Still waiting for names. Last time I checked HTC and Nokia are struggling to make profits and Motorola is a money pit for Google (though Wall Street doesn't seem to care). And LG just reported a not so great quarter in part to lackluster smartphone business. Perhaps Samsung has high margins on cheaper phones but I'm not aware of anyone else who does.
You keep saying "cheap", when in actual fact the other person said "cheaper".
Large investors and the trading firms don't care whether or not a company is profitable, they care if THEY can make a profit. A brokerage makes money both selling and buying! I wouldn't be concerned about short-term stock gyrations if you intend on holding AAPL for the long run.
Bingo!
Anyone using maths to justify this share price drop is naive or stupid.
You can focus on the "beats" all you want, but the bottom line is revenue is increasing at a very slow pace while earnings are down year over year. Slow revenue growth, earnings falling or stagnant = a range bound stock price. Typically the market does well from Nov through January so I would expect the share price to rise with the market, but I also expect it to fall more when the market corrects and continue that trend until a new product line is released or revenue finally starts to drop.
Covered calls from here to January should expire worthless or bought back at a profit.
You can focus on the "beats" all you want, but the bottom line is revenue is increasing at a very slow pace while earnings are down year over year. Slow revenue growth, earnings falling or stagnant = a range bound stock price. Typically the market does well from Nov through January so I would expect the share price to rise with the market, but I also expect it to fall more when the market corrects and continue that trend until a new product line is released or revenue finally starts to drop.
Covered calls from here to January should expire worthless or bought back at a profit.
Last year's holiday quarter was great... but basically flat yoy... and the stock continued to tank throughout the year.
Until Apple shows some continued earnings growth I think we can expect AAPL to stay range bound.
Yes because AAPL is a mature company and revs don't mean as much anymore and important is on margin and how much profit they can generate. AMZN on the other hand, is all about increasing revs right now. Over the next few years, AMZN is the much better investment stock market wise.
Okay, I'll play your ridiculous game...AAPL is a mature company? Hmmmm, let me ask you: where has aapl's revenue come from over the last few years? which product lines? Are you sure it's a mature company?
Regardless, even if it were a "mature" company, where do you get the idea that it's more important to have margins? You have it backward. Mature companies have dominant market share (in a specific segment) resulting in steady (and usually slow) increasing revenue....has nothing to do with high margins. You need to redefine what you mean by mature.
Listen, I get it...I get why the market is concerned with 1Q margins. But it's just a fantasmic game the market loves to play to get price swings so they can make money in buying AND selling.
Ahhh, who am I tried to kid. Just go on thinking it's because aapl is a mature company and amzn is a better investment.
That was a strong quarter. The margin concerns were explained on the call. China Mobile is getting the iPhone in just a few days when it launches its 4g network.
You can focus on the "beats" all you want, but the bottom line is revenue is increasing at a very slow pace while earnings are down year over year. Slow revenue growth, earnings falling or stagnant = a range bound stock price. Typically the market does well from Nov through January so I would expect the share price to rise with the market, but I also expect it to fall more when the market corrects and continue that trend until a new product line is released or revenue finally starts to drop.
Covered calls from here to January should expire worthless or bought back at a profit.
That was the last quarter with YoY margins over 40%. Starting in jan 2014, Apple will compare its YoY quarters with much lower margin quarters. The units sales increase and revenue will be significantly higher on a YoY basis with similar margins or even better margins.
EPS is going up on a YoY basis in Jan 2014 and beyond because in 2013 Apple margins were in the 36% to 37.5% range. From what was explained on the call, I think Apple margins in 2014 will be in the 37% to 39% range.
With 10% more revenue and 1% to 2% better margins, lower stock float on buybacks, I expect Apple to growth is EPS by 15% to 20% by the end of 2014.
imo we will have a bigger iPhone in 2014. By the end of 2014, the 5C will become the low cost phone. They explained on the call that the current entry level phone was the 4s and the 5c is mid-range. Well the Analysts will have there low cost 5c, but in a year, not now. I suspect the margins on the 5c will be better than the current 4s, so Apple could price it at $400 instead of $450.
and, imo, 2014 will be year Apple gets into a new product category. Apple TV or iwatch or ...
other than that I expect an iPad Pro at some point and a bigger phone.
So Apple beats estimates and yet they're down over 2% after hours supposedly because of lower margins. Yet I keep reading articles about how Apple needs cheaper iPhones and iPads. How exactly would that increase margins?
Apple beat their current targets. While margins were down, they were expected to be down *even more*-so even the margins were a 'plus' for the Apple column as valuation goes.
Profits were down, but that also was expected and also built into the current stock valuation.
Apple also released their forecast for the holiday season. While it is a solid forecast, the current stock price was based on expectations that were higher than Apple forecast. Since Apple's guidance is saying they are going to sell less over the holidays than Wall Street had valued into the share price, that is the driver for the (relatively small) correction to Apple's share price.
So it really isn't a case of Wall Street 'punishing' Apple, its a little bit the opposite. Wall Street drove the shares higher than they should have been based on their best guess of what Apple sales might be. Apple corrected them by stating the sales outlook looks good- just not as good as the stock price was on.
It is Apple's expected holiday sales forecast that drove the price down- not the reduced profits or lower margins.
That was the last quarter with YoY margins over 40%. Starting in jan 2014, Apple will compare its YoY quarters with much lower margin quarters. The units sales increase and revenue will be significantly higher on a YoY basis with similar margins or even better margins.
EPS is going up on a YoY basis in Jan 2014 and beyond because in 2013 Apple margins were in the 36% to 37.5% range. From what was explained on the call, I think Apple margins in 2014 will be in the 37% to 39% range.
With 20% more revenue and 1% to 2% better margins, lower stock float on buybacks, I expect Apple to growth is EPS by 20% to 30% by the end of 2014.
Hard to debate with wishful thinking. I mean how can I reason with someone who thinks EPS could be $52 by this time next year and cites 20% revenue increases that the company hasn't seen in a year? According to Cook they already retired 47 million shares which means they spent over 33% of the total allotment for buybacks already and EPS still dropped yoy. Unless there is a new product line it's hard to see EPS doing better than a 10% increase (i.e. getting back to where it was a year ago). That is a lot for a company this size, just not that exciting when it comes to the stock. Great products, nice dividend, I just don't expect the stock price to go anywhere significant.
Hard to debate with wishful thinking. I mean how can I reason with someone who thinks EPS could be $52 by this time next year and cites 20% revenue increases that the company hasn't seen in a year? According to Cook they already retired 47 million shares which means they spent over 33% of the total allotment for buybacks already and EPS still dropped yoy. Unless there is a new product line it's hard to see EPS doing better than a 10% increase (i.e. getting back to where it was a year ago). That is a lot for a company this size, just not that exciting when it comes to the stock. Great products, nice dividend, I just don't expect the stock price to go anywhere significant.
You are right on one thing, I misread 2013 Q1 revenue and got the 2012 Q1 instead. Still, in Q1 2014 we will have 10% on revenue with lets say the same YoY margins but a much lower stock float compare to Q1 2013. So that give us around 12-13% EPS in Q1 but I think it will get much better on a YoY basis toward the year because starting in Q2 2014 we should start to beat YoY margins. So we may close 2014 with 15% to 20% EPS increase.
You are right on one thing, I misread 2013 Q1 revenue and got the 2012 Q1 instead. Still, in Q1 2014 we will have 10% on revenue with lets say the same YoY margins but a much lower stock float compare to Q1 2013. So that give us around 12-13% EPS in Q1 but I think it will get much better on a YoY basis toward the year because starting in Q2 2014 we should start to beat YoY margins. So we may close 2014 with 15% to 20% EPS increase.
ok I will now go edit my previous post
Well, lets see what happens. I don't think Apple is a bad investment at this point just not one to beat a market perform. Certainly don't mind collecting the dividend every quarter.
They may have beat the estimates but the fact is that **profit** is down. Again. A year-over-year quarter decrease of $700 million is no joke. They need to do something to stop that decreasing **profit**. I'm surprised AAPL is only down 2%.
Edit: Fixed revenue to be profit. My apologies.
Here's a way to look at this from a different perspective and comparing to others. I don't know why these guys are even looking at Gross margin more than Net Profit in terms of margins. That's what the bottom line is. Apple's margins on a Net Profit perspective is FAR better than ANY computer company out there, HP, Dell, ASUS, ACER, Samsung, etc. etc. etc. That's what Apple is, a personal computing hardware company and that's how they are listed. Actually, Samsung isn't technically listed as a personal computing company, but more of a technology company that branches out into other things like a component mfg, appliances, telecom, and other things COMPLETELY unrelated to computing.
Apple shouldn't be compared to Google, Microsoft, Oracle, IBM either from a perspective of the TYPE of business that they are.
In every line of business, there is how the company is doing as compared to other companies in the same sector and then compared to the sector as a whole. I think people miss looking at companies from that perspective. These analysts and media people keep comparing Apple's numbers to Google, Samsung, Micrsoft when they are actually completely different types of companies with traditionally different business models, cost structure, etc.
I would be looking and comparing Apple to the same sector as a whole and the to each "competitor" in the same sector to gauge how good or bad they are doing FIRST. If you do that, they look like they are sitting on the top of the world in terms of profits and profit margins compared to everyone else combined or individually.
$7.9 Billion might be down a little, but that's not that far off from how much Google makes in Net Profits over the course of a year and this is done during the slow summer period right before some MASSIVE MAJOR announcements. Yeah, the iPhone 5S and 5C helped, but they aren't shipping as many iPhone 5S's last quarter as they will in this quarter due to production issues that are just starting to get dealt with.
IPad sales were down because the new models didn't get announced and shipped. The new MBPRetinas didn't get announced and shipped last month, same with MacPro and even iMacs barely got into last quarter's numbers.
Yeah, they are giving away OS X, iWork, etc. for free moving forward, but I think they'll make up for that with MacPro (new model) and new iPads and iPhones for this quarter.
And we're still waiting for you (or others) to supply the name of a manufacturer that is making large margins on a cheaper phone than the iPhone.
... and I'm still waiting for you to comprehend what the original poster said.
[... even though razor blades is not a good example]
[... actually, upon rereading the original post I see that I must have combined it with another post concerning margins and volume. So... as "I" see it, Cook has chosen the devil he knows, higher margins. This is not to say that lowering margins wouldn't produce more eps, but it also does not guarantee it.)
Unless Apple makes the iMac a POS like the pc people will hold on to it for dear life. Hell I had my flower power iMac from mid 2001 to 2008. Never a problem. Never a goddamn virus.
Sorry. I meant net profit. Should have been pretty easy to figure out what I meant considering it was in the title and first line of the article. And you've proven my point even more. Their revenue is up and net profit has decreased. Raise the red flags internally Apple.
All consumer companies have decreasing margins as they get bigger. B-to-B companies have much larger margins, but much smaller revenues. Distributors, like Amazon to consumers or Ingram to the trade, operate on tiny margins. Supermarkets are a 3% business, but they have huge cash flow.
Wall Street wants it all ways: They don't want Apple to retain so much cash, they want them to have less expensive products to gain (or stop losing) market share AND they want them to increase margins. You can't have it all. But I don't care...if the stock drops, I'll buy some more.
As I've posted many times before, it used to take a year for a consumer electronics company to sell a million units of anything. Now it takes Apple a few hours. And still Wall Street isn't satisfied. Even Macs sold well and no one expected that. With all the new products, even though only evolutionary, 4 th Q should be great.
All consumer companies have decreasing margins as they get bigger. B-to-B companies have much larger margins, but much smaller revenues. Distributors, like Amazon to consumers or Ingram to the trade, operate on tiny margins. Supermarkets are a 3% business, but they have huge cash flow.
Wall Street wants it all ways: They don't want Apple to retain so much cash, they want them to have less expensive products to gain (or stop losing) market share AND they want them to increase margins. You can't have it all. But I don't care...if the stock drops, I'll buy some more.
As I've posted many times before, it used to take a year for a consumer electronics company to sell a million units of anything. Now it takes Apple a few hours. And still Wall Street isn't satisfied. Even Macs sold well and no one expected that. With all the new products, even though only evolutionary, 4 th Q should be great.
I don't think Wall Street wants Apple to have them all.
I think Wall Street wants to see a gain for the plan Apple chooses before the share price will increase.
If Apple lowers margins then Wall Street wants to see increased market share to the point that eps increases.
If Apple increases margins then Wall Street wants to see revenue and earnings increase to the point that eps increases.
Comments
Still waiting for names. Last time I checked HTC and Nokia are struggling to make profits and Motorola is a money pit for Google (though Wall Street doesn't seem to care). And LG just reported a not so great quarter in part to lackluster smartphone business. Perhaps Samsung has high margins on cheaper phones but I'm not aware of anyone else who does.
You keep saying "cheap", when in actual fact the other person said "cheaper".
There is a big difference.
Large investors and the trading firms don't care whether or not a company is profitable, they care if THEY can make a profit. A brokerage makes money both selling and buying! I wouldn't be concerned about short-term stock gyrations if you intend on holding AAPL for the long run.
Bingo!
Anyone using maths to justify this share price drop is naive or stupid.
You can focus on the "beats" all you want, but the bottom line is revenue is increasing at a very slow pace while earnings are down year over year. Slow revenue growth, earnings falling or stagnant = a range bound stock price. Typically the market does well from Nov through January so I would expect the share price to rise with the market, but I also expect it to fall more when the market corrects and continue that trend until a new product line is released or revenue finally starts to drop.
Covered calls from here to January should expire worthless or bought back at a profit.
You can focus on the "beats" all you want, but the bottom line is revenue is increasing at a very slow pace while earnings are down year over year. Slow revenue growth, earnings falling or stagnant = a range bound stock price. Typically the market does well from Nov through January so I would expect the share price to rise with the market, but I also expect it to fall more when the market corrects and continue that trend until a new product line is released or revenue finally starts to drop.
Covered calls from here to January should expire worthless or bought back at a profit.
Last year's holiday quarter was great... but basically flat yoy... and the stock continued to tank throughout the year.
Until Apple shows some continued earnings growth I think we can expect AAPL to stay range bound.
Yes because AAPL is a mature company and revs don't mean as much anymore and important is on margin and how much profit they can generate. AMZN on the other hand, is all about increasing revs right now. Over the next few years, AMZN is the much better investment stock market wise.
Okay, I'll play your ridiculous game...AAPL is a mature company? Hmmmm, let me ask you: where has aapl's revenue come from over the last few years? which product lines? Are you sure it's a mature company?
Regardless, even if it were a "mature" company, where do you get the idea that it's more important to have margins? You have it backward. Mature companies have dominant market share (in a specific segment) resulting in steady (and usually slow) increasing revenue....has nothing to do with high margins. You need to redefine what you mean by mature.
Listen, I get it...I get why the market is concerned with 1Q margins. But it's just a fantasmic game the market loves to play to get price swings so they can make money in buying AND selling.
Ahhh, who am I tried to kid. Just go on thinking it's because aapl is a mature company and amzn is a better investment.
That was a strong quarter. The margin concerns were explained on the call. China Mobile is getting the iPhone in just a few days when it launches its 4g network.
imo Apple will finish the year around $600.
You can focus on the "beats" all you want, but the bottom line is revenue is increasing at a very slow pace while earnings are down year over year. Slow revenue growth, earnings falling or stagnant = a range bound stock price. Typically the market does well from Nov through January so I would expect the share price to rise with the market, but I also expect it to fall more when the market corrects and continue that trend until a new product line is released or revenue finally starts to drop.
Covered calls from here to January should expire worthless or bought back at a profit.
That was the last quarter with YoY margins over 40%. Starting in jan 2014, Apple will compare its YoY quarters with much lower margin quarters. The units sales increase and revenue will be significantly higher on a YoY basis with similar margins or even better margins.
EPS is going up on a YoY basis in Jan 2014 and beyond because in 2013 Apple margins were in the 36% to 37.5% range. From what was explained on the call, I think Apple margins in 2014 will be in the 37% to 39% range.
With 10% more revenue and 1% to 2% better margins, lower stock float on buybacks, I expect Apple to growth is EPS by 15% to 20% by the end of 2014.
Or a larger one.
Or a larger one.
imo we will have a bigger iPhone in 2014. By the end of 2014, the 5C will become the low cost phone. They explained on the call that the current entry level phone was the 4s and the 5c is mid-range. Well the Analysts will have there low cost 5c, but in a year, not now. I suspect the margins on the 5c will be better than the current 4s, so Apple could price it at $400 instead of $450.
and, imo, 2014 will be year Apple gets into a new product category. Apple TV or iwatch or ...
other than that I expect an iPad Pro at some point and a bigger phone.
So Apple beats estimates and yet they're down over 2% after hours supposedly because of lower margins. Yet I keep reading articles about how Apple needs cheaper iPhones and iPads. How exactly would that increase margins?
Apple beat their current targets. While margins were down, they were expected to be down *even more*-so even the margins were a 'plus' for the Apple column as valuation goes.
Profits were down, but that also was expected and also built into the current stock valuation.
Apple also released their forecast for the holiday season. While it is a solid forecast, the current stock price was based on expectations that were higher than Apple forecast. Since Apple's guidance is saying they are going to sell less over the holidays than Wall Street had valued into the share price, that is the driver for the (relatively small) correction to Apple's share price.
So it really isn't a case of Wall Street 'punishing' Apple, its a little bit the opposite. Wall Street drove the shares higher than they should have been based on their best guess of what Apple sales might be. Apple corrected them by stating the sales outlook looks good- just not as good as the stock price was on.
It is Apple's expected holiday sales forecast that drove the price down- not the reduced profits or lower margins.
That was the last quarter with YoY margins over 40%. Starting in jan 2014, Apple will compare its YoY quarters with much lower margin quarters. The units sales increase and revenue will be significantly higher on a YoY basis with similar margins or even better margins.
EPS is going up on a YoY basis in Jan 2014 and beyond because in 2013 Apple margins were in the 36% to 37.5% range. From what was explained on the call, I think Apple margins in 2014 will be in the 37% to 39% range.
With 20% more revenue and 1% to 2% better margins, lower stock float on buybacks, I expect Apple to growth is EPS by 20% to 30% by the end of 2014.
Hard to debate with wishful thinking. I mean how can I reason with someone who thinks EPS could be $52 by this time next year and cites 20% revenue increases that the company hasn't seen in a year? According to Cook they already retired 47 million shares which means they spent over 33% of the total allotment for buybacks already and EPS still dropped yoy. Unless there is a new product line it's hard to see EPS doing better than a 10% increase (i.e. getting back to where it was a year ago). That is a lot for a company this size, just not that exciting when it comes to the stock. Great products, nice dividend, I just don't expect the stock price to go anywhere significant.
Hard to debate with wishful thinking. I mean how can I reason with someone who thinks EPS could be $52 by this time next year and cites 20% revenue increases that the company hasn't seen in a year? According to Cook they already retired 47 million shares which means they spent over 33% of the total allotment for buybacks already and EPS still dropped yoy. Unless there is a new product line it's hard to see EPS doing better than a 10% increase (i.e. getting back to where it was a year ago). That is a lot for a company this size, just not that exciting when it comes to the stock. Great products, nice dividend, I just don't expect the stock price to go anywhere significant.
You are right on one thing, I misread 2013 Q1 revenue and got the 2012 Q1 instead. Still, in Q1 2014 we will have 10% on revenue with lets say the same YoY margins but a much lower stock float compare to Q1 2013. So that give us around 12-13% EPS in Q1 but I think it will get much better on a YoY basis toward the year because starting in Q2 2014 we should start to beat YoY margins. So we may close 2014 with 15% to 20% EPS increase.
ok I will now go edit my previous post
You are right on one thing, I misread 2013 Q1 revenue and got the 2012 Q1 instead. Still, in Q1 2014 we will have 10% on revenue with lets say the same YoY margins but a much lower stock float compare to Q1 2013. So that give us around 12-13% EPS in Q1 but I think it will get much better on a YoY basis toward the year because starting in Q2 2014 we should start to beat YoY margins. So we may close 2014 with 15% to 20% EPS increase.
ok I will now go edit my previous post
Well, lets see what happens. I don't think Apple is a bad investment at this point just not one to beat a market perform. Certainly don't mind collecting the dividend every quarter.
They may have beat the estimates but the fact is that **profit** is down. Again. A year-over-year quarter decrease of $700 million is no joke. They need to do something to stop that decreasing **profit**. I'm surprised AAPL is only down 2%.
Edit: Fixed revenue to be profit. My apologies.
Here's a way to look at this from a different perspective and comparing to others. I don't know why these guys are even looking at Gross margin more than Net Profit in terms of margins. That's what the bottom line is. Apple's margins on a Net Profit perspective is FAR better than ANY computer company out there, HP, Dell, ASUS, ACER, Samsung, etc. etc. etc. That's what Apple is, a personal computing hardware company and that's how they are listed. Actually, Samsung isn't technically listed as a personal computing company, but more of a technology company that branches out into other things like a component mfg, appliances, telecom, and other things COMPLETELY unrelated to computing.
Apple shouldn't be compared to Google, Microsoft, Oracle, IBM either from a perspective of the TYPE of business that they are.
In every line of business, there is how the company is doing as compared to other companies in the same sector and then compared to the sector as a whole. I think people miss looking at companies from that perspective. These analysts and media people keep comparing Apple's numbers to Google, Samsung, Micrsoft when they are actually completely different types of companies with traditionally different business models, cost structure, etc.
I would be looking and comparing Apple to the same sector as a whole and the to each "competitor" in the same sector to gauge how good or bad they are doing FIRST. If you do that, they look like they are sitting on the top of the world in terms of profits and profit margins compared to everyone else combined or individually.
$7.9 Billion might be down a little, but that's not that far off from how much Google makes in Net Profits over the course of a year and this is done during the slow summer period right before some MASSIVE MAJOR announcements. Yeah, the iPhone 5S and 5C helped, but they aren't shipping as many iPhone 5S's last quarter as they will in this quarter due to production issues that are just starting to get dealt with.
IPad sales were down because the new models didn't get announced and shipped. The new MBPRetinas didn't get announced and shipped last month, same with MacPro and even iMacs barely got into last quarter's numbers.
Yeah, they are giving away OS X, iWork, etc. for free moving forward, but I think they'll make up for that with MacPro (new model) and new iPads and iPhones for this quarter.
You keep saying "cheap", when in actual fact the other person said "cheaper".
There is a big difference.
And we're still waiting for you (or others) to supply the name of a manufacturer that is making large margins on a cheaper phone than the iPhone.
And we're still waiting for you (or others) to supply the name of a manufacturer that is making large margins on a cheaper phone than the iPhone.
... and I'm still waiting for you to comprehend what the original poster said.
[... even though razor blades is not a good example]
[... actually, upon rereading the original post I see that I must have combined it with another post concerning margins and volume. So... as "I" see it, Cook has chosen the devil he knows, higher margins. This is not to say that lowering margins wouldn't produce more eps, but it also does not guarantee it.)
All consumer companies have decreasing margins as they get bigger. B-to-B companies have much larger margins, but much smaller revenues. Distributors, like Amazon to consumers or Ingram to the trade, operate on tiny margins. Supermarkets are a 3% business, but they have huge cash flow.
Wall Street wants it all ways: They don't want Apple to retain so much cash, they want them to have less expensive products to gain (or stop losing) market share AND they want them to increase margins. You can't have it all. But I don't care...if the stock drops, I'll buy some more.
As I've posted many times before, it used to take a year for a consumer electronics company to sell a million units of anything. Now it takes Apple a few hours. And still Wall Street isn't satisfied. Even Macs sold well and no one expected that. With all the new products, even though only evolutionary, 4 th Q should be great.
All consumer companies have decreasing margins as they get bigger. B-to-B companies have much larger margins, but much smaller revenues. Distributors, like Amazon to consumers or Ingram to the trade, operate on tiny margins. Supermarkets are a 3% business, but they have huge cash flow.
Wall Street wants it all ways: They don't want Apple to retain so much cash, they want them to have less expensive products to gain (or stop losing) market share AND they want them to increase margins. You can't have it all. But I don't care...if the stock drops, I'll buy some more.
As I've posted many times before, it used to take a year for a consumer electronics company to sell a million units of anything. Now it takes Apple a few hours. And still Wall Street isn't satisfied. Even Macs sold well and no one expected that. With all the new products, even though only evolutionary, 4 th Q should be great.
I don't think Wall Street wants Apple to have them all.
I think Wall Street wants to see a gain for the plan Apple chooses before the share price will increase.
If Apple lowers margins then Wall Street wants to see increased market share to the point that eps increases.
If Apple increases margins then Wall Street wants to see revenue and earnings increase to the point that eps increases.
This is not to say that Apple is doing poorly.