Wall Street adjusts Apple expectations after Tim Cook 'rips the Band-Aid off'

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  • Reply 61 of 117
    foggyhill said:
    I have not read the prior comments, and look forward to doing so later today, but my 2¢ is that Apple has currently no narrative or vision to offer the market, and the market is making up its own. As it always does.

    Cook just does not appear to be comfortable creating, managing, massaging, reinforcing such a narrative, and I think the Board is utterly useless/absent at this point (it's a bunch of mediocre people and has-beens anyway).

    I find it particularly puzzling, given how passionate Tim Cook can be on matters that concern him personally. Why can't he bring the same passion to addressing his shareholders' genuine concerns? (And I am not talking about -- I could care less about -- the fly-by-nights and the drive-by shareholders here). Weird....
    So, you're mainly worried about communication. I do think that they may need a better communication from Cook (not sure it is possible), but I don't think anyone right now would be doing better in other sphere of what a CEO needs to do. That's the problem; few people, not even Musk, had Jobs ability to inspire, to make you believe you know what the future will be. Maybe have someone promoted internally that's the best at this; there must be 1-2 in Apple's upper sphere.

    Operations people and most engineers are hopeless communicators, especially when it comes to a lofty future.

    Scientists/Inventors are much better; they have a twinkle in their eyes that cannot be reproduced.

    Google make due for no real good communicators by essentially publicizing their R&D as it goes and hyper-diversifying,
    Amazon does it by pushing so hard on revenue development that they always use that as an excuse for not having decent profits.

    Apple will generate 200B profits in the next 4 years even if they coast, adding it to their current haul, they are in a better position than any company out there to weather macro economic problems and go do whatever they want.

    I do think it's a bit unfair that Cook is put in a position where he can't really win. Last year's gangbuster results (that one, especially analyst expected made it so) made it very hard to duplicate the following year, especially with the currency rise.

    Jobs had a lot less expectations put on him, the Ipod took 3-4 years to really be a hit and even the Iphone took 2 years.
    It's only when Jobs came back to Apple that he had this level of expectations put on him; and at that point, just surviving was a success.

    I don't think even Jobs could manage this kind of massive expectations, though Wall Street would likely prefer his aspirational messaging, even if it were pure BS, than the current crew of not so adept communicator of straight reality.
    Cook is not great communicator. At least Jony Ive admits he can't articulate the way Steve did (and I think in some ways it stresses him out that people expect him to take Steve's place in that way). Yes a lot of analysts have pushed for Apple to pivot towards services but the supplemental slide and discussion on the earnings call didn't really have a narrative around it. It almost seemed like something hastily thrown together once they knew iPhone was going to disappoint. This is the first call in a while where I felt Cook was a bit defensive and kind of gloomy. I didn't get the sense there would be any big catalyst in 2016. Just more of an incremental refinement year.
    anantksundaram
  • Reply 62 of 117
    totaltotal Posts: 83member
    in 2012-2013 AAPL fell from $100 to $56, so -44%. Now we are from $134 at $94, so -30%. I can see room for decline to $75 to match -44% decline like in 2013, does it make sense? Add global uncertainties and i can even see $60-65, but it is probably too much.

    Anyway im still profitable with my investment, but once will AAPL decline under $85 i will start virtually losing (i was temporarily losing in that 2013 decline), so not easy decision if SELL, HOLD or BUY more, i can afford all options. 
    edited January 2016
  • Reply 63 of 117
    jfc1138jfc1138 Posts: 3,090member
    total said:
    in 2012-2013 AAPL fell from $100 to $56, so -44%. Now we are from $134 at $94, so -30%. I can see room for decline to $75 to match -44% decline like in 2013, does it make sense? Add global uncertainties and i can even see $60-65, but it is probably too much.
    What sort of forward P/E would that be less cash, 2? Yes, too much no doubt.
  • Reply 64 of 117
    foggyhillfoggyhill Posts: 4,767member
    crowley said:
    Price of stock is supposed to reflect the average of how traders value the stock. Nothing more, nothing less.
    In theory, those valuing of the stock should reflect actual estimation of present value of future earnings (that's the classical definition).
    Well, that's not what happens in the real world.

    It seemingly reflects more how the stock will move in the next few days instead of reflecting a long term state  (so, it's more like commodity).

    Perfect Information flows are supposed to lead to a correct price being assessed; but, such a thing is illusion more than ever.

    In high tech, with the future information horizon being so close (nobody really knows the future beyond 3-4 years) and most people not really understanding what their investing in and information being more and more plentiful and hard to assess correctly ( in part because of the globalized nature of companies and thus the bigger impact of macro forces), self-adjustment of stock price fails.

    The much higher volatility and speed of today's stock trading, especially because it is now impacted by the much higher volatility in markets like China, just compounds issue.


    From trade to trade, based on fear, bad info, rumors a stock will rise; it doesn't need to be reflect a real value, just a perceived value.
    A bit like buying a Rolex...
    As long as you find someone who's ready to buy it (because they think they can sell it, not because they think it actually reflects fundamentals), the stock stays at a price.

    That's the only thing that makes  a stock like Amazon make sense, people shuffling paper around hoping they don't get stuck with it before they made their profit.








    edited January 2016 palomine
  • Reply 65 of 117
    foggyhillfoggyhill Posts: 4,767member
    foggyhill said:
    So, you're mainly worried about communication. I do think that they may need a better communication from Cook (not sure it is possible), but I don't think anyone right now would be doing better in other sphere of what a CEO needs to do. That's the problem; few people, not even Musk, had Jobs ability to inspire, to make you believe you know what the future will be. Maybe have someone promoted internally that's the best at this; there must be 1-2 in Apple's upper sphere.

    Operations people and most engineers are hopeless communicators, especially when it comes to a lofty future.

    Scientists/Inventors are much better; they have a twinkle in their eyes that cannot be reproduced.

    ....

    Jobs had a lot less expectations put on him, the Ipod took 3-4 years to really be a hit and even the Iphone took 2 years.
    It's only when Jobs came back to Apple that he had this level of expectations put on him; and at that point, just surviving was a success.

    I don't think even Jobs could manage this kind of massive expectations, though Wall Street would likely prefer his aspirational messaging, even if it were pure BS, than the current crew of not so adept communicator of straight reality.
    Cook is not great communicator. At least Jony Ive admits he can't articulate the way Steve did (and I think in some ways it stresses him out that people expect him to take Steve's place in that way). Yes a lot of analysts have pushed for Apple to pivot towards services but the supplemental slide and discussion on the earnings call didn't really have a narrative around it. It almost seemed like something hastily thrown together once they knew iPhone was going to disappoint. This is the first call in a while where I felt Cook was a bit defensive and kind of gloomy. I didn't get the sense there would be any big catalyst in 2016. Just more of an incremental refinement year.
    If they're really releasing a lot of stufk in Q3 (like it seems they are), maybe he couldn't really say too much (maybe it's even better since setting expectations too high is what gets apple into trouble with Wall Street anyway. Even during those calls, Jobs wasn't that great; those things are a slog at the best of times.
    edited January 2016 palomine
  • Reply 66 of 117
    k2kwk2kw Posts: 1,726member
    sog35 said:
    slurpy said:
    Is this what analysts/investors focus on? The next 3 months? Explains why that industry is so fucked, with absolutely no vision and long term agenda.
    And who's fault is that?

    Did Tim Cook give us guidance for revenue for the rest of 2016?
    Did he give us guidance for 2017?
    Did he gives us guidance regarding what the install base will be in 3 years, 5 years, and 10 years?
    Did he give us guidance for what he expects service revenue (the next growth product) to be in the next 3 years?

    NO.

    Or course Wall Street only looks 3 months ahead. Because that's all Tim Cook will talk about in solid terms.  He is too secretive about the future so Wall Street does not give them any credit for the future.

    This goes back to what I've been saying for YEARS.  Tim Cook has no vision. Or he does but does not articulate it clearly to Wall Street. Wall Street sees Apple simply as a hardware company. Yesterday was the first time Apple even tried to hint at services being a massive part of Apple in the future. $30 billion in services is massive for 2015. Yet I don't see a single headline talking about that. Sad.  The reason is he should have been pushing the install base/services/monitize install base theme YEARS AGO. Now it looks like a desperate move.

    Stock has lost $30 billion today. Total lost is over $250 billion since last year.  We could easily see $80 stock price in a few days. All because Apple is run by a CEO who has no idea how to control the narrative of the company.

    Let's hope it hits $80.  Incredibly buying opportunity.   Let the market shake out the fools who bought high.  Lol.  Then it can shoot up later this year.
  • Reply 67 of 117
    crowleycrowley Posts: 5,826member
    jason98 said:
    sog35 said:
     We could easily see $80 stock price in a few days. All because Apple is run by a CEO who has no idea how to control the narrative of the company.

    IMO the only mistake Tim is making is wasting company's cash on dividends. Instead he should have let the price go down as much as Wall Street wants and then just take the company private with all its cash reserves, or at least buy back as much as possible.
    >.<

    That is NOT how a company becomes privately owned!
    fastasleep
  • Reply 68 of 117
    512ke512ke Posts: 782member
    APPL will rise again 


    palomine
  • Reply 69 of 117
    k2kwk2kw Posts: 1,726member
    crowley said:
    jason98 said:
    IMO the only mistake Tim is making is wasting company's cash on dividends. Instead he should have let the price go down as much as Wall Street wants and then just take the company private with all its cash reserves, or at least buy back as much as possible.
    >.<

    That is NOT how a company becomes privately owned!
    I wonder how low Apple would have to fall for bill gates to be able to buy it.
  • Reply 70 of 117
    volcanvolcan Posts: 1,787member
    k2kw said:

    I wonder how low Apple would have to fall for bill gates to be able to buy it.
    Gates would rather see Apple in bankruptcy, liquidated and delisted.
  • Reply 71 of 117
    foggyhillfoggyhill Posts: 4,767member
    jdnc123 said:
    foggyhill said:
    So, did fracking wall street "know" about the slowdown (sic).... After Apple fucking grew it's profit 80% since 2012, when Apple was valued as low as now.
    If they fucking anticipated the slowdown .... Right.... Why didn't those moron anticipate 200B in profits and reflect it the god damn price like they're supposed to.

    Price of stock is supposed to reflect present value of future profit, are you telling me that's what Wall street did 3 years ago; are you for god damn real?
    Please start making sense in your argument.

    Wall street shits out a number based who the knows what. Google would need to quadruple its profit within 3-4 years for its valuation to make sense; well, good luck on that with Facebook breathing down their necks and their moonshots all using up money instead of generating it.
    Profits increased and multiples decreased.  It happens all the time, not just with Apple.  Its a rationale response to a slowing growth trajectory.  

    Apple is currently on a negative growth trajectory.  They have more cash than any company in the history of the world and can't grow.  That's the main problem.  All the resources anyone can imagine and they can't muster up an idea to show growth from here.  It's reality until they prove the Street wrong and I got no sense from the conf call that they are prepared to change that view this year.  Frankly, it sounded pathetic and like panic.  Last quarter Cook says no problems in China and now this quarter they are experiencing a slowdown like they've never seen before.  Good fcking hell, everyone and their mother has been saying China was slowing down for a year and yet Cook got caught by surprise by it.  Maybe he didn't see it as early, but given all the datapoints out there that it was slowing he sure as heck could have made some contingencies versus just dismissing only 3 months ago.

    I worry about employee retention.  Anyone who joined the company in the last three years is working for salary only and not stock comp as the options aren't increasing in value like they did in the past. Much easier to argue to yourself that you can kill it at a smaller startup (or at Google based on recent stock performance) if you are a talented engineer by NOT going to Apple.
    It's the rising US dollar that's the main headwind, not China;
    so you fracking predicted the US dollar going up 40% in less than 2 years?
    Well, you should apply to become a god because I don't believe you.

    Nobody expected oil prices dragging the whole planet in a near flatline like that.
    Because no one expected the saudis to be that dumb in their hope of bankrupting those doing oil fracking.

    That Apple kept their sales up with product prices going up that much is kind of a miracle with that kind of Macro headwind.

    That's why Cook emphasized the fact that Apple's current users are not switching to others, that Apple is still gaining users; sales are delayed and not curtailed. That's an important difference.

    BTW, you  didn't answer my argument, just side stepped it and expect I'll forget?
    If a company grows 400% in 2 years and then stays at flatline for the next 8, it's still a much bigger company than a company growing 10% a year over the whole period, yet your criteria would give the stock price of that company in year 7 a incredibly higher value. That's basically what occurs in the case of Google versus Apple, or Facebook vs Apple or just about any tech company in the world versus Apple.
    edited January 2016 fastasleepe1618978
  • Reply 72 of 117
    512ke said:
    APPL will rise again 


    Yep. This is a pretty entertaining turn of events, but the market saturation has long been predicted. 

    That said, this is an opportunity to buy APPL at June 2014 prices.
  • Reply 73 of 117
    sog35 said:
    And who's fault is that?

    Did Tim Cook give us guidance for revenue for the rest of 2016?
    Did he give us guidance for 2017?
    Did he gives us guidance regarding what the install base will be in 3 years, 5 years, and 10 years?
    Did he give us guidance for what he expects service revenue (the next growth product) to be in the next 3 years?

    NO.

    Or course Wall Street only looks 3 months ahead. Because that's all Tim Cook will talk about in solid terms.  He is too secretive about the future so Wall Street does not give them any credit for the future.

    This goes back to what I've been saying for YEARS.  Tim Cook has no vision. Or he does but does not articulate it clearly to Wall Street. Wall Street sees Apple simply as a hardware company. Yesterday was the first time Apple even tried to hint at services being a massive part of Apple in the future. $30 billion in services is massive for 2015. Yet I don't see a single headline talking about that. Sad.  The reason is he should have been pushing the install base/services/monitize install base theme YEARS AGO. Now it looks like a desperate move.

    Stock has lost $30 billion today. Total lost is over $250 billion since last year.  We could easily see $80 stock price in a few days. All because Apple is run by a CEO who has no idea how to control the narrative of the company.

    Some people think the earth is flat or the US didn't land on the moon. Explaining things to these people doesn't work because they won't see reason. So why should Tim waste his time with the financial market equivalent?
    BS. Thats what Tim Cook wants to do but he doesn't know how to do it proper. 

    Tim Cook so far has pandered to wall street and its disgusting. Lets see. All those stock buybacks all those dividends. Precisely because Tim Cook hopes it will help the stock. Having lunch with Carl Ichan. Trying to position Apple as something it isn't. Get rid of this fool as CEO. I am tired of his kissing wall street. All of this and the company has lost a couple of hundred billion in value. Good job. So lets see has this helped the stock? Hell NO.
  • Reply 74 of 117

    stevie said:
    Wall Street doesn't understand Apple, so Wall Street hates Apple.

    Never mind that Apple has funneled BILLIONS of dollars from people's pockets directly into Wall Street's grubby little hands.  Never mind that Apple is poised to give even MORE money to Wall Street.

    It is never enough for them.  Apple just gives and gives to Wall Street, every quarter, year in and year out.  But they want Apple to sell more, not less.  Go figure.
    Exactly why Tim Cook should stop kissing wall street. Stop giving Apple's money way. Stop buying back stock. Stop meeting with people like Carl Ichan. Stop all that. Stop paying so much attention to wall street Mr. Cook. They don't care about you or apple. Invest into Apple. Build Apple. Stop giving wall street anything.

    Steve Jobs said it best. Paraphrasing... "when we as a company do good, the stock will follow."

    Wall street is greedy. like the poster said. Apple give and gives. and wall street only wants more and more. Enough of this. Apple stop paying attention to this crap.


  • Reply 75 of 117
    thomprthompr Posts: 1,511member
    foggyhill said:
    jdnc123 said:
    Honest question.  How do you think Steve Jobs would feel about the market saying Google is a better and thus more valuable company as it is today.  Google has an enterprise value of $420 billion versus Apple at $372 billion.  Google is about to pass Apple in market cap also.  The stock is lower than it was in 2012 due to massive multiple compression, which has happened because the Street saw the growth slowing, apparently even before the CEO did.  Google has increased by $200 billion or so in value since 2012, MIcrosoft by $150 billion, Netflix by $40 billion, Amazon by $175 billion, all while Apple lost $130 billion of total enterprise value.  The idea that this is just 'the market' is complete and utter garbage.  Its an Apple problem, not a market problem.  I'm a lover of Apple products and owner of the stock, but I can't convince myself that the other companies I mentioned havent been making bolder moves than Apple under Tim Cook.

    I personally think Jobs is rolling in his grave because Cook has allowed Google to surpass Apple in value.  Given how much he hated them, he has to be.
    So, did those gurus on wall street "know" about that future slowdown (sic) in 2012....when Apple was valued as low as now despite the fact that there was 200B in profits coming up within 4 years. Why didn't these doufus idiots reflect that in the god damn price like they's supposed to.

    By your measure, a company that makes:
    40B 50B 100B 101B 99B 103B 106B  in profits
     should have a lower stock price than a company making
    30B 35B   40B   45B 50B   55B 60B 65B profits over the same period....
    Hey, the second company is growing!!

    That's how Wall Street works.
    Even worse, if the same company had a growth profile like the second one, instead of the first, its stock price would be higher!

    IF I present things like that, people would say, well that's ridiculous... The first company would had 10+15+60+56B+44B+43B+41B=269B more money in the bank that the successful second company! than the second one and would still likely make money than the second for another 5-6 years... so, another 100B more at least even it didn't grow.

    Well, that's how it is in gambling land that is the stock market; were shuffling paper barely has to make sense as long as someone is ready to buy them.

    Price of stock is supposed to reflect present value of future profit, are you telling me that's what Wall street did 3 years ago; are you for god damn real?
    Please start making sense in your argument.

    Wall street shits out a number based who the knows what. Google would need to quadruple its profit within 3-4 years for its valuation to make sense; well, good luck on that with Facebook breathing down their necks and their moonshots all using up money instead of generating it.
    People keep wanting to compare Google, Microsoft, Facebook, or Amazon to Apple and make sense out of the discrepancies in P/E ratios, etc.  That is an exercise in futility, and it is not even an appropriate comparison anyway.

    Apple makes the majority of its earnings from hit hardware products.  Traditionally such things can collapse very very quickly (just ask RIM, Palm, Nokia, etc).  It takes a lot longer to turn the tide if you are a leader in office software (Microsoft), search (Google), social (Facebook) or retail (Amazon).  These guys are going to stay on top of their respective mountains for a long long time.  Wall Street is afraid that Apple could get RIMed in the next few years, and there is a long, long, way to fall.

    Now I believe that Apple's situation is very different and far more stable than those other vanquished companies that I mentioned (Palm, Nokia, etc).  And likely most of the people here do too.  But what matters the most is whether a significant number of investors on Wall Street think otherwise.  Apparently they do.  Enough people are expecting Goliath to fall that a sort of self-fulfilling prophecy has occurred.

    Aside to Sog:  This has nothing to do with Cook, and we can't cry about the unfairness relative to Google, etc.  It is what it is, and it was inevitable once Apple shattered the record for company performance with a hit hardware product that (unlike search or MS Office) becomes yesterday's news every year.  There are a lot of good arguments for why Apple should be able to sustain their current awesome performance, if not grow it slowly and steadily.  But these arguments are falling on deaf ears.  They won't believe Cook just because he says so.


    apple iigsfastasleeppalomine
  • Reply 76 of 117
    sog35 said:
    ibill said:
    In my view, Steve Jobs did no better with managing Wall Street expectations, perhaps not even as good as Tim Cook is doing now.
    I disagree. 

    Steve Jobs did not have prolonged periods of Apple having a 10-12 PE.
    Apple was never this ridiculously under valued like how it was from 2013-2014 and now.
    Steve Jobs did a lot better with wall street then Tim Cook because Steve Jobs didn't care about wall street like Tim Cook portrays. He just didn't give them any impact. His way was as Apple does so does the stock and you saw that in his focus and his incredible products and low and be hold Apple stock was just fine. 

    Wall street will always be wall street. They pick on Apple because they are greedy and they know when Apple is in the news ratings and clicks go up so they love the attention. Here is looking at you CNBC get your camera time and head shots and makes waves as long as you can while that camera is pointed at you.

    Tim Cook's focus seems to be to reliant on appeasing wall street. This is not what Apple is about. Apple is about being focused and making great products. What happened to that.
    edited January 2016
  • Reply 77 of 117
    Tim Cook so far has pandered to wall street and its disgusting. Lets see. All those stock buybacks all those dividends. Precisely because Tim Cook hopes it will help the stock. Having lunch with Carl Ichan. Trying to position Apple as something it isn't. Get rid of this fool as CEO. I am tired of his kissing wall street. All of this and the company has lost a couple of hundred billion in value. Good job. So lets see has this helped the stock? Hell NO.
    Nope, wrong. Nothing to do with pandering.

    It was wise use of cash: to return value back to shareholders and to invest back into the company. Could part of the reason be to prop up share prices?....possibly, but that was a tertiary reason at best.

  • Reply 78 of 117
    thomprthompr Posts: 1,511member
    sog35 said:
    I disagree. 

    Steve Jobs did not have prolonged periods of Apple having a 10-12 PE.
    Apple was never this ridiculously under valued like how it was from 2013-2014 and now.
    Steve Jobs did a lot better with wall street then Tim Cook because Steve Jobs didn't care about wall street like Tim Cook portrays. He just didn't give them any impact. His way was as Apple does so does the stock and you saw that in his focus and his incredible products and low and be hold Apple stock was just fine. 

    Wall street will always be wall street. They pick on Apple because they are greedy and they know when Apple is in the news ratings and clicks go up so they love the attention. Here is looking at you CNBC get your camera time and head shots and makes waves as long as you can while that camera is pointed at you.

    Tim Cook's focus seems to be to reliant on appeasing wall street. This is not what Apple is about. Apple is about being focused and making great products. What happened to that.
    When Steve Jobs was around, there was reasonable hope that Apple could grow in size by a factor of 2-3x (or more) and, in fact, that has since occurred under Tim Cook's leadership.  Try to convince a majority of Wall Streeters that Apple could grow another 2-3x from this point forward and you'll probably fail.  (Even I doubt that!)  It's that simple.  Don't blame Cook for this.  Blame Wall Street for their insatiable appetite.  Jobs could do no better, nor could anybody else.

    Many on Wall Street see diminished capacity for growth (probably true) and increasing probability of iPhone collapse (probably false).  Put those two together and that means there is an unfavorable risk/reward formula in the minds of many people.  They may be wrong.  But that doesn't matter.  As Crowley said above, the stock price is nothing more than a barometer of average expectations.  The stock market is like an auction, in which the "value" of an item is defined by whatever the highest bidder is willing to pay.  There is no "objective value" other than that.  PE ratios and PEG ratios are useful tools, but at the end of the day, the market is an auction based on expectations.  And once your company is doing so well that a lot of people disbelieve in your growth story, then those ratios become completely useless.
    nolamacguypalomine
  • Reply 79 of 117
    volcanvolcan Posts: 1,787member
    drewys808 said:


    It was wise use of cash: to return value back to shareholders and to invest back into the company. Could part of the reason be to prop up share prices?....possibly, but that was a tertiary reason at best.

    Yeah, I agree. The share price has been down for about two months but the Dow and Nasdaq also dropped similar percentages so the depreciation is mostly reflective of the market as a whole not some mismanagement on Apple's part.

    Since the dividend and split, the stock was up quite nicely until just recently. I think the dividend, split and buyback are all efforts to curb the volatility and actually help smaller investors to buy and hold shares. When the stock was $500 it was mostly held by fund managers, so if anything Apple is is helping investors and not Wall Street traders.
  • Reply 80 of 117
    Facebook is up 12% after hours. Why? Yes they reported good numbers but more importantly they have a good story to tell and they tell it well. What is Apple's story? All we got on the conference call was FX, FX and more FX. Oh and a pretty useless slide about "services" which at this point are mostly App Store and iTunes downloads. Until Apple finds its story and tells it in a compelling way I think the stock is stuck in the mud.
    anantksundarampalomine
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