SCOTUS ruling & US-China trade war 'not a threat' to Apple's growth potential
Although there's a "very real risk" from more tariffs on Apple products, and this week's Supreme Court ruling laid the groundwork for a challenge to the App Store, neither is a "threat to future growth potential," Cowen analysts said on Tuesday.

The impact from both problems "can be moderated over time," Cowen said in an investor memo. "We maintain our positive view on Apple stock and believe our thesis for Services business growth and stable hardware product sales longer term remains under-appreciated by the market," the firm wrote.
Cowen nevertheless warned that Apple's earnings per share (EPS) could be slashed by 14% if an expansion of Trump administration tariffs on Chinese goods takes effect in June. That could see a 25% levy on products like iPhones, iPads, and MacBooks, which are primarily assembled in China by companies like Foxconn and Pegatron.
iPhones alone could knock 6 to 7% off EPS, Cowen said. That's assuming Apple decides to absorb the hit from tariffs -- if it hikes prices to compensate, EPS could drop $0.14 to to $0.58 per share, based on "demand destruction" of 10 to 40%. That would amount to 1 to 4% of forecast fiscal 2020 EPS.
The Supreme Court ruling "increases the probability that Apple may have modest financial risk due to monetary awards," the memo continued. While it only allows the Apple v. Pepper case -- over App Store monopoly accusations -- to continue, should the plaintiffs win, Apple could end up paying between $3.1 billion and $9.2 billion in compensation if it doesn't settle out of court.
Thankfully for Apple, Cowen noted, it could be 18 to 24 months before any payouts happen, assuming it doesn't emerge victorious.
Cowen is holding onto an "outperform" rating for Apple stock with a $245 price target.

The impact from both problems "can be moderated over time," Cowen said in an investor memo. "We maintain our positive view on Apple stock and believe our thesis for Services business growth and stable hardware product sales longer term remains under-appreciated by the market," the firm wrote.
Cowen nevertheless warned that Apple's earnings per share (EPS) could be slashed by 14% if an expansion of Trump administration tariffs on Chinese goods takes effect in June. That could see a 25% levy on products like iPhones, iPads, and MacBooks, which are primarily assembled in China by companies like Foxconn and Pegatron.
iPhones alone could knock 6 to 7% off EPS, Cowen said. That's assuming Apple decides to absorb the hit from tariffs -- if it hikes prices to compensate, EPS could drop $0.14 to to $0.58 per share, based on "demand destruction" of 10 to 40%. That would amount to 1 to 4% of forecast fiscal 2020 EPS.
The Supreme Court ruling "increases the probability that Apple may have modest financial risk due to monetary awards," the memo continued. While it only allows the Apple v. Pepper case -- over App Store monopoly accusations -- to continue, should the plaintiffs win, Apple could end up paying between $3.1 billion and $9.2 billion in compensation if it doesn't settle out of court.
Thankfully for Apple, Cowen noted, it could be 18 to 24 months before any payouts happen, assuming it doesn't emerge victorious.
Cowen is holding onto an "outperform" rating for Apple stock with a $245 price target.
Comments
So let’s hear your solution. Or is it just because #45 is doing it and that makes it bad?
Your points are valid about the crimes China has committed, but is #45’s solution helping, or hurting us in the long term?
It doesn’t help when it appears that #45 does not know how tarrifs work and who will bear the brunt of higher costs.
The flip side is that Wall St. acts hysterically whenever the threat of any punitive measure is talked about.
This doesn't even make sense. A global intimidation scam? To what end? Agree or disagree with the actions he's taken, do you concede China is a real problem when it comes to trade, intellectual property, etc? What would be the endgame of such a "scam?"
I think calling it a "scam" is way, way over the top. Frustration or confusion or outright disagreement? Let's hear the argument. I haven't heard a good one yet. It's all "free trade good. Tariffs bad." Why?
Regarding the long term, it's obviously too early to tell. I do know that we've been doing things one way for 40 years, and it's had disastrous results. I do know that the country running a trade deficit has an easier time in a such "war." Why do you state Trump doesn't know how tariffs work? I think he knows exactly how they work...that's why he's using them as leverage. This is not a partisan comment, but how may times does Trump have to "win" in order for his opponents to stop thinking he's an idiot? And idiot doesn't do what he's done over the past few years. An idiot doesn't get elected President over the most traditionally qualified field in history. An idiot doesn't survive a frame job and coup attempt from his own government (and no matter who you voted for--that's exactly what happened).
How all this works out is anyone's guess. Maybe he's right. Maybe he's wrong. But I, for one, am glad to see someone finally standing up for the U.S. on trade.
If China will not play fair and respect the US economy, then we cannot show China respect.
The practice of not formally recognizing Taiwan as a sovereign nation is a form of respect. I can think of many ways to make China do the right thing....
Check this page for the products that are 100% American made. There are only four electronics products, couple of headphones and some speakers.
https://clark.com/shopping-retail/american-made-in-the-usa/
Apple used to manufacture computers in the US. So did Dell. But Americans want cheaper and cheaper, and it's cheaper to make stuff in Asia.
Now don't get me wrong, the Chinese steal intellectual property and don't play fair. And I absolutely detest Trump. I agree something needs to be done about China, but hurting the economy with impulsive tweets isn't perhaps the right way.
Eventually, like Japan, even China won't be cheap, and the world will move to other lower labor cost places (maybe India or Africa). Or robotics will allow the US industry to survive (although jobs won't).
Neal
Have any of you asked how did China get in the position it is today? Every big manufacturer picked stakes and headed to a nation with no labor unions, massive workforce and one that is better educated and trained in advanced manufacturing, to a country with no environmental protections in place, all this to help the bottom line which everyone in the west including corporations and consumers have benefited from.
The old "they stole our jobs" and "they stole our technology" is a smoke screen to hide why and where and why manufacturing "went away". Apple will never make iPhones or any other product of any quantity in the USA again, why should they when they have made billions in profits from their friends in China.
Tariffs are soooo 19th century.
krugman on tariffs
in google and read.
I don't pay attention to the mentally deranged and the cluelessly wrong.
https://www.politico.com/story/2016/11/krugman-trump-global-recession-2016-231055