Somebody did a wrong calculation, I re-read the earnings call transcript and they said "ASP increased to $181" - I think that the 72% bit was added by the apple insider editors or something, not only is it wrong (as far as I can tell anyway) - Appleinsider is the only place where that figure shows up (also as far as I can tell). The only 72% number that I can find is Apples marketshare in players, maybe that is what was meant and there was a bit of an editing mistake or something.
Anyway, it does not matter. Do you think that the average sales price of an iPod can keep on going up? Average sales prices can only add a few more quarters of growth at most - average sales price increases are a short term story, not providing the kind of long term growth that justifies a high P/E ratio.
Here's the perfect example of the short-term investor psychology that both drive prices up and down in fantastic fashion, unrelated to the underlying strength of the Company.
Of course ASP can't keep going up, neither can volumes, neither can anything else, keep growing indefinitely, that's why good businesses, like Apple, keep adjusting their business strategy to keep overall growth continuing its upward trend (that, of course has eventual limits but we're not there yet with Apple). The point is, DESPITE these kinds of natural limits on any given product/product line, Apple has continued to EXCEED expectations as a whole business, not necessarily in each sector of their business. Mac's weak, shit to iPod, which rejuvenates the Macs, which now proved a growth engine as the iPod's weaken and Apple shifts to phones, Apple TV/Rental, 'general WiFi appliance', etc. Apple's future growth doesn't depend on iPod, or Mac, or iPhone, or,...... It's can they continue to adjust their business mix to the current reality. They have done that very very well in recent times, especially as judged by their financial performance. As has been said elsewhere, their crown jewel, to exploit, is OSX, which they are doing.
Here's the perfect example of the short-term investor psychology that both drive prices up and down in fantastic fashion, unrelated to the underlying strength of the Company.
Those same people also drove the stock price way above the underlying value of the company. There is no way it is worth $200/share.
Yep. Here's the bounce. Apple bottomed out at $126 now up to $138. I hope some others of you were able to grab some shares.
- Jasen.
Sadly, we've only just touched the tip of the recession. There's a lurking beast beneath the waters that might just take the whole ship down. These numbers have more to do with Apple's assessment of the coming climate for Apple growth, not specifically recession concerns. It was brought up by Steve Jobs himself that he would not comment on macroeconomic conditions.
If the recession is worse than expected, which is highly likely considering that the credit bubble is in the process of exploding, something that should have happened in 2001, then stock prices are likely to fall even further. $126 is not the bottom yet. Look at a price around $90 for a bottom.
Probably the single most important fact that is being ignored by most investors is that Apple is significantly underreporting their earnings. Reported net profit is $1.56B or $1.76 per diluted share. Positive cash flow from operations is $2.76B or $3.11 per diluted share.
Basically, there seems to be about $1.2B difference between the reported net profit and the actual cash flow. What is the source of this difference?
That type of thing shows up from time to time. I think most of the difference is money from interest on their pile of cash. IIRC, it isn't counted as profits.
This is generally true, but in this case the difference is actually due to deferred profits from operations. The actual positive cash flow was $3B, $2.76 billion of which came from operations. So the money from interest, etc. was about a quarter billion.
Earlier in the Apple release, they specifically say iPhone and AppleTV sales have accrued $1.44B in revenue. I am guessing that a lot of this is kickbacks from mobile operators, which is pure profit for Apple.
If the recession is worse than expected, which is highly likely considering that the credit bubble is in the process of exploding, something that should have happened in 2001, then stock prices are likely to fall even further. $126 is not the bottom yet. Look at a price around $90 for a bottom.
So if you really think it's going to 90, have you shorted AAPL? Have you put your money where your mouth is?
Which means Apple did not sell many more this year than last. But sold more expensive iPods this year than last. The iPhone cannibalized iPod sales this year. Which is OK because its higher revenue item.
It will be very interesting to see whether 10MIL iPhones get sold.
Yeah g3pro, why don't you short AAPL? You'll be rich when it goes to "around $90". I would bet all my AAPL shares that you won't though.
Teckstud, Apple is going to sell more than 10 million iPhones by the end of calendar year 2008. They will release the next generation iPhone that will have 3G, and simultaneously launch into Asia.
Yeah g3pro, why don't you short AAPL? You'll be rich when it goes to "around $90". I would bet all my AAPL shares that you won't though.
Teckstud, Apple is going to sell more than 10 million iPhones by the end of calendar year 2008. They will release the next generation iPhone that will have 3G, and simultaneously launch into Asia.
True. Apple is already selling iPhones at a rate of 2+ million units a quarter. It is likely that iPhone will break into a lot of new markets throughout the year. After the techno-geeks and Apple loyalists, the most lucrative customer for expensive gadgets are business customers. At least in the USA, AT&T started offering iPhone to customers on business plans. If Apple can manage to offer a solution that provides smooth integration with corporate email servers, iPhone is a more attractive business client device than Blackberry or Palm.
Even if the 3G version is delayed for some reason, another $100 can easily drive the demand to reach the 10 million iPhone target by the end of the year.
Comments
Somebody did a wrong calculation, I re-read the earnings call transcript and they said "ASP increased to $181" - I think that the 72% bit was added by the apple insider editors or something, not only is it wrong (as far as I can tell anyway) - Appleinsider is the only place where that figure shows up (also as far as I can tell). The only 72% number that I can find is Apples marketshare in players, maybe that is what was meant and there was a bit of an editing mistake or something.
Anyway, it does not matter. Do you think that the average sales price of an iPod can keep on going up? Average sales prices can only add a few more quarters of growth at most - average sales price increases are a short term story, not providing the kind of long term growth that justifies a high P/E ratio.
Here's the perfect example of the short-term investor psychology that both drive prices up and down in fantastic fashion, unrelated to the underlying strength of the Company.
Of course ASP can't keep going up, neither can volumes, neither can anything else, keep growing indefinitely, that's why good businesses, like Apple, keep adjusting their business strategy to keep overall growth continuing its upward trend (that, of course has eventual limits but we're not there yet with Apple). The point is, DESPITE these kinds of natural limits on any given product/product line, Apple has continued to EXCEED expectations as a whole business, not necessarily in each sector of their business. Mac's weak, shit to iPod, which rejuvenates the Macs, which now proved a growth engine as the iPod's weaken and Apple shifts to phones, Apple TV/Rental, 'general WiFi appliance', etc. Apple's future growth doesn't depend on iPod, or Mac, or iPhone, or,...... It's can they continue to adjust their business mix to the current reality. They have done that very very well in recent times, especially as judged by their financial performance. As has been said elsewhere, their crown jewel, to exploit, is OSX, which they are doing.
Here's the perfect example of the short-term investor psychology that both drive prices up and down in fantastic fashion, unrelated to the underlying strength of the Company.
Those same people also drove the stock price way above the underlying value of the company. There is no way it is worth $200/share.
Those same people also drove the stock price way above the underlying value of the company. There is no way it is worth $200/share.
I believe that's what I said
both drive prices up and down in fantastic fashion
Besides Apple and Motorola, the dow has had a swing of over 450 points today. At one point it was down over 300, now it's up over 140 and rising.
- Jasen.
Yep. Here's the bounce. Apple bottomed out at $126 now up to $138. I hope some others of you were able to grab some shares.
- Jasen.
Sadly, we've only just touched the tip of the recession. There's a lurking beast beneath the waters that might just take the whole ship down. These numbers have more to do with Apple's assessment of the coming climate for Apple growth, not specifically recession concerns. It was brought up by Steve Jobs himself that he would not comment on macroeconomic conditions.
If the recession is worse than expected, which is highly likely considering that the credit bubble is in the process of exploding, something that should have happened in 2001, then stock prices are likely to fall even further. $126 is not the bottom yet. Look at a price around $90 for a bottom.
Originally Posted by macshark
Probably the single most important fact that is being ignored by most investors is that Apple is significantly underreporting their earnings. Reported net profit is $1.56B or $1.76 per diluted share. Positive cash flow from operations is $2.76B or $3.11 per diluted share.
Basically, there seems to be about $1.2B difference between the reported net profit and the actual cash flow. What is the source of this difference?
That type of thing shows up from time to time. I think most of the difference is money from interest on their pile of cash. IIRC, it isn't counted as profits.
This is generally true, but in this case the difference is actually due to deferred profits from operations. The actual positive cash flow was $3B, $2.76 billion of which came from operations. So the money from interest, etc. was about a quarter billion.
Earlier in the Apple release, they specifically say iPhone and AppleTV sales have accrued $1.44B in revenue. I am guessing that a lot of this is kickbacks from mobile operators, which is pure profit for Apple.
If the recession is worse than expected, which is highly likely considering that the credit bubble is in the process of exploding, something that should have happened in 2001, then stock prices are likely to fall even further. $126 is not the bottom yet. Look at a price around $90 for a bottom.
So if you really think it's going to 90, have you shorted AAPL? Have you put your money where your mouth is?
Which means Apple did not sell many more this year than last. But sold more expensive iPods this year than last. The iPhone cannibalized iPod sales this year. Which is OK because its higher revenue item.
It will be very interesting to see whether 10MIL iPhones get sold.
Teckstud, Apple is going to sell more than 10 million iPhones by the end of calendar year 2008. They will release the next generation iPhone that will have 3G, and simultaneously launch into Asia.
Yeah g3pro, why don't you short AAPL? You'll be rich when it goes to "around $90". I would bet all my AAPL shares that you won't though.
Teckstud, Apple is going to sell more than 10 million iPhones by the end of calendar year 2008. They will release the next generation iPhone that will have 3G, and simultaneously launch into Asia.
True. Apple is already selling iPhones at a rate of 2+ million units a quarter. It is likely that iPhone will break into a lot of new markets throughout the year. After the techno-geeks and Apple loyalists, the most lucrative customer for expensive gadgets are business customers. At least in the USA, AT&T started offering iPhone to customers on business plans. If Apple can manage to offer a solution that provides smooth integration with corporate email servers, iPhone is a more attractive business client device than Blackberry or Palm.
Even if the 3G version is delayed for some reason, another $100 can easily drive the demand to reach the 10 million iPhone target by the end of the year.