Possibly an expectation of the Next Big Thing has been priced in to Apple's stock for some time now, and as time goes by more investors lose faith. But someone (such as a true Apple fan) who still believes they will come up with it could hang on to their stock and come up roses.
I do believe Apple will make the Next Big Thing and their stock should be higher. And I think I know what it will be. Warning: crazy theory of the week coming up. This is not based on inside info, just their past patterns.
- Steve always liked "democratising" technology: the GUI to let *everyone* use a computer, desktop publishing to let anyone publish, the App store to let anyone publish an app, "The computer for the rest of us." Steve is gone but this is still in Apple's values.
- They like products where they can provide the whole widget/whole ecosystem
- Typically they go after markets where there is already an established market, but the products are still rudimentary/hard to use, and leverage their UX genius to make them easy to use.
- Typically they go after things that attach to a computer in some way.
- The thing they go after has to be something the CEO cares about, or it won't succeed. Tim doesn't care about TV, I bet he never even watches it. He loves operations and manufacture though.
Therefore I think there Next Big Thing they will do is 3d printers/prototypers for the masses:
- Democratize manufacturing itself
- Use brick and mortar Apple Stores to sell ink, use App Store to download blueprints to print. The next big market is not songs or movies or games but blueprints.
- Market exists but is still primitive. Much of the software is clunky Java apps. Use Apple software knowhow to make easier to use.
- The CEO knows all about manufacturing so even though he's not a product guy he should be able to get enthusiastic about this.
Look at it from a different point of view: the pile of cash Apple is sitting on is more than $100/stock. So the valuation of the company (minus cash), is only $350 (given the after hours trading range). Apple also pays more dividend than a government bond pays in interest.
So consider Apple for a moment like a utlity stock: people will keep buying smart phones, computers, tablets, etc. People are lazy switching platforms once they are in a particular eco system. If Apple just is good enough at keeping up with everyone else, without being the leaps and bounds leader, then they can make enough revenue and profits to justify the stock price with ZERO GROWTH.
But even that would be hard to do, because there are significant markets Apple has barely started to tap into, so even without groundbreaking new products, Apple has years of growth ahead.
Apple is certainly not asleep at the wheel; they innovate on many levels, down to things like alternative energy sources, so they have IP they can license for revenue streams investors don't even think about. And that's without going into potential future markets such as embedded systems (home/car), TV, photo/video, etc.
Plus they still have a huge pile of cash with which to buy into growth opportunities in case they totally forgot how to innovate.
And investors forget, that while Jobs was involved with a lot of things and had his names on a few patents in the sense that he was involved in details of design and such, it's not Jobs' engineering skills, etc. that produced these products. The innovation at Apple comes from the many smart people who work for the company, Jobs was mainly a great figurehead, leader, marketing guy; a person around which the media could focus the cult of Apple; but nowhere near as important as people make him out to be, aside from breaking out from certain common "wisdoms" such as e.g. false cost cutting, etc.
But these important deviations have long become part of the Apple corporate fabric, they don't rely on Jobs being there to remain there for a long time to come.
You can't treat Apple like a utility because they pay a crappy dividend. Utilities tend to be good income stocks on the other hand. And that cash pile is useless to me as an investor. Look at RIM. No debt. $3 billion in the bank. They're stock still crashed to oblivion when they started failing, and they had somehting like $10 billion in the bank when their troubles started. And like it or not, that's what investors are worried about. One bad iPhone launch and the stock will tank. Not to RIMM levels, mind you. But to under $400.
As for new markets. I have my doubts. Apple doesn't do well when they don't control the whole setup (remember Moto ROKR?). Now look at embedded systems like cars. What incentive does Audi have to give up branding and profits/margins on nav sytsems to Apple? Have you ever seen a car company allow a standard interface on their cars, which includes none of their branding? Heck, auto groups like VAG, don't even maintain the same branding across their brands. And yet people think they'll hand over control of one of their most important customer experiences to Apple? Wishful thinking at best. And Apple just isn't capable of cooperation and integration like this:
It's not in their DNA. The most Apple will get from these companies is an optional Siri button and some Siri compatibility with their in-car systems. So unless Apple is going to start building cars, fridges and washing machines, I wouldn't expect embedded systems to be huge for Apple anytime soon.
Like I've said, TV is their best bet. But TV is just pointless to attempt without content. And, the TV producers are a lot wiser than the music industry execs that Apple strongarmed. So this is going nowhere for a while. They might actually prefer to go their own way on a web service or co-operate with Google or Amazon to combat the rising Netflix threat, than they would to co-operate with Apple. Apple is probably the partner of last resort for them.
Lastly, it's just a myth that people are judging the stock based on the loss of Steve Jobs. If that was the case, the stock never would have climbed after Jobs passed away. No, investors are just being rational and cautious. It's their money on the line. And they aren't fanboys who will only see rainbows and unicorns and ignore negative warnings.
The more important statistic is that China's middle class is larger than the entire US population. China is already Apple's second largest market and on its way to becoming the largest.
There's no denying that you don't know what you're talking about.
The Chinese definition of middle class is nowhere near the American definition of middle class.
There's a reason Apple has to offer payment plans to make iPhones affordable in China. And it probably has to eat the interest too.
China, will, of course, be huge. Lots of latent demand, and when Apple finally addresses it, they'll have to invent a new class of ships to carry money. But, I do worry about margins when it comes to China.
Mac bigger than Google? By what measure. I wasn't aware that the Mac unit has a market cap of $240 billion dollars. Nor was I aware that the iPad had become a business unit with a $234 billion dollar valuation. And the iPod division has a $23 billion dollar valuation? Since when?
Part of the reasons fanboys can't take the stock fluctuations is becuase of ridiculous myth building like this. Some actually believe crap like the Mac is bigger than Google.
Take out the iPhone, and the rest of Apple combined would probably be the same size as Google....or smaller. So in reality, Apple (as a stock) is as dependant on the iPhone as Google is on search. And Google's got less competition on its key market than Apple does.
As for me, I'm afraid about about a bad iPhone launch (a la "You're holding it wrong") and devastating impact that could have on the stock price. Of course, I also balance that risk with the likelihood that Apple will keep growing steadily for the forseeable future. That's why I maintain my holdings.
But if you think Apple is a safe bet, why do you go all in with your entire portfolio on AAPL? If you think your inner fanboy is a terrific investment advisor, put your money where your mouth is. Dump all your lifesavings on AAPL. It's a sure bet right?
I'm hoping AAPL will close the year at about $600 and maybe hit $700 by end of 2014. I still think analysts are being a bit optimistic, predicting $700 by the summer.
If you buy a cheap $100 Android phone because you don't have the money for an expensive one, you will get used to Android OS and ecosystem and next time, when you will have the money for an expensive phone you will not switch to Apple, you will buy an expensive Android phone. Market share DOES MATTER! People don't like to learn new stuff. See how many people still hang on Windows XP because they don't like or don't want to learn Windows 7 or 8.
I don't think that is necessarily true. If you buy a cheap $100 Android phone, it is going to run like crap and not be able to run most of the newer apps available. Your user experience will be horrible and you might want to try something new when you can afford it. Alos I find it ridiculously ironic that the same morons that gripe about margins seem to think it would be good for Apple to sell a sub $200 phone. What do they think would happen to margins then????
I've been an apple user and customer since 1995. I've grown up with the company - their products have enriched my life. I've followed the rumors, the speculation, and the stock price from the $30's to the $700 high. Finally went long somewhere around $500. I'll hold my pittance of stock because I've seen Apple fight back too many times before to believe it's best days are behind it. The problem is Apple is shitting gold in a world where investors expect platinum diarrhea. No company's stock can withstand those expectations.
Refresh my memory. How many products does Tesla sell?
One. And the price of the stock reflects those risks.
And tell me why the number of products they sell should matter to me as an investor?
They have one car, with an average selling price above $80 000. They've pre-sold all of 2013's production. Buy now and you'll be lucky to get the car this year. And their average daily order rate is rising and has already outpaced their production rate. They have a gigantic technological lead, and they are building an entire ecosystem around electric cars. They are also exceptional at marketing. Not a single ad on TV, but 20 000 cars sold. How? Through strategic location of Tesla stores (heck, they're VP on this front is ex-Apple). Heck, they don't even let you test drive the car. They've won several Car of the Year awards including Motor Trend. And their manufacturing costs (for electric vehicles) are exceptionally low and of very high quality, with much of it done in house. Does all that sound familiar?
The only reason the stock isn't higher is because they aren't profitable yet. Lots of investors seem to be analyzing them like a traditional car company as opposed to a tech company. So the risks of failure are priced in. But I'm grateful for all the shorts. They keep the price down. I predict a bloodbath when their earnings report comes up. A sweet Valentine's day present for me. Will be lovely if I can catch a short squeeze.
As for comparing between TSLA and AAPL. All I can say is that TSLA has returned to me far higher paper gains in the last year than AAPL.
I don't get the talk about the end of subsidies in the US affecting only AAPL. On AT&T the Galaxy SIII is $549.00 off contract ($599 on Verizon). The Galaxy Note II is $649.00 ($699 on Verizon). The SII is $399.00 and The Note I is $599. Sure Samsung sells 9 other smartphones on AT&T off contract but those four would give them their biggest margin. Those four would be their best phones and presumably get the most recent Android updates at a faster clip.
Now when we look at the Apple Store website the iPhone 5 unlocked is $649.00. The 4S is $549.00. The 4 (8 GB) is $450.00. You can't get them unlocked from AT&T (though they do show the regular price) but you can from Verizon at the same price points. We see that Samsung's newest phones are priced similarly off-contract to Apple's.
The cheapest off-contract smartphone on AT&T as a whole is the Pantech Burst for $299.99 (LTE-capable). The cheapest Samsung is the Samsung Rugby Smart (real name) for $329.99. The cheapest Samsung LTE-enabled phone is the Samsung Galaxy Exhilarate (real name) for $379.99. On Verizon the cheapest off-contract smartphone is the BlackBerry Curve 9310 Social Messaging Smartphone for $299.99. The cheapest LTE-enabled phone is also the cheapest Samsung and is the Samsung Galaxy Stellar (real name) for $329.99.
So yes the newest iPhone starts at $649 while the newest Samsungs start at $549 and $649. Those are priced much higher than most other smartphones without the subsidy. But if the subsidy model erodes that still affects Samsung's higher margin devices. Sure they would still sell the lower margin loss-leaders but how long would that continue? It would send the the US back to the feature phone era where companies weren't making money. I don't think Samsung or Nokia or RIMM wants that just the same as Apple doesn't.
With the subsidy on AT&T the prices range from $0.01 (various) with 2-year contract to $299.99 (Galaxy Note II) with 2-year contract. The subsidy brings prices together to let phones stand on their own merit. And as we've seen from AT&T's and Verizon's earnings the iPhone wins out.
All that being said yes the subsidy model makes the phone seem cheaper to the customer. But whether you get it on or off contract if it is a smartphone and you're getting a data and voice plan that will cost the same. The difference between on-contract and off-contract purchases is with the off-contract there isn't an early termination clause and fee (because you don't have a contract). The subsidy and 2 year commitment is only an assurance that you will stay two years or pay a fee for AT&T et. al to recoup the profit they wanted to make off you. That monthly bill will not be different if you buy the phone outright.
You can't add a smartphone to a prepaid plan (maybe on smaller carriers you can):
So an individual user's real options are to pay ~$199 up front with a ~$60/month bill and risk paying up to $349 to leave before two-years..
- or -
Pay ~$550 up front with a ~$60/month bill with the ability to switch carriers (if they support your phone).
I think most people expect to remain with one carrier which is why they would want to limit their up-front cost which is why I expect most people are fine with the subsidy.
I think Samsung and Nokia and RIMM want their higher end phones to not be a roadblock on price and stand on their own merit over cheaper "smart" phones (similar thinking to Apple) which is why I expect they are fine with the subsidy model.
I think the telcos are not fine with the subsidy for the initial hit on profits. But it gives people a reason to commit to them long term. They'd rather have long-term commitment and 'stickiness' and long-term profits like Apple does rather than miniscule short-term profits with the chances that people will leave them after only a couple of months. That's why I think they're fine with the subsidy. Sure they maybe can do away with the subsidy, make everybody month-to-month, and say if you sign up for a year or two you'll get $10-$20 off each month of your bill. But nothing talks like that up-front cost when you're actually purchasing a device. Other industries like cable and utilities do that take off from your monthly bill if you *commit* long term but they are only providing a service. If you're knocking ~$400 off an upfront fee for a device most people are taking that deal.
I don't get the talk about the end of subsidies in the US affecting only AAPL. On AT&T the Galaxy SIII is $549.00 off contract ($599 on Verizon). The Galaxy Note II is $649.00 ($699 on Verizon). The SII is $399.00 and The Note I is $599.
They don't care about that. Those other companies offer cheaper (read: crap) phones additionally. The minimum cost of entry for Apple smartphones is $450*, which is "too much" for "people" to "pay". And indeed, the phone price is higher than the price of the low-end (read: old or crap) phones from others.
*It's way, way, way, way more, but they all pretend that you then don't have to pay monthly for the phone.
If you buy a cheap $100 Android phone because you don't have the money for an expensive one, you will get used to Android OS and ecosystem and next time, when you will have the money for an expensive phone you will not switch to Apple, you will buy an expensive Android phone. Market share DOES MATTER! People don't like to learn new stuff. See how many people still hang on Windows XP because they don't like or don't want to learn Windows 7 or 8.
Actually, my experience tells me the opposite: the people who got a subsidized free or cheap Android phone 2-3 years ago were so disappointed, they switched to iPhones when their contracts were up for renewal. The learning curve wasn't an issue. One person I know even switched to the new Nokia Lumina 920 from Android. When I asked them about their upgrade, I found that low price was still a deciding factor for them, so they didn't jump from $100 to more expensive Android device. That they could get a Lumia 920 or iPhone 4S at the $99 level (with contract) appealed to them. They didn't jump to a more expensive "elite geek-spec'd" Android phone.
The Windows XP example is an invalid analogy, because most users (not the tech savvy ones) just use whatever OS came with their computer for as long as they own that computer. Their decision to upgrade to say, Windows 7 is then tied to their PC upgrade cycle. They will tell you (they think) they need a new PC to run Windows 7, so they plan to upgrade when they get a new PC. They don't want to upgrade the OS while still running 5 year old hardware. It's NOT because they "don't want to learn new stuff."
Let's see. No mid range sans monitor desktop Mac. Not even the choice any longer of a user installed internal optical drive on the Mini and the IMac. No, I see no reason sales are flat.
I'm wondering why the flat profits on increased Gross Revenues. What changed for the quarter that brought the Net Profits to that level?
If they used the same profit margin as they did a year prior with the same SG&A, etc. then they should have seen about $3+ Billion additional in Net Profit.
So what expenses increased $3 Billion?
How much was spent in R&D, Cost of Revenue, SG&A, any non-recurring, Income Tax Expenses, Other Expenses they didn't have last year? Is it because they are paying dividends this year and they didn't last year? I'm sure that's part of it.
I don't get the talk about the end of subsidies in the US affecting only AAPL. On AT&T the Galaxy SIII is $549.00 off contract ($599 on Verizon). The Galaxy Note II is $649.00 ($699 on Verizon). The SII is $399.00 and The Note I is $599. Sure Samsung sells 9 other smartphones on AT&T off contract but those four would give them their biggest margin. Those four would be their best phones and presumably get the most recent Android updates at a faster clip.
Now when we look at the Apple Store website the iPhone 5 unlocked is $649.00. The 4S is $549.00. The 4 (8 GB) is $450.00. You can't get them unlocked from AT&T (though they do show the regular price) but you can from Verizon at the same price points. We see that Samsung's newest phones are priced similarly off-contract to Apple's.
The cheapest off-contract smartphone on AT&T as a whole is the Pantech Burst for $299.99 (LTE-capable). The cheapest Samsung is the Samsung Rugby Smart (real name) for $329.99. The cheapest Samsung LTE-enabled phone is the Samsung Galaxy Exhilarate (real name) for $379.99. On Verizon the cheapest off-contract smartphone is the BlackBerry Curve 9310 Social Messaging Smartphone for $299.99. The cheapest LTE-enabled phone is also the cheapest Samsung and is the Samsung Galaxy Stellar (real name) for $329.99.
So yes the newest iPhone starts at $649 while the newest Samsungs start at $549 and $649. Those are priced much higher than most other smartphones without the subsidy. But if the subsidy model erodes that still affects Samsung's higher margin devices. Sure they would still sell the lower margin loss-leaders but how long would that continue? It would send the the US back to the feature phone era where companies weren't making money. I don't think Samsung or Nokia or RIMM wants that just the same as Apple doesn't.
With the subsidy on AT&T the prices range from $0.01 (various) with 2-year contract to $299.99 (Galaxy Note II) with 2-year contract. The subsidy brings prices together to let phones stand on their own merit. And as we've seen from AT&T's and Verizon's earnings the iPhone wins out.
All that being said yes the subsidy model makes the phone seem cheaper to the customer. But whether you get it on or off contract if it is a smartphone and you're getting a data and voice plan that will cost the same. The difference between on-contract and off-contract purchases is with the off-contract there isn't an early termination clause and fee (because you don't have a contract). The subsidy and 2 year commitment is only an assurance that you will stay two years or pay a fee for AT&T et. al to recoup the profit they wanted to make off you. That monthly bill will not be different if you buy the phone outright.
You can't add a smartphone to a prepaid plan (maybe on smaller carriers you can):
So an individual user's real options are to pay ~$199 up front with a ~$60/month bill and risk paying up to $349 to leave before two-years..
- or -
Pay ~$550 up front with a ~$60/month bill with the ability to switch carriers (if they support your phone).
I think most people expect to remain with one carrier which is why they would want to limit their up-front cost which is why I expect most people are fine with the subsidy.
I think Samsung and Nokia and RIMM want their higher end phones to not be a roadblock on price and stand on their own merit over cheaper "smart" phones (similar thinking to Apple) which is why I expect they are fine with the subsidy model.
I think the telcos are not fine with the subsidy for the initial hit on profits. But it gives people a reason to commit to them long term. They'd rather have long-term commitment and 'stickiness' and long-term profits like Apple does rather than miniscule short-term profits with the chances that people will leave them after only a couple of months. That's why I think they're fine with the subsidy. Sure they maybe can do away with the subsidy, make everybody month-to-month, and say if you sign up for a year or two you'll get $10-$20 off each month of your bill. But nothing talks like that up-front cost when you're actually purchasing a device. Other industries like cable and utilities do that take off from your monthly bill if you *commit* long term but they are only providing a service. If you're knocking ~$400 off an upfront fee for a device most people are taking that deal.
Those prices are discounted. Isn't the unlocked SIII 16G model have a retail list price of $699 before any discounting? I think Samsung is discounting to move product since they're sales are slowly eroding, which is normal when a product becomes over 6 months old. It's reaching it's end of flagship status and will become a cheaper phone when Samsung releases the S4.
You can't treat Apple like a utility because they pay a crappy dividend. Utilities tend to be good income stocks on the other hand. And that cash pile is useless to me as an investor. Look at RIM. No debt. $3 billion in the bank. They're stock still crashed to oblivion when they started failing, and they had somehting like $10 billion in the bank when their troubles started. And like it or not, that's what investors are worried about. One bad iPhone launch and the stock will tank. Not to RIMM levels, mind you. But to under $400.
As for new markets. I have my doubts. Apple doesn't do well when they don't control the whole setup (remember Moto ROKR?). Now look at embedded systems like cars. What incentive does Audi have to give up branding and profits/margins on nav sytsems to Apple? Have you ever seen a car company allow a standard interface on their cars, which includes none of their branding? Heck, auto groups like VAG, don't even maintain the same branding across their brands. And yet people think they'll hand over control of one of their most important customer experiences to Apple? Wishful thinking at best. And Apple just isn't capable of cooperation and integration like this:
It's not in their DNA. The most Apple will get from these companies is an optional Siri button and some Siri compatibility with their in-car systems. So unless Apple is going to start building cars, fridges and washing machines, I wouldn't expect embedded systems to be huge for Apple anytime soon.
Like I've said, TV is their best bet. But TV is just pointless to attempt without content. And, the TV producers are a lot wiser than the music industry execs that Apple strongarmed. So this is going nowhere for a while. They might actually prefer to go their own way on a web service or co-operate with Google or Amazon to combat the rising Netflix threat, than they would to co-operate with Apple. Apple is probably the partner of last resort for them.
Lastly, it's just a myth that people are judging the stock based on the loss of Steve Jobs. If that was the case, the stock never would have climbed after Jobs passed away. No, investors are just being rational and cautious. It's their money on the line. And they aren't fanboys who will only see rainbows and unicorns and ignore negative warnings.
I think Apple stock will definitely rebound when they sign China Mobile and they get more updated products out there. Despite what Cook says about the size, I think they should have a larger screen size iPhone for those that want a larger screen. the 4inch is a keeper, but they should offer a larger screen size.
Also, it will be interesting to someday get Maps fixed, just to shut up the Fandroids out there.
I'm sure we'll see some more cool products to be released later this year. I know it won't add tons, but the new MacPro would be great for the high end Pros.. I think they've been patient enough. It will be interesting to see what they do to the OS and iOS.
Comments
Possibly an expectation of the Next Big Thing has been priced in to Apple's stock for some time now, and as time goes by more investors lose faith. But someone (such as a true Apple fan) who still believes they will come up with it could hang on to their stock and come up roses.
I do believe Apple will make the Next Big Thing and their stock should be higher. And I think I know what it will be. Warning: crazy theory of the week coming up. This is not based on inside info, just their past patterns.
- Steve always liked "democratising" technology: the GUI to let *everyone* use a computer, desktop publishing to let anyone publish, the App store to let anyone publish an app, "The computer for the rest of us." Steve is gone but this is still in Apple's values.
- They like products where they can provide the whole widget/whole ecosystem
- Typically they go after markets where there is already an established market, but the products are still rudimentary/hard to use, and leverage their UX genius to make them easy to use.
- Typically they go after things that attach to a computer in some way.
- The thing they go after has to be something the CEO cares about, or it won't succeed. Tim doesn't care about TV, I bet he never even watches it. He loves operations and manufacture though.
Therefore I think there Next Big Thing they will do is 3d printers/prototypers for the masses:
- Democratize manufacturing itself
- Use brick and mortar Apple Stores to sell ink, use App Store to download blueprints to print. The next big market is not songs or movies or games but blueprints.
- Market exists but is still primitive. Much of the software is clunky Java apps. Use Apple software knowhow to make easier to use.
- The CEO knows all about manufacturing so even though he's not a product guy he should be able to get enthusiastic about this.
Quote:
Originally Posted by rcfa
Look at it from a different point of view: the pile of cash Apple is sitting on is more than $100/stock. So the valuation of the company (minus cash), is only $350 (given the after hours trading range). Apple also pays more dividend than a government bond pays in interest.
So consider Apple for a moment like a utlity stock: people will keep buying smart phones, computers, tablets, etc. People are lazy switching platforms once they are in a particular eco system. If Apple just is good enough at keeping up with everyone else, without being the leaps and bounds leader, then they can make enough revenue and profits to justify the stock price with ZERO GROWTH.
But even that would be hard to do, because there are significant markets Apple has barely started to tap into, so even without groundbreaking new products, Apple has years of growth ahead.
Apple is certainly not asleep at the wheel; they innovate on many levels, down to things like alternative energy sources, so they have IP they can license for revenue streams investors don't even think about. And that's without going into potential future markets such as embedded systems (home/car), TV, photo/video, etc.
Plus they still have a huge pile of cash with which to buy into growth opportunities in case they totally forgot how to innovate.
And investors forget, that while Jobs was involved with a lot of things and had his names on a few patents in the sense that he was involved in details of design and such, it's not Jobs' engineering skills, etc. that produced these products. The innovation at Apple comes from the many smart people who work for the company, Jobs was mainly a great figurehead, leader, marketing guy; a person around which the media could focus the cult of Apple; but nowhere near as important as people make him out to be, aside from breaking out from certain common "wisdoms" such as e.g. false cost cutting, etc.
But these important deviations have long become part of the Apple corporate fabric, they don't rely on Jobs being there to remain there for a long time to come.
You can't treat Apple like a utility because they pay a crappy dividend. Utilities tend to be good income stocks on the other hand. And that cash pile is useless to me as an investor. Look at RIM. No debt. $3 billion in the bank. They're stock still crashed to oblivion when they started failing, and they had somehting like $10 billion in the bank when their troubles started. And like it or not, that's what investors are worried about. One bad iPhone launch and the stock will tank. Not to RIMM levels, mind you. But to under $400.
As for new markets. I have my doubts. Apple doesn't do well when they don't control the whole setup (remember Moto ROKR?). Now look at embedded systems like cars. What incentive does Audi have to give up branding and profits/margins on nav sytsems to Apple? Have you ever seen a car company allow a standard interface on their cars, which includes none of their branding? Heck, auto groups like VAG, don't even maintain the same branding across their brands. And yet people think they'll hand over control of one of their most important customer experiences to Apple? Wishful thinking at best. And Apple just isn't capable of cooperation and integration like this:
http://www.audiusa.com/us/brand/en/owners/audi_connect/navigation.html
It's not in their DNA. The most Apple will get from these companies is an optional Siri button and some Siri compatibility with their in-car systems. So unless Apple is going to start building cars, fridges and washing machines, I wouldn't expect embedded systems to be huge for Apple anytime soon.
Like I've said, TV is their best bet. But TV is just pointless to attempt without content. And, the TV producers are a lot wiser than the music industry execs that Apple strongarmed. So this is going nowhere for a while. They might actually prefer to go their own way on a web service or co-operate with Google or Amazon to combat the rising Netflix threat, than they would to co-operate with Apple. Apple is probably the partner of last resort for them.
Lastly, it's just a myth that people are judging the stock based on the loss of Steve Jobs. If that was the case, the stock never would have climbed after Jobs passed away. No, investors are just being rational and cautious. It's their money on the line. And they aren't fanboys who will only see rainbows and unicorns and ignore negative warnings.
You can be an analyst then
You can be an analyst then
Quote:
Originally Posted by jragosta
The more important statistic is that China's middle class is larger than the entire US population. China is already Apple's second largest market and on its way to becoming the largest.
There's no denying that you don't know what you're talking about.
The Chinese definition of middle class is nowhere near the American definition of middle class.
There's a reason Apple has to offer payment plans to make iPhones affordable in China. And it probably has to eat the interest too.
China, will, of course, be huge. Lots of latent demand, and when Apple finally addresses it, they'll have to invent a new class of ships to carry money. But, I do worry about margins when it comes to China.
Quote:
Originally Posted by pedromartins
the "mac" is bigger than google.
the "iPad" is bigger than microsoft.
the "iPod" is bigger than Dell.
What are you afraid of?
Mac bigger than Google? By what measure. I wasn't aware that the Mac unit has a market cap of $240 billion dollars. Nor was I aware that the iPad had become a business unit with a $234 billion dollar valuation. And the iPod division has a $23 billion dollar valuation? Since when?
Part of the reasons fanboys can't take the stock fluctuations is becuase of ridiculous myth building like this. Some actually believe crap like the Mac is bigger than Google.
Take out the iPhone, and the rest of Apple combined would probably be the same size as Google....or smaller. So in reality, Apple (as a stock) is as dependant on the iPhone as Google is on search. And Google's got less competition on its key market than Apple does.
As for me, I'm afraid about about a bad iPhone launch (a la "You're holding it wrong") and devastating impact that could have on the stock price. Of course, I also balance that risk with the likelihood that Apple will keep growing steadily for the forseeable future. That's why I maintain my holdings.
But if you think Apple is a safe bet, why do you go all in with your entire portfolio on AAPL? If you think your inner fanboy is a terrific investment advisor, put your money where your mouth is. Dump all your lifesavings on AAPL. It's a sure bet right?
I'm hoping AAPL will close the year at about $600 and maybe hit $700 by end of 2014. I still think analysts are being a bit optimistic, predicting $700 by the summer.
Quote:
Originally Posted by NelsonX
If you buy a cheap $100 Android phone because you don't have the money for an expensive one, you will get used to Android OS and ecosystem and next time, when you will have the money for an expensive phone you will not switch to Apple, you will buy an expensive Android phone. Market share DOES MATTER! People don't like to learn new stuff. See how many people still hang on Windows XP because they don't like or don't want to learn Windows 7 or 8.
I don't think that is necessarily true. If you buy a cheap $100 Android phone, it is going to run like crap and not be able to run most of the newer apps available. Your user experience will be horrible and you might want to try something new when you can afford it. Alos I find it ridiculously ironic that the same morons that gripe about margins seem to think it would be good for Apple to sell a sub $200 phone. What do they think would happen to margins then????
I've been an apple user and customer since 1995. I've grown up with the company - their products have enriched my life. I've followed the rumors, the speculation, and the stock price from the $30's to the $700 high. Finally went long somewhere around $500. I'll hold my pittance of stock because I've seen Apple fight back too many times before to believe it's best days are behind it. The problem is Apple is shitting gold in a world where investors expect platinum diarrhea. No company's stock can withstand those expectations.
Originally Posted by AgNuke1707
The problem is Apple is shitting gold in a world where investors expect platinum diarrhea.
Easy: less fiber.
You hear that, Apple? Don't make anything that has a carbon fiber case! Let the stock price flow through you!
Quote:
Originally Posted by quinney
Refresh my memory. How many products does Tesla sell?
One. And the price of the stock reflects those risks.
And tell me why the number of products they sell should matter to me as an investor?
They have one car, with an average selling price above $80 000. They've pre-sold all of 2013's production. Buy now and you'll be lucky to get the car this year. And their average daily order rate is rising and has already outpaced their production rate. They have a gigantic technological lead, and they are building an entire ecosystem around electric cars. They are also exceptional at marketing. Not a single ad on TV, but 20 000 cars sold. How? Through strategic location of Tesla stores (heck, they're VP on this front is ex-Apple). Heck, they don't even let you test drive the car. They've won several Car of the Year awards including Motor Trend. And their manufacturing costs (for electric vehicles) are exceptionally low and of very high quality, with much of it done in house. Does all that sound familiar?
The only reason the stock isn't higher is because they aren't profitable yet. Lots of investors seem to be analyzing them like a traditional car company as opposed to a tech company. So the risks of failure are priced in. But I'm grateful for all the shorts. They keep the price down. I predict a bloodbath when their earnings report comes up. A sweet Valentine's day present for me. Will be lovely if I can catch a short squeeze.
As for comparing between TSLA and AAPL. All I can say is that TSLA has returned to me far higher paper gains in the last year than AAPL.
I don't get the talk about the end of subsidies in the US affecting only AAPL. On AT&T the Galaxy SIII is $549.00 off contract ($599 on Verizon). The Galaxy Note II is $649.00 ($699 on Verizon). The SII is $399.00 and The Note I is $599. Sure Samsung sells 9 other smartphones on AT&T off contract but those four would give them their biggest margin. Those four would be their best phones and presumably get the most recent Android updates at a faster clip.
Now when we look at the Apple Store website the iPhone 5 unlocked is $649.00. The 4S is $549.00. The 4 (8 GB) is $450.00. You can't get them unlocked from AT&T (though they do show the regular price) but you can from Verizon at the same price points. We see that Samsung's newest phones are priced similarly off-contract to Apple's.
The cheapest off-contract smartphone on AT&T as a whole is the Pantech Burst for $299.99 (LTE-capable). The cheapest Samsung is the Samsung Rugby Smart (real name) for $329.99. The cheapest Samsung LTE-enabled phone is the Samsung Galaxy Exhilarate (real name) for $379.99. On Verizon the cheapest off-contract smartphone is the BlackBerry Curve 9310 Social Messaging Smartphone for $299.99. The cheapest LTE-enabled phone is also the cheapest Samsung and is the Samsung Galaxy Stellar (real name) for $329.99.
So yes the newest iPhone starts at $649 while the newest Samsungs start at $549 and $649. Those are priced much higher than most other smartphones without the subsidy. But if the subsidy model erodes that still affects Samsung's higher margin devices. Sure they would still sell the lower margin loss-leaders but how long would that continue? It would send the the US back to the feature phone era where companies weren't making money. I don't think Samsung or Nokia or RIMM wants that just the same as Apple doesn't.
With the subsidy on AT&T the prices range from $0.01 (various) with 2-year contract to $299.99 (Galaxy Note II) with 2-year contract. The subsidy brings prices together to let phones stand on their own merit. And as we've seen from AT&T's and Verizon's earnings the iPhone wins out.
All that being said yes the subsidy model makes the phone seem cheaper to the customer. But whether you get it on or off contract if it is a smartphone and you're getting a data and voice plan that will cost the same. The difference between on-contract and off-contract purchases is with the off-contract there isn't an early termination clause and fee (because you don't have a contract). The subsidy and 2 year commitment is only an assurance that you will stay two years or pay a fee for AT&T et. al to recoup the profit they wanted to make off you. That monthly bill will not be different if you buy the phone outright.
You can't add a smartphone to a prepaid plan (maybe on smaller carriers you can):
So an individual user's real options are to pay ~$199 up front with a ~$60/month bill and risk paying up to $349 to leave before two-years..
- or -
Pay ~$550 up front with a ~$60/month bill with the ability to switch carriers (if they support your phone).
I think most people expect to remain with one carrier which is why they would want to limit their up-front cost which is why I expect most people are fine with the subsidy.
I think Samsung and Nokia and RIMM want their higher end phones to not be a roadblock on price and stand on their own merit over cheaper "smart" phones (similar thinking to Apple) which is why I expect they are fine with the subsidy model.
I think the telcos are not fine with the subsidy for the initial hit on profits. But it gives people a reason to commit to them long term. They'd rather have long-term commitment and 'stickiness' and long-term profits like Apple does rather than miniscule short-term profits with the chances that people will leave them after only a couple of months. That's why I think they're fine with the subsidy. Sure they maybe can do away with the subsidy, make everybody month-to-month, and say if you sign up for a year or two you'll get $10-$20 off each month of your bill. But nothing talks like that up-front cost when you're actually purchasing a device. Other industries like cable and utilities do that take off from your monthly bill if you *commit* long term but they are only providing a service. If you're knocking ~$400 off an upfront fee for a device most people are taking that deal.
Originally Posted by alcstarheel
I don't get the talk about the end of subsidies in the US affecting only AAPL. On AT&T the Galaxy SIII is $549.00 off contract ($599 on Verizon). The Galaxy Note II is $649.00 ($699 on Verizon). The SII is $399.00 and The Note I is $599.
They don't care about that. Those other companies offer cheaper (read: crap) phones additionally. The minimum cost of entry for Apple smartphones is $450*, which is "too much" for "people" to "pay". And indeed, the phone price is higher than the price of the low-end (read: old or crap) phones from others.
*It's way, way, way, way more, but they all pretend that you then don't have to pay monthly for the phone.
Actually, my experience tells me the opposite: the people who got a subsidized free or cheap Android phone 2-3 years ago were so disappointed, they switched to iPhones when their contracts were up for renewal. The learning curve wasn't an issue. One person I know even switched to the new Nokia Lumina 920 from Android. When I asked them about their upgrade, I found that low price was still a deciding factor for them, so they didn't jump from $100 to more expensive Android device. That they could get a Lumia 920 or iPhone 4S at the $99 level (with contract) appealed to them. They didn't jump to a more expensive "elite geek-spec'd" Android phone.
The Windows XP example is an invalid analogy, because most users (not the tech savvy ones) just use whatever OS came with their computer for as long as they own that computer. Their decision to upgrade to say, Windows 7 is then tied to their PC upgrade cycle. They will tell you (they think) they need a new PC to run Windows 7, so they plan to upgrade when they get a new PC. They don't want to upgrade the OS while still running 5 year old hardware. It's NOT because they "don't want to learn new stuff."
Let's see. No mid range sans monitor desktop Mac. Not even the choice any longer of a user installed internal optical drive on the Mini and the IMac. No, I see no reason sales are flat.
Originally Posted by MacTac
No mid range sans monitor desktop Mac. No, I see no reason sales are flat.
You act as though this has ever been a concern at any time in Apple's history.
That's funny, but it's also sad.
Why don't you get back to me when you are finished arguing with yourself.
I'm wondering why the flat profits on increased Gross Revenues. What changed for the quarter that brought the Net Profits to that level?
If they used the same profit margin as they did a year prior with the same SG&A, etc. then they should have seen about $3+ Billion additional in Net Profit.
So what expenses increased $3 Billion?
How much was spent in R&D, Cost of Revenue, SG&A, any non-recurring, Income Tax Expenses, Other Expenses they didn't have last year? Is it because they are paying dividends this year and they didn't last year? I'm sure that's part of it.
Quote:
Originally Posted by alcstarheel
I don't get the talk about the end of subsidies in the US affecting only AAPL. On AT&T the Galaxy SIII is $549.00 off contract ($599 on Verizon). The Galaxy Note II is $649.00 ($699 on Verizon). The SII is $399.00 and The Note I is $599. Sure Samsung sells 9 other smartphones on AT&T off contract but those four would give them their biggest margin. Those four would be their best phones and presumably get the most recent Android updates at a faster clip.
Now when we look at the Apple Store website the iPhone 5 unlocked is $649.00. The 4S is $549.00. The 4 (8 GB) is $450.00. You can't get them unlocked from AT&T (though they do show the regular price) but you can from Verizon at the same price points. We see that Samsung's newest phones are priced similarly off-contract to Apple's.
The cheapest off-contract smartphone on AT&T as a whole is the Pantech Burst for $299.99 (LTE-capable). The cheapest Samsung is the Samsung Rugby Smart (real name) for $329.99. The cheapest Samsung LTE-enabled phone is the Samsung Galaxy Exhilarate (real name) for $379.99. On Verizon the cheapest off-contract smartphone is the BlackBerry Curve 9310 Social Messaging Smartphone for $299.99. The cheapest LTE-enabled phone is also the cheapest Samsung and is the Samsung Galaxy Stellar (real name) for $329.99.
So yes the newest iPhone starts at $649 while the newest Samsungs start at $549 and $649. Those are priced much higher than most other smartphones without the subsidy. But if the subsidy model erodes that still affects Samsung's higher margin devices. Sure they would still sell the lower margin loss-leaders but how long would that continue? It would send the the US back to the feature phone era where companies weren't making money. I don't think Samsung or Nokia or RIMM wants that just the same as Apple doesn't.
With the subsidy on AT&T the prices range from $0.01 (various) with 2-year contract to $299.99 (Galaxy Note II) with 2-year contract. The subsidy brings prices together to let phones stand on their own merit. And as we've seen from AT&T's and Verizon's earnings the iPhone wins out.
All that being said yes the subsidy model makes the phone seem cheaper to the customer. But whether you get it on or off contract if it is a smartphone and you're getting a data and voice plan that will cost the same. The difference between on-contract and off-contract purchases is with the off-contract there isn't an early termination clause and fee (because you don't have a contract). The subsidy and 2 year commitment is only an assurance that you will stay two years or pay a fee for AT&T et. al to recoup the profit they wanted to make off you. That monthly bill will not be different if you buy the phone outright.
You can't add a smartphone to a prepaid plan (maybe on smaller carriers you can):
So an individual user's real options are to pay ~$199 up front with a ~$60/month bill and risk paying up to $349 to leave before two-years..
- or -
Pay ~$550 up front with a ~$60/month bill with the ability to switch carriers (if they support your phone).
I think most people expect to remain with one carrier which is why they would want to limit their up-front cost which is why I expect most people are fine with the subsidy.
I think Samsung and Nokia and RIMM want their higher end phones to not be a roadblock on price and stand on their own merit over cheaper "smart" phones (similar thinking to Apple) which is why I expect they are fine with the subsidy model.
I think the telcos are not fine with the subsidy for the initial hit on profits. But it gives people a reason to commit to them long term. They'd rather have long-term commitment and 'stickiness' and long-term profits like Apple does rather than miniscule short-term profits with the chances that people will leave them after only a couple of months. That's why I think they're fine with the subsidy. Sure they maybe can do away with the subsidy, make everybody month-to-month, and say if you sign up for a year or two you'll get $10-$20 off each month of your bill. But nothing talks like that up-front cost when you're actually purchasing a device. Other industries like cable and utilities do that take off from your monthly bill if you *commit* long term but they are only providing a service. If you're knocking ~$400 off an upfront fee for a device most people are taking that deal.
Those prices are discounted. Isn't the unlocked SIII 16G model have a retail list price of $699 before any discounting? I think Samsung is discounting to move product since they're sales are slowly eroding, which is normal when a product becomes over 6 months old. It's reaching it's end of flagship status and will become a cheaper phone when Samsung releases the S4.
Quote:
Originally Posted by Jetz
You can't treat Apple like a utility because they pay a crappy dividend. Utilities tend to be good income stocks on the other hand. And that cash pile is useless to me as an investor. Look at RIM. No debt. $3 billion in the bank. They're stock still crashed to oblivion when they started failing, and they had somehting like $10 billion in the bank when their troubles started. And like it or not, that's what investors are worried about. One bad iPhone launch and the stock will tank. Not to RIMM levels, mind you. But to under $400.
As for new markets. I have my doubts. Apple doesn't do well when they don't control the whole setup (remember Moto ROKR?). Now look at embedded systems like cars. What incentive does Audi have to give up branding and profits/margins on nav sytsems to Apple? Have you ever seen a car company allow a standard interface on their cars, which includes none of their branding? Heck, auto groups like VAG, don't even maintain the same branding across their brands. And yet people think they'll hand over control of one of their most important customer experiences to Apple? Wishful thinking at best. And Apple just isn't capable of cooperation and integration like this:
http://www.audiusa.com/us/brand/en/owners/audi_connect/navigation.html
It's not in their DNA. The most Apple will get from these companies is an optional Siri button and some Siri compatibility with their in-car systems. So unless Apple is going to start building cars, fridges and washing machines, I wouldn't expect embedded systems to be huge for Apple anytime soon.
Like I've said, TV is their best bet. But TV is just pointless to attempt without content. And, the TV producers are a lot wiser than the music industry execs that Apple strongarmed. So this is going nowhere for a while. They might actually prefer to go their own way on a web service or co-operate with Google or Amazon to combat the rising Netflix threat, than they would to co-operate with Apple. Apple is probably the partner of last resort for them.
Lastly, it's just a myth that people are judging the stock based on the loss of Steve Jobs. If that was the case, the stock never would have climbed after Jobs passed away. No, investors are just being rational and cautious. It's their money on the line. And they aren't fanboys who will only see rainbows and unicorns and ignore negative warnings.
I think Apple stock will definitely rebound when they sign China Mobile and they get more updated products out there. Despite what Cook says about the size, I think they should have a larger screen size iPhone for those that want a larger screen. the 4inch is a keeper, but they should offer a larger screen size.
Also, it will be interesting to someday get Maps fixed, just to shut up the Fandroids out there.
I'm sure we'll see some more cool products to be released later this year. I know it won't add tons, but the new MacPro would be great for the high end Pros.. I think they've been patient enough. It will be interesting to see what they do to the OS and iOS.