Walt Mossberg and Jim Dalrymple both wrote articles about issues with Apple software. Most of the issues they have fall under Eddy Cue's leadership. He pretty much owns services at Apple and it's the weakest part of the company. IMO Cook needs to do something about that, even if Cue is popular inside the company. Take most of the software and cloud stuff away from him and have him focus on content deals and building out Pay.
I don't know him personally, so that's not an option. Having said that, this is one of the worst written lines I've ever seen here: "...abominable snow-boogeyman..."
THAT is just plain awful.
I see people finally woke up after the super bowl....
I have met Daniel during a talk he made where I used to work. Contrary to most analysts and bloggers, he is extremely intelligent. He likes writing, while many people have the attention span of a nat, making it difficult for many people to get through his articles. I'm sorry for those people because he develops his editorials using the cold hard facts instead of constantly extracting one little item out of context to make headlines.
Something else to think about for all the Apple needs to become a services company crowd...both LinkedIn and Tableau Software got crushed last week. LinkedIn is down 48% so far this year, Tableau down over 60%. Netflix down 27%. Software as a service is looking weak and media companies aren't looking so great either. I don't think it's some panacea that's going to bring Apple stock to $150 or whatever.
I don't know him personally, so that's not an option. Having said that, this is one of the worst written lines I've ever seen here: "...abominable snow-boogeyman..."
THAT is just plain awful.
I see people finally woke up after the super bowl....
I have met Daniel during a talk he made where I used to work. Contrary to most analysts and bloggers, he is extremely intelligent. He likes writing, while many people have the attention span of a nat, making it difficult for many people to get through his articles. I'm sorry for those people because he develops his editorials using the cold hard facts instead of constantly extracting one little item out of context to make headlines.
People hate Mr. Dilger because he is unabashedly pro-Apple and usually has the facts on his side to support his assertions. On the other hand these same people don’t seem to mind the constant oozing discharge of ridiculously biased Apple bashing from other tech writers who literally make crap up to show Apple is Doomed™. For these people a DED article is poisoned by the fact that it is hard to refute so they attack composition and grammar.
I continue to be amazed that people who lament the very existence of Apple, who hate the company with vigor, seem drawn like moths to a flame. Every Apple centric website I visit is like AI, infested with haters. I feel no inclination to visit Android or Windows sites because I am uninterested. Then there are those who hate the company but continue to use the products. Those types I really don’t get.
I don't know him personally, so that's not an option. Having said that, this is one of the worst written lines I've ever seen here: "...abominable snow-boogeyman..."
THAT is just plain awful.
I see people finally woke up after the super bowl....
I have met Daniel during a talk he made where I used to work. Contrary to most analysts and bloggers, he is extremely intelligent. He likes writing, while many people have the attention span of a nat, making it difficult for many people to get through his articles. I'm sorry for those people because he develops his editorials using the cold hard facts instead of constantly extracting one little item out of context to make headlines.
Several things: You misspelled "gnat," Dilger seems nice enough in real life and he is in desperate need of an editor who is willing to chop through a forest of text in order to find a clear path for readers.
I see people finally woke up after the super bowl....
I have met Daniel during a talk he made where I used to work. Contrary to most analysts and bloggers, he is extremely intelligent. He likes writing, while many people have the attention span of a nat, making it difficult for many people to get through his articles. I'm sorry for those people because he develops his editorials using the cold hard facts instead of constantly extracting one little item out of context to make headlines.
People hate Mr. Dilger because he is unabashedly pro-Apple and usually has the facts on his side to support his assertions. On the other hand these same people don’t seem to mind the constant oozing discharge of ridiculously biased Apple bashing from other tech writers who literally make crap up to show Apple is Doomed™. For these people a DED article is poisoned by the fact that it is hard to refute so they attack composition and grammar.
I continue to be amazed that people who lament the very existence of Apple, who hate the company with vigor, seem drawn like moths to a flame. Every Apple centric website I visit is like AI, infested with haters. I feel no inclination to visit Android or Windows sites because I am uninterested. Then there are those who hate the company but continue to use the products. Those types I really don’t get.
This isn't accurate. If I choose to ignore an article by DED, it's just that his deliberate long-windedness is tiresome. As has been said before, "brevity is the soul of wit." Well, it's also essential to clear communication and engaging storytelling. A wall of text is an unnecessary impediment for readers if it meanders, engages in trite wordplay and fails to make the point economically.
A good article should be long enough to communicate the writer's thoughts or opinions and leave room for the thoughts and opinions of readers. His submissions are too long and veer toward browbeatings.
There isn't that "get in now before it's too late" feeling with Apple stock like there is with Amazon, Google, or Facebook or other tech companies that command higher multiples. The bottom line is that people don't think Apple will grow by leaps and bounds in the future. Apple's famed secrecy doesn't help and neither does Tim Cook's private, low-key personality. People are convinced that Apple intends to sit back and milk the iPhone, never mind that Apple has spent more than it ever has on capex and R&D. How much does it cost to make a thinner iPhone with a better camera? All that R&D has to be going to something.
and yet the purpose of growth is to pave the way for....profit. Apple already owns all the profit in two industries. valuing growth over profit is putting the cart before the horse.
Walt Mossberg and Jim Dalrymple both wrote articles about issues with Apple software. Most of the issues they have fall under Eddy Cue's leadership. He pretty much owns services at Apple and it's the weakest part of the company. IMO Cook needs to do something about that, even if Cue is popular inside the company. Take most of the software and cloud stuff away from him and have him focus on content deals and building out Pay.
Nothing motivates like a public crucifixion.
Ok but Marco Arment's losing the functional high ground on software came out last year. If there are improvements they're coming slowly.
I see people finally woke up after the super bowl....
I have met Daniel during a talk he made where I used to work. Contrary to most analysts and bloggers, he is extremely intelligent. He likes writing, while many people have the attention span of a nat, making it difficult for many people to get through his articles. I'm sorry for those people because he develops his editorials using the cold hard facts instead of constantly extracting one little item out of context to make headlines.
Several things: You misspelled "gnat," Dilger seems nice enough in real life and he is in desperate need of an editor who is willing to chop through a forest of text in order to find a clear path for readers.
I did that on purpose (see lkrupp's comment about grammar).
Several things: You misspelled "gnat," Dilger seems nice enough in real life and he is in desperate need of an editor who is willing to chop through a forest of text in order to find a clear path for readers.
I did that on purpose (see lkrupp's comment about grammar).
If that was misspelled on purpose it was not obvious, nor was it effective.
Halfway through the last quarter, supply chain rumors of iPhone production cuts--purportedly "30 percent" of some unknown number--snowballed into an abominable snow-boogeyman of conjecture that claimed the end to iPhone growth was nigh and speculated about a downhill implosion of Apple's sales overall, an embarrassing lack of interest in Apple's newest iPhone 6s and a rapid evaporation of the world's most valuable company. They were wrong, here's why.
And yet the wall street bull continues even though the facts are in front of there face. The anal-ists only want to predict Apple's death even though there is not even a microscopic sign of that happening anytime in the next 10 years at least because Apple has so much money to back it up. Yet they will boost Google for there 1 trick pony of advertising even if it barely meets forecast. Apple had a world record quarter for December but what did it get, another slap in the face from the anal-ists.
DED said: "It can also build internationally with strong US Dollars (including those dozen new retail stores planned for Mainland China)."
I will bet you that those stores are NOT being built with U.S. dollars, but with a part of the off-shore cash pile.
There isn't that "get in now before it's too late" feeling with Apple stock like there is with Amazon, Google, or Facebook or other tech companies that command higher multiples. The bottom line is that people don't think Apple will grow by leaps and bounds in the future. Apple's famed secrecy doesn't help and neither does Tim Cook's private, low-key personality. People are convinced that Apple intends to sit back and milk the iPhone, never mind that Apple has spent more than it ever has on capex and R&D. How much does it cost to make a thinner iPhone with a better camera? All that R&D has to be going to something.
In spite of that, the worst thing Apple can do right now is to start trying to play the game of directly influencing investor perception. Investors are sometimes slow to come around. That's why we have asset bubbles all the time. Investors don't take the time to ask some important questions. Apple should reject the experts and work on making good products.
I agree with the essence of what you're saying, even though the timing of your first comment may be a bit off, as AMZN, GOOGL and FB are not experiencing the high flyer feel they did at their peaks. AMZN down ~30%, GOOGL and FB down ~16%. The latter two have seen their 16% drop over the last 6 days of trading. Time will tell if support continues to hold, but they along with the rest of the market appears to be in capitulation and respecting their Intermediate - Long term 50% retracement levels - which is where AAPL is as well.
Wall Street, unfortunately, looks at year over year comps (YOY) to judge whether demand for iPhones is still in tact. As has been said many places, 2014 holiday quarter was different than other holiday quarters as it's sales included buyers who wouldn't have purchased the iPhone if it weren't for the shift to the larger form factor, and this additional demand spilled over to the following quarter because of production constraints. Not saying anything new here, but if you stripped out those sales to get a better feel for whether general demand has weakened, the YOY comps would have been much better for the last holiday quarter and the upcoming quarter would be in line for a continuation of significant growth. How much better is hard to say, but if you treated the phenomenal growth numbers for 2015 as an outlier and assumed 2016 growth will be flat, then the iPhone sales trend is intact. Cook alluded to this in the conference call, but the markets, as you have said don't always connect the dots well.
There is an old saying attributed to Benjamin Graham that, "in the short term the stock market is a voting machine, but in the long term it is a weighing machine". In the short term (which can still be "years"), prices fluctuate according to belief, trends, chasing momentum, etc. Thus companies who's PE's are way out of whack may continue to have stock price growth as there is belief that they will continue to grow. Eventually over time though, the value of the company comes down being weighed on its worth - profits, pricing power, defensive moats to such profits, etc. Graham made that statement in the 1930's, and I believe the issue is even more acute now.
Look at what has happened to Twitter and LinkedIn recently. Stock prices powered up by momentum trading, but when the growth expected doesn't appear, they fell like rocks.
As for everyone's favourite company to compare to Apple - Amazon - in this case it isn't simply that they have next to no profits. The company has chosen specifically to invest almost all its money into growth (capex, devices, services) all the time, thus not showing earnings/profit per say, but growing the business. That is why analysts tend to look at cash flow as another metric for a company. Here Amazon is showing consistent growing cash flow every year. Ability to generate cash shows that they "could" have profits (to some degree) if they wanted to. Now, I still think Amazon is overvalued (I wouldn't put my own money there), but it isn't like some here think - they have a PE of almost 1000 so there is some conspiracy against Apple.
The AAPL cycle today appears very much like what has happened in 2008/9 and 2013, as DED outlines in the article. Look at the Apple revenue over a longer than 1-year timeline, and you can see ample evidence they are capable growing the company (each time in the past it was stated that they couldn't grow much more). Some years will be better than others. Apple is clearly investing heavily in own R&D and technology purchases to grow in multiple areas. The growth most likely will NOT be like it was in the past, but even 10-15% average growth for 5 years would give them a significantly higher multiple than today.
There isn't that "get in now before it's too late" feeling with Apple stock like there is with Amazon, Google, or Facebook or other tech companies that command higher multiples. The bottom line is that people don't think Apple will grow by leaps and bounds in the future. Apple's famed secrecy doesn't help and neither does Tim Cook's private, low-key personality. People are convinced that Apple intends to sit back and milk the iPhone, never mind that Apple has spent more than it ever has on capex and R&D. How much does it cost to make a thinner iPhone with a better camera? All that R&D has to be going to something.
In spite of that, the worst thing Apple can do right now is to start trying to play the game of directly influencing investor perception. Investors are sometimes slow to come around. That's why we have asset bubbles all the time. Investors don't take the time to ask some important questions. Apple should reject the experts and work on making good products.
I agree with the essence of what you're saying, even though the timing of your first comment may be a bit off, as AMZN, GOOGL and FB are not experiencing the high flyer feel they did at their peaks. AMZN down ~30%, GOOGL and FB down ~16%. The latter two have seen their 16% drop over the last 6 days of trading. Time will tell if support continues to hold, but they along with the rest of the market appears to be in capitulation and respecting their Intermediate - Long term 50% retracement levels - which is where AAPL is as well.
Wall Street, unfortunately, looks at year over year comps (YOY) to judge whether demand for iPhones is still in tact. As has been said many places, 2014 holiday quarter was different than other holiday quarters as it's sales included buyers who wouldn't have purchased the iPhone if it weren't for the shift to the larger form factor, and this additional demand spilled over to the following quarter because of production constraints. Not saying anything new here, but if you stripped out those sales to get a better feel for whether general demand has weakened, the YOY comps would have been much better for the last holiday quarter and the upcoming quarter would be in line for a continuation of significant growth. How much better is hard to say, but if you treated the phenomenal growth numbers for 2015 as an outlier and assumed 2016 growth will be flat, then the iPhone sales trend is intact. Cook alluded to this in the conference call, but the markets, as you have said don't always connect the dots well.
There were some folks in the forums noting that Apple's retention efforts would be tested by Alphabet, et al, but the truth is that Apple employees are likely more comfortable where they are, than looking for a mass exit with the volatility that we are now seeing in the tech industry, Throw in the M & A opportunities, and Apple could really prime itself for a major growth spurt, with the caveat that we don't know what that will entail as far as devices, services or timelines.
Apple pretty much confirmed the supply chain noise when they forecasted the first quarterly YOY sales decline for iPhone.
That is basically a case of a broken clock being right twice in a day. The only difference here is that the clock has only been right once, and given that supply chains can change for a lot of reasons then there is not enough evidence say that one is connected one to the other. It could be the case that Apple cut the supply chain because they found a cheaper supplier or they had enough parts to build what they needed and decided to bolster stock later in the year once everything got cheaper.
The point is that Cook said looking at the supply chain is not enough; that still holds true. Of course you're free to work with that assumption, but then you'll probably end up being surprised and then looking for a reason why you called it wrong; that seems to be the supply-chain analysts' way of doing things.
DED said: "It can also build internationally with strong US Dollars (including those dozen new retail stores planned for Mainland China)."
I will bet you that those stores are NOT being built with U.S. dollars, but with a part of the off-shore cash pile.
Apple's offshore cash is enumerated in USD.
And it's not literally "off shore," it's just recognized as coming from overseas sales and therefore can be set aside to be reinvested outside the US without paying a large tax that would kick in if it were to be simply handed to shareholders, or spent on US infrastructure. That's why the repatriation tax is so dumb: it is a major disincentive to spend foreign corporate income in the US.
Comments
I have met Daniel during a talk he made where I used to work. Contrary to most analysts and bloggers, he is extremely intelligent. He likes writing, while many people have the attention span of a nat, making it difficult for many people to get through his articles. I'm sorry for those people because he develops his editorials using the cold hard facts instead of constantly extracting one little item out of context to make headlines.
I continue to be amazed that people who lament the very existence of Apple, who hate the company with vigor, seem drawn like moths to a flame. Every Apple centric website I visit is like AI, infested with haters. I feel no inclination to visit Android or Windows sites because I am uninterested. Then there are those who hate the company but continue to use the products. Those types I really don’t get.
This isn't accurate. If I choose to ignore an article by DED, it's just that his deliberate long-windedness is tiresome. As has been said before, "brevity is the soul of wit." Well, it's also essential to clear communication and engaging storytelling. A wall of text is an unnecessary impediment for readers if it meanders, engages in trite wordplay and fails to make the point economically.
A good article should be long enough to communicate the writer's thoughts or opinions and leave room for the thoughts and opinions of readers. His submissions are too long and veer toward browbeatings.
Wall Street, unfortunately, looks at year over year comps (YOY) to judge whether demand for iPhones is still in tact. As has been said many places, 2014 holiday quarter was different than other holiday quarters as it's sales included buyers who wouldn't have purchased the iPhone if it weren't for the shift to the larger form factor, and this additional demand spilled over to the following quarter because of production constraints. Not saying anything new here, but if you stripped out those sales to get a better feel for whether general demand has weakened, the YOY comps would have been much better for the last holiday quarter and the upcoming quarter would be in line for a continuation of significant growth. How much better is hard to say, but if you treated the phenomenal growth numbers for 2015 as an outlier and assumed 2016 growth will be flat, then the iPhone sales trend is intact. Cook alluded to this in the conference call, but the markets, as you have said don't always connect the dots well.
Look at what has happened to Twitter and LinkedIn recently. Stock prices powered up by momentum trading, but when the growth expected doesn't appear, they fell like rocks.
As for everyone's favourite company to compare to Apple - Amazon - in this case it isn't simply that they have next to no profits. The company has chosen specifically to invest almost all its money into growth (capex, devices, services) all the time, thus not showing earnings/profit per say, but growing the business. That is why analysts tend to look at cash flow as another metric for a company. Here Amazon is showing consistent growing cash flow every year. Ability to generate cash shows that they "could" have profits (to some degree) if they wanted to. Now, I still think Amazon is overvalued (I wouldn't put my own money there), but it isn't like some here think - they have a PE of almost 1000 so there is some conspiracy against Apple.
The AAPL cycle today appears very much like what has happened in 2008/9 and 2013, as DED outlines in the article. Look at the Apple revenue over a longer than 1-year timeline, and you can see ample evidence they are capable growing the company (each time in the past it was stated that they couldn't grow much more). Some years will be better than others. Apple is clearly investing heavily in own R&D and technology purchases to grow in multiple areas. The growth most likely will NOT be like it was in the past, but even 10-15% average growth for 5 years would give them a significantly higher multiple than today.
The point is that Cook said looking at the supply chain is not enough; that still holds true. Of course you're free to work with that assumption, but then you'll probably end up being surprised and then looking for a reason why you called it wrong; that seems to be the supply-chain analysts' way of doing things.
Apple's offshore cash is enumerated in USD.
And it's not literally "off shore," it's just recognized as coming from overseas sales and therefore can be set aside to be reinvested outside the US without paying a large tax that would kick in if it were to be simply handed to shareholders, or spent on US infrastructure. That's why the repatriation tax is so dumb: it is a major disincentive to spend foreign corporate income in the US.