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iPhone sales predicted to top 80 million by 2012

post #1 of 38
Thread Starter 
New reports forecast that Apple will sell 50 million phones in 2011, and more than 80 million in 2012, as worldwide expansion and popularity of the iPhone continues to grow.

Apple shipped 13.7 million iPhones in the 2008 calendar year, and the number continues to grow. Last quarter alone, the Cupertino, Calif., company sold 5.2 million iPhones riding the successful launch of the iPhone 3GS. But two new predictions call for the mobile platform to reach astounding new heights worldwide in the next few years.

Bernstein Research

In a note from Bernstein Research this week, hardware analyst Tony Sacconaghi said that Apple will sell more than 50 million iPhones per year by the September 2011 fiscal year. The report, as relayed by Barron's, predicts the entire market for smartphones will grow 27 percent per year in both 2010 and 2011.

A major factor in the iPhone's predicted growth, as seen by Sacconaghi, is the platform's expansion to other carriers. In particular, the analyst expects Apple will sell 11 million phones alone in 2011 by offering the phone on Verizon Wireless in the U.S. With growth in Europe and expansion into China on the company's agenda, Bernstein Research believes Apple could easily achieve the 50 million goal. The firm has a $185 price target for AAPL stock and maintains its "Overweight" rating.

RBC Capital Markets

Similarly, Mike Abramsky, analyst with RBC Capital Markets, predicts that the iPhone will have 5.7 percent total addressable market share by 2012, well up from the 1.1 percent overall share held today. In the company's latest report, RBC has raised its price target for AAPL to $250, maintaining an "Outperform" rating.

Abramsky believes that total iPhone shipments will hit 82.1 million in 2012, good for a 16.3 percent share of the smartphone-specific market.

"Despite the iPhone’s introduction more than two years ago, competitors continue to lag iPhone’s sleek touchscreen experience, robust third-party applications platform, and tight multimedia integration," Abramsky said. "Off the strength of its brand, innovation, and customer loyalty, Apple is expected to retain its premium carrier subsidy versus competitors, sustaining above-peer margins for its smartphones. We believe Apple will sustain its lead in content, games, and apps, which we expect to expand to include mobile commerce, user-generated content, advanced gaming, etc."



The 92-page report predicts smartphones will see explosive growth in the next few years, calling them "the next wave of computing" and predicting shipments will exceed that of PCs in 2011. Abramsky believes that the devices could become the principal way in which people browse the Web, send e-mails, listen to music, watch TV, play games and more. The report increases the firm's prediction for smartphone penetration, calling for a 35.1 percent share of global handsets, totaling 504 million, in 2012.

post #2 of 38
Is it too soon to think the iPhone will come to Verizon in June 2010?
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post #3 of 38
The writing is on the wall.

The also-rans need to step up their game if they want to avoid an iPod-like bloodbath. It's in the mail, folks, and it's not looking too good for the other players so far.
post #4 of 38
The main impediment to Apple selling even more phones is the carrier limitation. The apps are what increases the value of the iPhone. Nobody even comes close. If carrier adoption becomes universal, the company could achieve 50% market share. However a multi carrier model may affect ASP via reduced subsidies... any opinions here?

250M smart phones by 2012 seems a little high... but I can see Apple getting close to 50% market share if the company adopts a multi carrier model once LTE is deployed. Usually the stock price tops out long before the market share and volume tops out. This has been an expensive lesson I have learnt in riding technology trends. So an exit strategy will be important, especially if the market cap gets close to $250B.
post #5 of 38
They'll all "explode" muhahahaaa
post #6 of 38
Quote:
Originally Posted by AjitMD View Post

The main impediment to Apple selling even more phones is the carrier limitation. The apps are what increases the value of the iPhone. Nobody even comes close. If carrier adoption becomes universal, the company could achieve 50% market share. However a multi carrier model may affect ASP via reduced subsidies... any opinions here?

250M smart phones by 2012 seems a little high... but I can see Apple getting close to 50% market share if the company adopts a multi carrier model once LTE is deployed. Usually the stock price tops out long before the market share and volume tops out. This has been an expensive lesson I have learnt in riding technology trends. So an exit strategy will be important, especially if the market cap gets close to $250B.

With 5 iphone models including a nano phone and tablet phone by 2013 apple could easily reach 300m in sales.
easily. The used phones get passed on to family or to craig list >> ever increasing the iser base and user love for the iphone platform . Remember when dick tracey make a video call from hos watch ?? that day is almost here .
a WATCH pod phone .



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post #7 of 38
I don't believe these forecasts for one second. Moreover, if these analysts really believed their own sales projections, they should be setting a much higher price target for Apple.

Let me explain.

Assume 80M iPhones sold in 2012 at an average price of $500 per phone => $40B in iPhone revenues. If Apple gets its average 15% profit margin (a very conservative assumption, since iPhone margins are higher the company's average), that is $6B in iPhone profits by 2010. At a P/E of 20, that's worth $120B in market cap. Discounted back to mid-2009 at a cost of equity of 15%, the present value is $85B today. With approximately 900M shares outstanding, that is ~$95 per share in Apple stock price from just in its iPhone line of business! Granted, not all of that $95 is extra share price (since some of this growth is already factored in to today's stock price), but surely, the price target should be higher than the upper $100s?

These are ridiculously optimistic forecasts.
post #8 of 38
Unbelievable. They sell very ordinary phone (when it comes to almost everything except excellent web browsing capabilities). App Store is stuffed with limited simplistic applications. Carriers' infrastructure can't stand the shot.
And yet they'll meet these ambitious expectations and all that without cheating anyone... Apple marketing people have a lot of secrets to tell...

We mean Apple no harm.

People are lovers, basically. -- Engadget livebloggers at the iPad mini event.

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People are lovers, basically. -- Engadget livebloggers at the iPad mini event.

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post #9 of 38
Quote:
Originally Posted by ivan.rnn01 View Post

Unbelievable. They sell very ordinary phone (when it comes to almost everything except excellent web browsing capabilities). App Store is stuffed with limited simplistic applications. Carriers' infrastructure can't stand the shot.
And yet they'll meet these ambitious expectations and all that without cheating anyone... Apple marketing people have a lot of secrets to tell...

You really don't get the iPhone, do you?
post #10 of 38
Quote:
Originally Posted by Quadra 610 View Post

You really don't get the iPhone, do you?

MB489NF. 7A400.

We mean Apple no harm.

People are lovers, basically. -- Engadget livebloggers at the iPad mini event.

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People are lovers, basically. -- Engadget livebloggers at the iPad mini event.

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post #11 of 38
Quote:
Originally Posted by ivan.rnn01 View Post

MB489NF. 7A400.

Still don't really get it
the jitterbug is for you
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post #12 of 38
delete
post #13 of 38
Quote:
Originally Posted by anantksundaram View Post

I don't believe these forecasts for one second. Moreover, if these analysts really believed their own sales projections, they should be setting a much higher price target for Apple.

Let me explain.

Assume 80M iPhones sold in 2012 at an average price of $500 per phone => $40B in iPhone revenues. If Apple gets its average 15% profit margin (a very conservative assumption, since iPhone margins are higher the company's average), that is $6B in iPhone profits by 2010. At a P/E of 20, that's worth $120B in market cap. Discounted back to mid-2009 at a cost of equity of 15%, the present value is $85B today. With approximately 900M shares outstanding, that is ~$95 per share in Apple stock price from just in its iPhone line of business! Granted, not all of that $95 is extra share price (since some of this growth is already factored in to today's stock price), but surely, the price target should be higher than the upper $100s?

These are ridiculously optimistic forecasts.

Optimistic or pessimistic?

First, target prices are typically for the next 12 months, so if they don't say otherwise this is my assumption, and the sales figures they are forecasting are over that horizon. Second, RBC does indeed set a target price over $200, at $250. You're never going to get 100% satisfaction or consistency out of numbers presented by analysts, since at best they are guesstimating, but I don't think they are wildly inconsistent either.

The exciting part for AAPL stockholder is that the iPhone is potentially a huge driver of growth over the next couple of years, rivaling if not bettering the revenue growth generated by the iPod over the past few years. I keep itching to sell some of my AAPL... but then I see forecasts like this, and find I can't seem to loosen my grip.

Does that mean it's going to happen? Of course not. You pays your money and you takes your chances.
Please don't be insane.
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post #14 of 38
Quote:
Originally Posted by brucep View Post

Still don't really get it
the jitterbug is for you

ooooh. low blow! and probably lost on him, since he's in france.

i think some people (maybe including ivan) don't understand what the iphone has done for people that don't want to study a manual for a week before they use their phone. yes, there are other phones that do everything the iphone does, there are certainly phones that have more ticks on a feature list. but how many of them are a joy to use?

that's what sets apple apart. attributing the iphone's success solely to apple's marketing is just trolling...
post #15 of 38
Quote:
Originally Posted by brucep View Post

Still don't really get it
the jitterbug is for you

Oh no you didn't!
post #16 of 38
If you want to call me names, tell me to shut up and f off...you will be ignored. I WILL NOT BE BULLIED!!
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post #17 of 38
Quote:
Originally Posted by VisualZone View Post

Guess a lot of you didn't see this:

http://www.ctv.ca/servlet/ArticleNew...18?hub=SciTech

The sheer demand for this product is pretty crazy.
post #18 of 38
Quote:
Originally Posted by tekgeeek View Post

Too bad we're all going to die in 2012...

But at least we will all die with an iPhone in our hand!
Let's just hope it's a Verizon iPhone
post #19 of 38
Guys... Have you ever seen the "manual", which comes with iPhone? I know, buddies of yours, which have buddies, which have parents, which have some iPhones never tell you about that "manual". But trust me, it can't take a week to read it.

I'm gonna make a picture of another big flag. You did want it, you, guys..

We mean Apple no harm.

People are lovers, basically. -- Engadget livebloggers at the iPad mini event.

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People are lovers, basically. -- Engadget livebloggers at the iPad mini event.

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post #20 of 38
Quote:
Originally Posted by Sipadan View Post

They'll all "explode" muhahahaaa

Only yours will explode. Jeez. Exploding iPhones are like only 2 or 3 in the world. Please.
post #21 of 38
Quote:
Originally Posted by anantksundaram View Post

I don't believe these forecasts for one second. Moreover, if these analysts really believed their own sales projections, they should be setting a much higher price target for Apple.

Let me explain.

Assume 80M iPhones sold in 2012 at an average price of $500 per phone => $40B in iPhone revenues. If Apple gets its average 15% profit margin (a very conservative assumption, since iPhone margins are higher the company's average), that is $6B in iPhone profits by 2010. At a P/E of 20, that's worth $120B in market cap. Discounted back to mid-2009 at a cost of equity of 15%, the present value is $85B today. With approximately 900M shares outstanding, that is ~$95 per share in Apple stock price from just in its iPhone line of business! Granted, not all of that $95 is extra share price (since some of this growth is already factored in to today's stock price), but surely, the price target should be higher than the upper $100s?

These are ridiculously optimistic forecasts.

The analysts' logic is actually very sound with regard to how the iPhone grows so large by 2012. However, your contention that a much higher share price would result from those predictions is also very sound. And so you justly point out that the analysts' iPhone sales predictions and share price targets are completely out of whack. You should stop right there, but you don't.

Your conclusion is that the analysts iPhone sales predictions are ridiculously high.

My conclusion is that the analysts' share price targets are ridiculously low.

Given the history of the analysts', it seems likely that they are still under-appreciating the high margins on the heavily subsidized iPhone because the deferred revenue is still shielding the earnings from clear view. It won't be too much longer before the deferred revenue wave build into an earnings tsunami, and when that happens (and it becomes clear to every Tom, Dick, & Harry) you are going to see a massive growth in P/E to "catch the wave". So, the share price will simultaneously get a boost from sudden earnings growth as well as P/E inflation.

Ultimately, the proper conclusion is that the AAPL share price will be much higher in 2012, a sure multi-bagger, IMNSHO (in my not so humble opinion). In other words, buy AAPL before it's too late.


Thompson
post #22 of 38
Quote:
Originally Posted by thompr View Post

My conclusion is that the analysts' share price targets are ridiculously low.

Even $250 within 12 months is too low? That is a 50% increase from the current share price -- which I'd call quite optimistic for any company (not to mention, in the midst of a recession). You would not?

As for the deferred revenue wave, we're enjoying that now, and it will only continue. This method of accounting doesn't make new revenue, it just spreads it out over time. Correct me if I misunderstand your point, but your analysis seems to assume that investors will suddenly start paying much closer attention to non-GAAP earnings and price AAPL accordingly. It could happen I suppose, but why?
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post #23 of 38
I don't get it. I thought the rose was off the bloom, the iPhone killers will win, and Apple is facing a consumer revolt. Surely these analysts have heard about Apple's approaching doom? What's up with all these positive projections?
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post #24 of 38
Quote:
Originally Posted by Dr Millmoss View Post

Even $250 within 12 months is too low? That is a 50% increase from the current share price -- which I'd call quite optimistic for any company (not to mention, in the midst of a recession). You would not?

Actually, Good Dr, I agree that $250 within 12 months is optimistic. And I agree with you that that is typically what is represented by an analysts' price target. As a matter of fact, I originally had a sentence to that effect in my response, but I removed it because I believe that even if the original poster was correct in his inherent assumption (i.e. that there should be agreement between the 2012 prediction and the near-term PPS targets) then his logic is completely flawed. In other words, even working within his own set of (questionable) premises, he STILL came up with a bogus conclusion.

Quote:
Originally Posted by Dr Millmoss View Post

As for the deferred revenue wave, we're enjoying that now, and it will only continue.

]

Correction: we're enjoying it now, but it will grow massively as we get more quarters of insanely great sales behind us.


Quote:
Originally Posted by Dr Millmoss View Post

This method of accounting doesn't make new revenue, it just spreads it out over time. Correct me if I misunderstand your point, but your analysis seems to assume that investors will suddenly start paying much closer attention to non-GAAP earnings and price AAPL accordingly. It could happen I suppose, but why?

Indeed, Dr, you misunderstand my point. I am asserting that in spite of the data before them, a great percentage of analysts and investors will continue to ignore the non-GAAP earnings in favor of the most readily available EPS figures (which are GAAP). A significant fraction of Wall Street will continue to use GAAP earnings and its derivatives (such as P/E) indefinitely.

What will change is the following: after we get 5-6 quarters of insanely great iPhone sales behind us, which we actually do not have yet, even the GAAP earnings are going to start shooting up. This is the tsunami to which I refer, and I think that THAT will be the turning point. There is an inherent delay built into the GAAP earnings for Apple, and all of the people that are turning a blind eye to it are going to be surprised when the GAAP tsunami hits. Truthfully, calling it a "tsunami" implies a sudden "here and gone" event. In actuality, the GAAP earnings growth will be like an impressive swell with a long wavelength. Different investors will realize the import at different points on the rise, but eventually there will be critical mass.

So this is my assertion in a nutshell:

1) Even GAAP earnings are going to begin impressive growth over the next few years, and
2) Those investors that are focused only on GAAP will jump in and drive the P/E higher.

Thompson
post #25 of 38
Quote:
Originally Posted by thompr View Post

Correction: we're enjoying it now, but it will grow massively as we get more quarters of insanely great sales behind us.

Well of course, it's just a delay effect, so GAAP will always lag behind non-GAAP earnings.

Quote:
Indeed, Dr, you misunderstand my point. I am asserting that in spite of the data before them, a great percentage of analysts and investors will continue to ignore the non-GAAP earnings in favor of the most readily available EPS figures (which are GAAP). A significant fraction of Wall Street will continue to use GAAP earnings and its derivatives (such as P/E) indefinitely.

What will change is the following: after we get 5-6 quarters of insanely great iPhone sales behind us, which we actually do not have yet, even the GAAP earnings are going to start shooting up. This is the tsunami to which I refer, and I think that THAT will be the turning point. There is an inherent delay built into the GAAP earnings for Apple, and all of the people that are turning a blind eye to it are going to be surprised when the GAAP tsunami hits. Truthfully, calling it a "tsunami" implies a sudden "here and gone" event. In actuality, the GAAP earnings growth will be like an impressive swell with a long wavelength. Different investors will realize the import at different points on the rise, but eventually there will be critical mass.

So this is my assertion in a nutshell:

1) Even GAAP earnings are going to begin impressive growth over the next few years, and
2) Those investors that are focused only on GAAP will jump in and drive the P/E higher.

Thompson

This is essentially the point made by Andy Zaky at Bullish Cross a few months back, and I do understand it. My skeptical side says that if this was going to set off a real buying frenzy, it probably would have already. Forecasting GAAP earnings for future quarters is easy enough, using Apple's non-GAAP earnings reporting, which they provide every quarter now. I mean, it's not a mystery -- anyone can accurately estimate how much iPhone revenue is already baked into future quarters. I'd like to think you are right, but...
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post #26 of 38
Quote:
Originally Posted by Dr Millmoss View Post

Well of course, it's just a delay effect, so GAAP will always lag behind non-GAAP earnings.

OK, so we've been in violent agreement about this fact from the get-go. The only question is whether this will come as a surprise to anybody...

Quote:
Originally Posted by Dr Millmoss View Post

This is essentially the point made by Andy Zaky at Bullish Cross a few months back, and I do understand it. My skeptical side says that if this was going to set off a real buying frenzy, it probably would have already. Forecasting GAAP earnings for future quarters is easy enough, using Apple's non-GAAP earnings reporting, which they provide every quarter now. I mean, it's not a mystery -- anyone can accurately estimate how much iPhone revenue is already baked into future quarters. I'd like to think you are right, but...

Yes, this point has been put out there for well over a year now. So you may reasonably question my assertion that there are still a large number of investors that are routinely missing the significance of this, but it isn't very hard to find examples. Over the past year or so, I have always stopped to take notice of published AAPL targets and supporting arguments, and I have been shocked to see that greater than half of them completely ignore the deferred revenue. They grab the GAAP numbers, arbitrarily assign a range of possible growth values based on little more than historical trends, select a range of forward P/E's to use (again based on historical trends) and compute a range of share prices. In each case, it is clear that their "high end" GAAP growth predictions are completely missing out on the contributions that are "already in the bag". Shocking, I tell you, that "smart" people such as these make so many choices based on incomplete information and shallow thinking. But then again, after the examples we have seen of market behavior over the past year, can you really support the notion that the majority is thinking rationally and using complete data to support their decisions? No, there is far far too much evidence to the contrary. There is so much near-term, knee-jerk reaction built into the system that investors still express concern over Apple's low-ball guidance each quarter. This, in spite of the fact that the tendency to do so is known and blathered about incessantly in the weeks leading up to the conference call. The AAPL market is extremely reactionary and driven by short-term thinking, which means it is definitely ripe for a "surprise" that they should have seen coming.

Based on the arguments and "analyses" I have seen, I am certain that there will still be significant surprise out there when the GAAP numbers hit their true growth.


Thompson
post #27 of 38
Quote:
Originally Posted by thompr View Post

Based on the arguments and "analyses" I have seen, I am certain that there will still be significant surprise out there when the GAAP numbers hit their true growth.

Ah, I see -- you expect some semblance of investor rationality to return. I didn't know it ever existed. I've seen little more than fleeting glimpses of rationality in my 12 years as an AAPL investor.

Well, we'll see I suppose. If you're right, maybe I can retire.
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post #28 of 38
But recent quarters have not been kind to Andy Zaky --- he missed basically everything on unit sales numbers and then got it right on the profit column, which meant that he pulled a number out of nowhere.

There were several wall street analysts hitting quite a few columns of unit sales right --- then got it wrong on the profit margin (and thus got in wrong on the quarterly earnings). Well, you can forgive them for getting the profit margin wrong --- they are human after all.

It is a lot different from Andy Zaky which basically missed everything but got the final number correct --- that basically meant he was guessing the whole way.
post #29 of 38
Quote:
Originally Posted by samab View Post

But recent quarters have not been kind to Andy Zaky --- he missed basically everything on unit sales numbers and then got it right on the profit column, which meant that he pulled a number out of nowhere.

There were several wall street analysts hitting quite a few columns of unit sales right --- then got it wrong on the profit margin (and thus got in wrong on the quarterly earnings). Well, you can forgive them for getting the profit margin wrong --- they are human after all.

It is a lot different from Andy Zaky which basically missed everything but got the final number correct --- that basically meant he was guessing the whole way.

Everybody is guessing to some extent. Zaky got closer to the important number than anyone else. I notice he's done that for the last several quarters, which is how long I've been reading him.
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post #30 of 38
Quote:
Originally Posted by Dr Millmoss View Post

Everybody is guessing to some extent. Zaky got closer to the important number than anyone else. I notice he's done that for the last several quarters, which is how long I've been reading him.

I disagree --- it is the "process" that is important.

To paraphrase Warren Buffett --- any idiot can get it right in the good times, but when the bad times come then we will know that they are swimming without any clothes.

If you read Andy's more recent stuff, he no longer has that everybody is wrong bravado. He was rightfully criticized by many people in recent quarters for getting every unit sales wrong and then getting the final profit number correct ---- it only means ONE thing, he was pulling a number out of a hat.
post #31 of 38
Quote:
Originally Posted by Dr Millmoss View Post

Ah, I see -- you expect some semblance of investor rationality to return. I didn't know it ever existed. I've seen little more than fleeting glimpses of rationality in my 12 years as an AAPL investor.

Look back at the charts for those 12 years. Notice that many of the extreme peaks and troughs have no associated fundamental driver? That's the irrationality you speak of, and you are right to expect it to remain. (OK, one big trough WAS fundamental: iMac sales fell off a cliff during the dot-com bust.) Now notice the incredible multi-bagger trend that is underlying all the noise and which generally tracks the growth of Apple's earnings? That's the rationality that is hard to discern on shorter time scales, and I expect it to remain as well.

So...

I expect that fear, uncertainty, and doubt from numerous sources will remain and will heavily influence investor sentiment (e.g. economy, health of Steve, crisis du jour, etc). I expect irrational behavior to "modulate" the signal so that there are significant peaks and troughs of euphoria and fear, respectively. I expect that the irrationality will always be present and cause volatility.

But I also expect many investors to continue to rely on the same shallow indicators that consistently get the lion's share of the media attention (e.g. the EPS and P/E that are based on GAAP numbers). And no, I don't think that the majority of potential AAPL investors even realize that the Apple GAAP EPS is about to skyrocket, in spite of the fact that it is easy to compute that fact, if they only knew to try. I expect that the realities of sharply increasing GAAP EPS and P/E will be rewarded by an underlying uptrend.

I expect that a small fraction of bold investors (that would be us) understands AAPL fundamentals at a deeper level than the majority and so isn't feeling like the current valuation (always based on GAAP) is in any way near the danger zone. Eventually, even the GAAP earnings numbers will bring valuation down to a safer level for the fence-sitters, and the share price will rise accordingly.

You know, I find that Wall Street is an uber-efficient handicapper of short term information. Every scrap of rumor or news that could influence this year's earnings is instantly "baked in". This is in accord with your message of the past few posts.

So you may wonder how the not-so-hidden news of the effects of deferred revenue isn't already "baked in" too. Well, as efficient as I think Wall Street may be, it is almost completely lost in the "long term" department. It seems like the majority of traders and fair-weather investors don't carefully consider fundamental details that are years away from significant import. I believe that if you have patience, vision, and a plan, you can really trounce Wall Street. Otherwise, they kill you.


Quote:
Originally Posted by Dr Millmoss View Post

Well, we'll see I suppose. If you're right, maybe I can retire.

Why do I get the impression you are disagreeing without even actually disagreeing? If you really have a strong opinion that I am wrong, just go ahead and post it with reasoning. (It won't hurt my feelings... debate is just exercise for the mind when it is kept professional and respectful.)

Thompson
post #32 of 38
Quote:
Originally Posted by thompr View Post

I expect that a small fraction of bold investors (that would be us) understands AAPL fundamentals at a deeper level than the majority and so isn't feeling like the current valuation (always based on GAAP) is in any way near the danger zone. Eventually, even the GAAP earnings numbers will bring valuation down to a safer level for the fence-sitters, and the share price will rise accordingly.

So you may wonder how the not-so-hidden news of the effects of deferred revenue isn't already "baked in" too. Well, as efficient as I think Wall Street may be, it is almost completely lost in the "long term" department. It seems like the majority of traders and fair-weather investors don't carefully consider fundamental details that are years away from significant import. I believe that if you have patience, vision, and a plan, you can really trounce Wall Street. Otherwise, they kill you.

The problem is that everybody CLAIMS that they know more or understand more than everybody else.

Not so long after Andy Zaky's now famous article on non-GAAP effects from revenue deferring --- he was shown to miss mac computers sales unit by a mile, ipod sales unit by a mile and iphone sales unit by a mile. But the funny thing was that Andy Zaky hit the jackpot on EPS.

It's like math exams in school --- the teacher is going to give you a lot of partial points when you get all the math equation proofs correct and then got the final answer wrong. Andy Zaky was basically the exact opposite --- getting all his proofs wrong and then got the final answer correct. It means what exactly --- he didn't understand a single thing about Apple at all.
post #33 of 38
Quote:
Originally Posted by samab View Post

The problem is that everybody CLAIMS that they know more or understand more than everybody else.

Not so long after Andy Zaky's now famous article on non-GAAP effects from revenue deferring --- he was shown to miss mac computers sales unit by a mile, ipod sales unit by a mile and iphone sales unit by a mile. But the funny thing was that Andy Zaky hit the jackpot on EPS.

It's like math exams in school --- the teacher is going to give you a lot of partial points when you get all the math equation proofs correct and then got the final answer wrong. Andy Zaky was basically the exact opposite --- getting all his proofs wrong and then got the final answer correct. It means what exactly --- he didn't understand a single thing about Apple at all.

Trying to predict near term unit sales, margins, and EPS, etc, is a not game I would even attempt. It didn't take a rocket scientist to know that Apple was going to announce strong numbers at the last conference call along with disappointing guidance. The final numbers were not easy to predict, but it was fairly clear that expectations would be handily exceeded. I am not surprised that Andy Zaky's unit sales numbers were bogus and that his profit was luckily correct. And I don't care one way or the other.

All I need to know is this:

iPhone has HUGE margins which have yet to make themselves apparent in the GAAP numbers,
many people are still using GAAP numbers to calculate valuation and determine entry points,
iPhone is growing market share in a market that will experience extreme growth. (If someone can't see the endgame of the cell phone industry, which has traditional cell phones almost completely annihilated within 5-10 years, then I guess they didn't foresee the mass market demise of the typewriter and film camera either.)

If those three things are true (and I wonder if anyone can challenge them) then the conclusions are simple:

iPhone profits will grow because of unit sales increase and exponential revenue recognition,
people focused only on GAAP numbers will be surprised at the profit growth, and
Apple's share price will benefit greatly.

Given a long term view, one doesn't get all caught up in the tedium of guessing what the details will be each and every quarter. I watch the results to help determine my future exit strategy, but I don't generally prognosticate about short-term numbers. So if anything, your Andy Zaky example only serves to further amplify my point.

This is the biggest no-brainer in tech that I can ever recall, and I am even more giddy from the fact that some folks still don't realize it yet. (I can buy more when I find some spare capital.) So much for Wall Street vision.


Cheers,
Thompson
post #34 of 38
Quote:
Originally Posted by thompr View Post

Trying to predict near term unit sales, margins, and EPS, etc, is a not game I would even attempt. It didn't take a rocket scientist to know that Apple was going to announce strong numbers at the last conference call along with disappointing guidance. The final numbers were not easy to predict, but it was fairly clear that expectations would be handily exceeded. I am not surprised that Andy Zaky's unit sales numbers were bogus and that his profit was luckily correct. And I don't care one way or the other.

All I need to know is this:

iPhone has HUGE margins which have yet to make themselves apparent in the GAAP numbers,
many people are still using GAAP numbers to calculate valuation and determine entry points,
iPhone is growing market share in a market that will experience extreme growth. (If someone can't see the endgame of the cell phone industry, which has traditional cell phones almost completely annihilated within 5-10 years, then I guess they didn't foresee the mass market demise of the typewriter and film camera either.)

If those three things are true (and I wonder if anyone can challenge them) then the conclusions are simple:

iPhone profits will grow because of unit sales increase and exponential revenue recognition,
people focused only on GAAP numbers will be surprised at the profit growth, and
Apple's share price will benefit greatly.

Given a long term view, one doesn't get all caught up in the tedium of guessing what the details will be each and every quarter. I watch the results to help determine my future exit strategy, but I don't generally prognosticate about short-term numbers. So if anything, your Andy Zaky example only serves to further amplify my point.

This is the biggest no-brainer in tech that I can ever recall, and I am even more giddy from the fact that some folks still don't realize it yet. (I can buy more when I find some spare capital.) So much for Wall Street vision.


Cheers,
Thompson

The iphone carries such high media profile that the carriers selling them have a big bulleye on their back. Sooner or later, the carriers have to justify their iphone business model --- in the light of the recent analyst report that not a single carrier makes money off the iphone.
post #35 of 38
Quote:
Originally Posted by thompr View Post

Why do I get the impression you are disagreeing without even actually disagreeing? If you really have a strong opinion that I am wrong, just go ahead and post it with reasoning. (It won't hurt my feelings... debate is just exercise for the mind when it is kept professional and respectful.)

Because we're discussing not arguing? It happens sometimes, even on the net.

True, the markets are rarely very sensible in the short-run, but my feeling is that the general rationality level when it comes to AAPL has always been sub-normative. My hunch about this (from years of investing in the company, and generally being a fan of their products) is that the conventional wisdom about Apple is they are bound to fail. If not now, probably soon. Even when they succeed, it tends to be regarded as a provisional success. Unlike other companies which become accepted as successful, Apple never seems to get a pass when they don't whack the ball out of the park.

As evidence of this, witness the number of journalist who persist in writing about Apple as a cult, and their customers as true believers. This nonsense survives the selling of hundreds of millions of products. So something cultural is going on here, and I believe it translates into investor behavior. How could it not? I think this is at least one reason why investors have such a hair-trigger when it comes to selling. This story could be over any minute, right?

Recall the 2000 debacle, when AAPL shares fell 50% in one after-hours session. That was bad enough, but then during the three years following, AAPL's market cap was frequently at or near cash on hand. Investors were valuing everything else the company owned, including its business, as completely worthless. Less than worthless, actually. How normal is that, even in times when fear overwhelms greed?

And did we not just see AAPL fall 60% from its high? Granted, in the midst of a general market panic, but still. I've been through too many of these gut-wrenching falls into the bottomless pit to have much faith that logic or good sense wills out in the end. Well okay, maybe in the end -- but you know what they say about the end.
Please don't be insane.
Reply
Please don't be insane.
Reply
post #36 of 38
Quote:
Originally Posted by ivan.rnn01 View Post

App Store is stuffed with limited simplistic applications.

I can connect to my employer's network via VPN (built in to the iPhone) and use an app I downloaded from the App Store to do a remote desktop session to any of the Windows machines at work or use a VNC client (also downloaded from the App Store) to do the same with the Macs. I also have a command line app which is useful for the Macs.

Let me summarize: my cell phone can act as a full screen remote desktop client over an encrypted tunnel over the public Internet. I have full control over servers and workstations from anywhere I happen to be using a gadget the size of a deck of cards thanks to the apps I got from the App Store.

Is that really your definition of "limited simplistic applications?"
post #37 of 38
Quote:
Originally Posted by inkswamp View Post

I can connect to my employer's network via VPN (built in to the iPhone) and use an app I downloaded from the App Store

I use actively - on daily basis - about 30 apps downloaded from AppStore. This is where the difference of our views comes from.

Quote:
Originally Posted by inkswamp View Post

to do a remote desktop session to any of the Windows machines at work or use a VNC client (also downloaded from the App Store) to do the same with the Macs. I also have a command line app which is useful for the Macs.

Let me summarize: my cell phone can act as a full screen remote desktop client over an encrypted tunnel over the public Internet. I have full control over servers and workstations from anywhere I happen to be using a gadget the size of a deck of cards thanks to the apps I got from the App Store.

What's so special about that? Your application is limited to one single version of operating system, isn't it? We, for instance, connect to our Domino servers from our iPhones. No big deal.

Quote:
Originally Posted by inkswamp View Post

Is that really your definition of "limited simplistic applications?"

No. Look, I'm gonna tell you, what it really is.
I download social network app from AppStore and it appears not to support the network's internal mailing service. I download car navigation app and discover instantly, that traffic jam notifications and speed camera database updates are not implemented; and all that -on the platform, which is seen by everyone as being the richest in wireless options one on the market. I download mobile TV app and it is said to work over WiFi, but it does not. I download date calculator (because gas expenses app doesn't have the ability to calculate dates) and it calculates business days and can't calculate calendar days...

We mean Apple no harm.

People are lovers, basically. -- Engadget livebloggers at the iPad mini event.

Reply

We mean Apple no harm.

People are lovers, basically. -- Engadget livebloggers at the iPad mini event.

Reply
post #38 of 38
Quote:
Originally Posted by inkswamp View Post

I can connect to my employer's network via VPN (built in to the iPhone) and use an app I downloaded from the App Store to do a remote desktop session to any of the Windows machines at work or use a VNC client (also downloaded from the App Store) to do the same with the Macs. I also have a command line app which is useful for the Macs.

Let me summarize: my cell phone can act as a full screen remote desktop client over an encrypted tunnel over the public Internet. I have full control over servers and workstations from anywhere I happen to be using a gadget the size of a deck of cards thanks to the apps I got from the App Store.

Is that really your definition of "limited simplistic applications?"

Good example. But it might be over his head.
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