1&d==wBSZXNIYXJjaF9NUwAxYjU5YzNkOC0zZjJhLTExZTgtYjNmNy03YTc5Y2ZIMjY4NDg%3D&=ser=
6gatijj6zka7a-0&__gda__=1776486864_121d7576e224eeb54e8f2dddada=84cd>

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## April 20, 2018 4:=1AM GMT

We forecast in-line March Q but see downside to June consensus esti=ates following iPhone build cuts and weak China data. We expect Apple to i=crease capital return program by $1508. We would buy any post-earnings dip=on 1) intact

Services story, 2) troughing ests, and 3) accelerated capital=return. What to do ahead of earnings. We expect Apple to report an in-line March qu=rter, but are cautious into earnings on May 1 due to our belief that June =uarter consensus estimates need to be revised lower. Additionally, with ex=ectations for a step up in capital returns at least partially embedded in =aluation (AAPL +14% since last print vs. Tech sector +5%, S&P 500 +2%)= Apple's capital return announcement could amount to a "sell the =ews" type of event, especially if forward estimates are revised mater=ally downward. That said, we would be buyers on any weakness following the=print given 1) the Services story remains intact, (leading to a stronger a=d more consistent source of EPS growth and margin expansion), 2) estimate =evisions are approaching trough (we already assume no device revenue growt= next three years), and 3) buybacks remain a source of downside protection= We lower our March and June quarter iPhone shipment estimates by 7M (1M i= March, 6M in June; FY18 iPhone shipments now at 210M, from 217M), while i=creasing expectations for both buybacks and dividends, resulting in FY18e =PS of $11.00 (down from $11.60) and FY19e EPS of $13.80 (down from $14.00)=(1 & 2). We remain Overweight with a price target of $200 (down from $=03), for 16% upside from current prices.We expect an in-line quarter...We =elieve that Apple will post March quarter results that are at the low end 4 its previously issued guidance and in-line with our updated estimates. O=r proprietary AlphaWise iPhone demand tracker points to sell out of 54M in=the March quarter (3), however we expect channel inventory reduction of —2= units in the quarter after record inventory build in December, which

This alert is sent from:

## Andrew Atlas,

You received this because you requested that you receive content =nd reports from: APPLE INC.

Please contact your FA if you want to unsubscribe from the alerts=

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Disclosures:</td></tr></table>

## Andrew Atlas, (cont.)

Please see the full report for risks, disclosures and other important information.

Important disclosures regarding the relationship between the companies that are referenced in Morgan Stanley research and Morgan Stanley Wealth Management research are available on the Morgan Stanley Wealth Management disclosure website at https://www.morganstanley.com/online/researchdisclosures=/a>.

Morgan Stanley Wealth Management Not Acting as Municipal Advisor Morgan Stanley Wealth Management is not acting as a municipal advisor to any municipal entity or obligated person within the meaning of Section 15B of the Securities Exchange Act (the "Municipal Advisor Rule") and the opinions or views contained herein are not intended t= be, and do not constitute, advice within the meaning of the Municipal Advisor Rule.

## Copyright

The copyright in materials provided by Morgan Stanley is owned by Morgan Stanley & Co. LLC. Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker-dealer in the United States. <https://www.morganstanley.com/online/researchdisclosures>

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Th= information contained in this communication is confidential, may be at=orney-client privileged, may constitute inside information, and is inte=ded only for the use of the addressee. It is the property of JEE =nauthorized use, disclosure or copying of this communication or any par= thereof is strictly prohibited and may be unlawful. If you have receiv=d this communication in error, please notify us immediately by retur= e-mail or by e-mail to conversation-id 9166 date-last-viewed 0 date-received 1524218538 flags 8590195713 gmail-label-ids 7 6 remote-id 814451 <mailto:jeevacation@gmail.com>