Apple

[Breand]

All I can say is I'm actually rooting for AAPL to destroy all low expectations today and stick it to the "analysts" who are driving the price down.

[Grieve]

Good to know I'm not alone on here, Breand.

Earnings are on the 23rd. No-one is going to care about the Sept-Dec quarter (unless it misses or is ridiculously huge). It's all going to be about the guidance for the current quarter. The problem is that Apple always low balls it...

[Breand]

ahh for some reason I thought it was today.

[Grieve]

No, but I'll take today's $20 jump...

[Grieve]

So everyone (okay, just Breand) can play along at home, here's what to look out for on the 23rd:

Revenue
Last year: $46.33b
Last quarter: $36b
Apple guidance: $52b
Analysts: $54.70b
Ideally: $56b+

EPS
Last year: $13.87
Last quarter: $8.67
Apple guidance: $11.75
Analysts: $13.45
Ideally: $14+

iStuff sold (analyst expectations)
iPhones: 47.6m
iPads: 22.8m
Macs: 5.3m

Guidance for Q2(most important of all)
Analysts: $11.75 EPS, $46.23b revs
I expect for Apple guidance: $7.00 EPS, $40b (this would be bad)

[Vanraw]

Here comes the I slump. Or continued islump. I'm hearing Verizon is going to cut or severely lower the subsidized iphone order to improve margins. Basically force customers to pay more of the high cost of the iphone while continuing to pay for subsidizing the android smart phones. While this might not show up in the earnings report tomorrow, its a risk to sales in the future.

Also what is Next? From a competition perspective most smart phones have caught iphone. Now its just image. So what now. Is iTV ever going to translate to Profit? What's Next?

The one thing apple has that is very powerfully is market share and sticky glue. People have investment in accessories and apps that will only work on the iphone. But will they pay 600 dollars every 2 Years?

I guess the only thing that apple has to drive growth in Profit is China demand?

Don't get me wrong. Apple numbers still look great. But market share can't be their only strength.

[Sebrent]

While I'm no iGroupie, there is a difference between the apps available for the iPhone and those available for Android and other smart phones.

The App store for Apple is much more restrictive when it comes to getting your apps to be available to the public. This has resulted in far fewer cases of malicious (malware/virus/etc.) apps being spread from their app store than for Android (whose app store has been deemed by some tech writers as "the wild west").

You'll also find, on average, higher quality in the Apple app store than in the unregulated stores.

[Slamz]

I think HTC and Samsung are going to steal more and more of the iPhone market. I'm starting to see more women in their 20s with Samsungs, which I feel has been the demographic most prone to succumb to Apple's marketing. These are the people who want sleek and chic, which Android phones have not typically been, but I think phones like the Galaxy S III and HTC One X have pretty well fixed that (also, when you have a purse there's no downside to having a larger phone, especially when you want to share videos and photos with friends in a "here, look at this" sort of way).

iTunes remains the curse of iPhone users, all of which seem to hate it but I have known people who upgraded to a new iPhone purely because they were too afraid to try and migrate to Android because iTunes has all their stuff and they didn't want to have to figure out how to deal with that. (Also, if you have stuff from iTunes before 2009, it's got DRM on it and will only play on an iSucker device.)


I also now think the "app" angle is overblown. I would say that what I see people do with their smartphones is about 98% internet stuff (web, email, messaging) and 2% app usage (and most of the apps they do use are just more "internet stuff", like Facebook app or online photo stores -- major apps available for all platorms). I think once you have a phone that can do all the basic internet stuff, I dunno how much appeal is really being added by an app store with 200,000 apps you'll never, ever buy. Apple also let out their Mr. Hyde side for public viewing with the whole maps boondoggle, which I think was a huge PR mistake. Not so much that they released their own app, but that they did so before it was well tested and ready, and blocking Google Maps showed the ugly side of how Apple views product control (it's not your phone, it's theirs).

[Vanraw]

I think the app angle is a little over blown as well, but like you said people are afraid.....

There is more expensive sticky glue on accessories and content support. I always hear "optimized for the ipad. ". From content providers. Why dint they say optimized for tablets.... Also I bought my wife a money speaker system for her iphone 4. Sounds great and powers the iphone. Odd thing is apple changed the interact so it doesn't support iphone 5.

Changing that interface can be a real issue for apple. Especially when you go to the Verizon or att store and the sales person is motivated to sell higher margin products.....

[Breand]

They beat estimates but not by much. Stock sinking in after hours. crap.

[Jakensama]

Not looking good for Grieve keeping his house.

[Grieve]

Thank goodness I sold all my Apple and bought Netflix instead before the close!



Or not.

I'll buy more tomorrow. The selloff remains insane. They beat on earnings and were essentially inline on revs. They shipped 1m less iPhones than expected, but still 10 million more than last year, when they had blockbuster sales of the iPhone 4S. That's stellar growth by anyone's standards. Next quarter's guidance is typically lowballed.

[Vanraw]

Down 52 in after hours. They didn't beat the streets expectations.

[Grieve]

They beat handily on EPS. For revenue, they came in at $54.50 vs $54.58 billion expected. Yes...0.15% less. Causing a 10% selloff.

Or as The Verge put it:

Well, Apple reported record revenues, an eye-popping $54.5 billion in just the last 90 days. On top of that it raked in a record profit $13.1 billion. iPhone sales and iPad sales were both record highs. And yet the company fell in after hours trading. If you were to compare it to the other tech stocks who reported earnings, it might feel like Apple is in a different universe. Google missed its marks and was up 10 percent. Netflix made a tiny profit of 13 cents per share and jumped up nearly 40 percent. Yet even as it breaks records and mints cash, Apple's stock can't seem to recover its momentum.

[Vanraw]

Yea I agree. From a revenue perspective the numbers are pretty amazing year over year. But its like we said in other threads. How do you keep up growth expectations at this rate. Also looks like Profit was down compared to revenue.

It is going to be interesting to see how apple proceeds if demand shrinks because of the removal of subsidize.

[grizzle]

Youch.

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[Jakensama]

[Grieve]

All it's done is provided a gift of a buying opportunity. I bought a bunch of long dated options today, including 20 Jan 2014 $685/690 spreads for just 25c each (payout $10,000 if the stock hits $690).

I think the stock may stay low for now, but I fully expect a lot of announcements this year, including an iTV and new iPhones.

[Grieve]

Timely article from Bloomberg comparing Apple to Amazon.

Apple made $13.1b in pure profit this last quarter.

Amazon has only made $5b in profit in it's entire lifetime. Not $5b a quarter, not $5b a year...$5b spread out over all 18 years is has been a public company. And that doesn't even include all the money it's lost over most of that time. Bezos himself is worth $25.4 billion, or 5 times as much as the entire profit his company has ever made, and twice as much as Steve Jobs was worth at his peak, despite Apple making hundreds of billions in profit.

Meanwhile Apple's PE is 10.20, or around 7 if you discount cash. Amazon's PE is...3,257.38.

It's very ironic that investors flee a company making money hand over fist, while piling into one that may, possibly, perhaps, one day actually make a little money.

http://go.bloomberg.com/market-now/2013/...s-promise/

[grizzle]

Comparing Apple to Amazon? That's an extremely weird comparison, completely apples to oranges. Someone out there is throwing in the kitchen sink...

[Vanraw]

Well your comparing retail to a tech company. But your right on the numbers. The numbers are crazy. But this is about growth and profit expectations.

The question is, can they keep it up. Can profit and revenue continue to grow at the same Rate? Is apple Bubble?

My biggest concern with apple is they only have one product. Several revisions, but all the growth and profit are one product technology. And they are the target of everyone. And they no longer have the best product. Or at least the product leading everyone by leaps and bounds.

On the itv, I just don't know. Its been 1 year away for a while. I was in best buy last night and a similar,are model of my 50 inch bought 4years ago is about half the cost I paid. I don't see itv being a multi billion growth product. Margins are tight, and there are several smart tvs out there. In fact Samsung is ahead of the curve here.

I understood the concept of itv was to create an environment of unplugged cable. So why is apple reportedly working with cable companies now?

ether way, the main question is if iphone growth is ebbing, then what is the growth Product? Apple tv can't be the answer. Not 10s of billions per quarter.

But apple numbers are still out of this world. So I don't know how long it will take to become "normal".

[Slamz]

Amazon is the online retail king, with a secure position that seems unlikely to be upset in any foreseeable future. It just doesn't seem feasible for a competitor to rise up and threaten Amazon's position. There's technical issues, logistics issues and I think a general trust of Amazon as a safe, reliable retailer that will make them hard to uproot by anyone.

Apple I see as being in a position that's far more tenuous. They can, and one day probably will, lose half their sales overnight as the public sense of what's cool simply shifts to some other company. There's nothing about Apple that makes them untouchable in their bailiwick, as Amazon and Netflix basically are in theirs.

Short term, I see Amazon as risky because their stock is inflated. Long term, they're probably safer than US government bonds. Apple is the other way around. Short term I think they can make big wins. Long term all it's going to take is one stiff breeze to knock them over. Their real claim to fame is not technical superiority but rather, they deliver a slick product with great marketing and a well designed user-interface. Nothing stops some other company from doing all of that better. Could happen tomorrow or it may not happen for 10 years but one day it'll happen and that will be a bad day to be holding Apple.

[Grieve]

Slamz, you are missing the point. Amazon is safe and reliable, yes, but they don't make any money. I could start a company tomorrow that would be equally reliable - it wouldn't make any money this year or next year. Even without the iPhone and iPad, Apple would be raking in FAR more profits than Amazon could ever dream of.

As for the comparison, Apple is retail as well (in fact it has the most successful retail stores in the world, twice as profitable per square foot as Tiffany), and Amazon is tech too with the various Kindles (and likely soon a phone) and its cloud business.

I think iTV will be very big, although not as big as iPhone. And "it's been coming for a year for a while" and "it was supposed to be..." are kind of moot, since Apple has never announced anything about what it will be, when it will be, or even if it will be. Just because online prognosticators keep being wrong doesn't mean a thing.

People keep saying that Apple is no longer innovative since Steve Jobs died, because they've released no game-changing product. Well...there was a gap of 6 years between the iPod and iPhone. Three years between the iPhone and iPad. It hasn't even been three years since the iPad. People are impatient. As well as the iTV, I see wearable devices like watches and maybe glasses coming as well, and probably a bunch of stuff we can't even think of.

[Vanraw]

since Apple has never announced anything about what it will be, when it will be, or even if it will be. Just because online prognosticators keep being wrong doesn't mean a thing.

You don't see the Irony here? The speculators on a iTV release are as wrong as the speculators that say its going to be some sort of awe inspiring TV revolution. While the naysayers are saying.... missed another year, the Fanboys are saying, "This is going to be huge!!!"

Based on what facts is Apple TV going to be huge?

I see only one way apple TV would generate anything that would offset 54 billion a quarter. If the iTV was a full blown out MAC with a 50inch screen selling for $800 to $1000. That would be a game changer.

I want you to think about this. If there is 100 million house holds in America and every single house hold bought a Apple TV for $2000, that would be 200 billion total revenue. Lets say its a set top box for $500, and every single household bought one, that would be 50 billion revenue. We all know there is no way in hell every household in America will buy one. And thirst for things like Netflix in Europe and such is not like America. The main market will be here. TV's are not bought ever 2 years and every household isn't going to buy an Apple. So I fail to see how a apple TV in any fashion would dent 54 billion a quarter on a long term basis.

Could it be a couple billion revenue stream? yes. But that is not the market expectations.

Don't get me wrong. Apple numbers are still unreal. I think part of the problem here is people trade on stock price and not fundamentals. They see this massive ramp up in stock and sell at the first negative news because they view it as a bubble. Apple numbers are odd. There almost too good. I feel like they should be a new category of stock like a Tech RIET. Meaning at some point the only reason to won the stock is profit sharing dividends.

To be clear also, Im looking at buying into apple here for some medium term gains. Your spreads are probably a good bet. Not that the stock will hit 690 but mid 500 is likely.

I think part of my problem with Apple is that their market cap is so big now, they should be a thinking like a tech conglomerate and not a small start up. If I was running Apple I would be aggressively looking at buying / merging with very large companies that diversify revenue and products. Perhaps they should buy someone like Sharp to branch out into other manufacturing sectors. Or buy a services company that would leverage them into the enterprise as opposed to the consumer. The enterprise market is something Apple has not done a good job on. If I saw some sort of movement to diversify product and revenue, I would buy into Apple and wait for the $1000 mark. But right now its only one product.




conare so

[Grieve]

You are talking as if it would have to replace all existing revenue. Do you think iPhone sales are suddenly going to zero? Seems a bit far fetched. Look at the misery Rimm have been in for the last few years, and they are still selling 40-50 million phones a year.

I think iPhone growth will slow (unless they really do release a cheaper phone for China and India, which looks likely), but any additional revenue from an iTV would be on top of what they already get. Plus $24b of that $54.5b was from stuff OTHER than the iPhone. iPad is still growing gangbusters, with no sign of slowing down, and the more apple devices there are out there, the more revenue they will get from iTunes and iCloud. Plus China revenue was up 67% this quarter from a year ago - that is a HUGE opportunity. Cook is expecting China to take over from the US as the biggest revenue source this year.

Also, what if they had a recurring revenue stream from iTV? Subscription service, maybe? They could do a Netflix-like service themselves. They are already releasing a Pandora-killer Internet radio service this year.

So in summary...I'll still be getting Jake's house.